The Eclipse of Keynesianism

"This book examines the internal dynamics of the economics profession and explores the process by which two Chicago economists, Milton Friedman and George Stigler, influenced the direction of world history in the last quarter of the twentieth century. In macroeconomics, the quantity theory was economically 'tested' against its hegemonic Keynesian rival and as a result became highly influential. But in microeconomics no comparable body of literature emerged to 'test' the theory of monopolistic competition. Friedman and Stigler both declined to be drawn into the process by which the model of perfect competition could be replaced by a general theory of microeconomics that emphasized the prevalence of market power. This book provides a context for these developments: Stigler's model of the sociology of economic knowledge and Friedman's sceptical view of the appropriate role of econometrics in economic analysis. The book also examines the way in which Friedman infuriated and captivated his Keynsian opponents. Gradually, some Keynsians began to display a more tolerant attitude towards inflation, the societal problem which facilitated the political and economic revolutions of the Thatcher-Reagan years."--BOOK JACKET.