ABSTRACT

Macroeconomic policy for the bulk of the twentieth century was based on three assumptions that no longer obtain (if they ever did). These are:

short-run focus: the basic macroeconomic problem is to stabilize the economy over the business cycle and promote full employment in the short run;

capital/labour conflict: the basic distributional problem is the division of income between capital and labour;

commodity conception of welfare: economic welfare is a function of per capita real income.