ABSTRACT
Today, as always, the basic policy question is: “What is to be done?” At its best, economic analysis always asks this question. If economic analysis or theory cannot point the way to improving the human condition, it has little relevance. The essential macroeconomic problem is how to get full employment without inflation. The industrial democracies of the West have struggled with this for nearly two decades without notable success. True, during the Reagan administration inflation dropped from the double digit levels of the late 1970s, but the cost of this was an unemployment rate in the 7 percent range or higher throughout the 1980s. 1 Further, there is no assurance that inflation is permanently vanquished from systems of mixed market capitalism. Too often in the past economists have been wrong, with respect both to the magnitude and to the likelihood of inflation; there is little reason to believe there has been a fundamental change in this situation.
