ABSTRACT
The era that began in the 1920s and lasted some twenty years until the beginning of the Second World War is often spoken of as the “high theory” era. It was so called because the innovative theoretical breakthroughs that were made had a potential for completely altering “the orientation and character of economics” (Shackle 1967:5). The Robinson-Chamberlin theories of imperfect or monopolistic competition, Hicks’s revival of Edgeworth’s indifference curves, Keynes’s theory of aggregate effective demand, the Morgenstern-von Neumann theory of games, and the ex ante, ex post construct of the Swedish School were chief among these breakthroughs. Each in its own way these innovations undertook to address the anomalies or “puzzles” inherent in the conventional model of an economic process driven by the maximizing choices of households and firms to determine the equilibrium prices that clear markets. It is thus a conundrum that, some sixty years later, the neo-Walrasian model of the contemporary mainstream is predicated on essentially the same “vision” (to use Schumpeter’s indispensable term) of the real world that was dominant when the creative spasm of high theory began.
