chapter  8
35 Pages

Toward a General Nonlinear Macrodynamic Theory of Economic Fluctuations

Introduction IN NO THEORETICAL ANALYSIS of the economic phenomenon

called industrial fluctuation, the trade cycle, business cycles, or economic fluctuations, can considerable idealization be avoided. For the process of economic fluctuations involves so many complexities and interdependencies of economic society that it is impossible to understand, much less control, that process without properly abstracting from realities. As J. A. Schumpeter said, "analyzing business cycles means neither more nor less than analyzing the economic process of the capitalistic era." The formidable dimension of this task almost by necessity requires macroscopic theories-an extremely high degree of idealization. The kind of idealizations to be selected and the elements to be omitted or underscored depend on the questions at issue. This dependence of idealization on the relevant questions may not even be unique. There may be and usually are some idealizations or different degrees of idealization even on the same questions to be answered. No theory, therefore, could claim to be the theory of economic fluctuations.