ŏ Ŕ ō Ŝ Š ő Ş ȟMacroeconomics and
Coordination*
A more exact, though wordy, title for this chapter would be “Macroec-
onomics, Coordination, and Discoordination.” Macroeconomics studies
disruptions to the economywide coordination processes that microeco-
nomics explains. An emphasis, instead, on aggregate demand facing aggre-
gate supply is hopelessly superficial.
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It is standard nowadays to bewail disarray in macroeconomics and mone-
tary theory. Fundamentalist Keynesianism, as we might call it, dominated
textbooks and policy circles for roughly three decades. Experience and the-
ory then discredited it. Ļe fundamentalists brooded about inadequacy of
total spending (or occasionally the reverse), about the propensity to con-
sume out of real income, and about a saving gap that grows with income
and wealth and so becomes all the harder to fill with investment spending,
especially as real capital formation leaves fewer attractive opportunities for
still further private investment. Even nowadays, policymakers and a few
economists still cling to some such doctrine by default and still recom-
mend expanding “aggregate demand” to “stimulate” national and world
economies, albeit at the risk of price inflation implied by the equally dis-
credited notion of the Phillips curve.
An alternative school of Keynesian interpretation stems from Robert
Clower (ȀȈȇȃ) and Axel Leijonhufvud (ȀȈȅȇ,ȀȈȇȀ). As history of economic
thought it may be questionable, but its substance deserves ample attention.*Originally entitled “Austrian Ļemes in a Reconstructed Macroeconomics,” this
chapter derives from a conference presentation in Amsterdam, JanuaryȀȈȈȄ, published
inAustrian Economics in Debate, eds. Willem Keizer et al. (London and New York: Rout-
ledge,ȀȈȈȆ):ȁȁ–ȃȀ. It is considerably updated here.Ȁȁȇ