Introduction: single period theory and continuation theory
In his last paper, John Hicks (1990) throws light on a fundamental issue for dynamic analysis: the nature and definition of economic activities and, behind this, the time structure of production. The insights thus provided, together with the reference to other contributions by the author, allow important steps forward in the analysis of processes of economic change interpreted as sequential processes. This, as is well known, consists of two analytical moments: the ‘single period theory’ and the ‘continuation theory’ – that is, the analysis of the way in which successive periods are linked in a sequence.
Hicks's article is essentially a critical review of Adam Smith and John Maynard Keynes in an attempt at what he calls a ‘unification of macroeconomics.’ The focus is on the time articulation of economic activity; this makes it possible to stress the shortcomings of the analyses of both authors, but also to show that these analyses are, in a way, complementary: in fact, each of them lacks precisely what the other has, so that, together, they comprise a basis for a coherent system of thought.
Hicks proceeds from the consideration that ‘Smith, like Keynes, is working with analysis of the behaviour of an economy during a period…