ABSTRACT
Today, it is unfashionable, or even unprofessional, in economics to prognosticate on policy without in-depth empirical work to yield 'predictions' useful for policy formulation. Yet that does not seem to be the way that policy development has occurred in the past. Today, we are trapped by the inadequacies of empiricism which cannot provide a secure base for policy formulation. All we have is an ability to short-term forecast a limited range of economic variables because of the inherent continuity of economic structure. The position that has been taken here is to argue that the primary business of the macro economist is not to tinker with shocks to a fixed structure but to devise new structures compatible with evolutionary development. Although the scope to formalize, quantify and impress everyone with scientism is much reduced and the probability of obscurity very high, this creative task of the macroeconomist is of central importance. To carryover our dynamic distinction into economics itself, much of conventional macroeconomics is maintenance activity, maintenance of the beliefs that hold prevailing macro-consciousness together, at the expense of creative activity. 3
Evolution of structure is usually viewed as a slow, long-run process, but it is punctuated by sharp phases of catastrophic events. Beneath this pattern lies a macro-consciousness which is capable of shifting with great rapidity under the dual tensions of conservatism (maintenance) and radicalism (creativity). Evolutionary progress requires new structure which can encompass both in some proximate manner. We have emphasized what an outstanding job Keynes did in this regard, whatever misgivings we might have about the economic system that Keynesian consciousness ultimately spawned. In this chapter, the purpose is to propose a policy innovation which is directed towards the avoidance of simultaneous inflation and unemployment in economies which are, structurally, quite different to those that Keynes had in mind.
