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Alex M. Thomas, Macroeconomics: An Introduction

John King
p. 725-726
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Alex M. Thomas, Macroeconomics: An Introduction, Cambridge: Cambridge University Press, 2021, xx + 234 pages, 978-110873199-7

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1This is a most unusual textbook on macroeconomics: it is highly original, not to say idiosyncratic, in both content and exposition, with some eye-catching illustrations by Sahana Subramanyam. It is very well-written and also very scholarly, with a good list of references and suggestions for further reading at the end of each of the nine chapters. As an undergraduate textbook on macroeconomics, it has some additional and very substantial strengths. Thomas advocates pluralism in macroeconomic theory, but rightly argues that this does not mean that “anything goes”. He distinguishes “Keynesian” and “neoclassical approaches” and comes down firmly on the side of the former: full employment is by no means guaranteed in a capitalist economy, he correctly maintains, and the levels of output and employment are determined by demand-side factors, and are generally not constrained by supply. He sees economics as “an embedded system”, stressing its dependence on society and the natural environment. And, throughout the book, Thomas integrates modern macroeconomic theory with the history of economic thought, drawing on classical political economy in addition to the crucial landmarks of twentieth-century thought. He has a lot to say about Keynes and (commendably) also sets out the fundamental principles of Michał Kalecki’s macroeconomics.

2There are two introductory chapters. In chapter 1 Thomas asks “What is economics?”, and in chapter 2, “Conceptualising the macroeconomy”, he treats it both as an embedded system and as “a web of flows”. The three core theoretical chapters follow. Chapter 3 deals with money and interest rates, emphasising the endogenous nature of money. Chapter 4 is devoted to the theory of output and employment, first in a closed and then in an open economy, while chapter 5 deals with the theory of economic growth, with particular reference to the Indian economic environment. In chapter 6, “Why economic theory matters”, Thomas emphasises the danger that poor theories will lead to bad policies. He applies this principle in chapter 7, where he discusses ways of achieving the crucial policy objective of full employment, again with special reference to India. Chapter 8 deals with the second important policy objective, low inflation, and the book ends in chapter 9, “Towards good economics”, with Thomas’s endorsement of the need for pluralism in theory and method. “I end this book”, he writes, “with the hope that you take pluralism as your friend, sometimes a difficult one, in your journey of learning” (196).

3While Alex Thomas was a graduate student in Australia, and makes frequent approving references to Tony Aspromourgos from the University of Sydney, he now teaches at Azim Premji University in Bangalaru, India, and he pays sustained and systematic attention to the special features of the Indian economy and how they affect macroeconomic theory and policy. I imagine that this feature of the book will be of great interest to non-Indian readers.

4There are also some unfortunate omissions. Perhaps the most important is the lack of any substantial critical account of the “neoclassical” macroeconomics that he rejects; there is no discussion of the IS-LM model, for example. His treatment of the methodological issues that are raised by the mainstream insistence on providing “microfoundations” for macroeconomics is also rather sketchy, though he does make the important point that “it is crucial to keep in mind that not all knowledge can be produced and understood on the basis of individual behaviour and experience” (65). Rather surprisingly Thomas makes no mention of Post Keynesian macroeconomics as a separate non-neoclassical school, and his treatment of financial crises is very thin, with only one very brief reference to Hyman Minsky. I would also have liked to see some analysis of the dynamic approach to growth theory taken by Nicholas Kaldor and his disciples, especially Tony Thirlwall, who stressed the relationship between output growth and productivity growth in manufacturing industry.

5But these defects do not detract from Thomas’s achievements. This will be an extremely valuable text for its intended readership, second- and third-year Indian undergraduates, and also for postgraduate and academic readers in other countries. Students outside India might find it rather too Indo-centric, but it certainly belongs in every university library, since it offers a distinctive and convincing defense of pluralism in macroeconomic theory.

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John King, « Alex M. Thomas, Macroeconomics: An Introduction »Œconomia, 11-4 | 2021, 725-726.

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John King, « Alex M. Thomas, Macroeconomics: An Introduction »Œconomia [En ligne], 11-4 | 2021, mis en ligne le 01 décembre 2021, consulté le 23 mai 2022. URL : http://journals.openedition.org/oeconomia/11824 ; DOI : https://doi.org/10.4000/oeconomia.11824

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Auteur

John King

Emeritus Professor, La Trobe University. J.King@latrobe.edu.au

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Les contenus d’Œconomia sont mis à disposition selon les termes de la Licence Creative Commons Attribution - Pas d'Utilisation Commerciale - Pas de Modification 4.0 International.

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