ABSTRACT
Econometric estimation is then undertaken to determine which variables on the list are indeed empirically relevant. The central notion is that the modern capitalist economy is oligopolistic and that macro-economic theory must take this fact on board. Thus an industry is typically dominated by a few firms, and at the economy level a significant proportion of decisions on investment, pricing, etc. is in the hands of relatively few firms and within those firms decisions are in the hands of a small number of individuals. The pursuit of profits by firms and of real wages by workers is the central conflict in the economy. The theories of imperfect competition indicated reasons why individual firms would usually operate with excess capacity, whilst John Maynard Keynes addressed himself directly to the causes of unemployment and excess capacity.
