ABSTRACT
In the decades after the Second World War, when classical science and big government were most admired, macroeconomic theory meant a set of simultaneous equations that represented the interacting markets. These equations, which were known as the Keynesian synthesis (being a synthesis of Keynes and neoclassical economics), could be econometrically quantified and solved to derive predictions, predictability being one of the admired features of economic science. According to the theory governments were able to adjust such parameters as taxation and the money supply, and thereby attain politically desired levels of national income, employment, interest, etc. Macroeconomic policy, which was called ‘fine-tuning’, ensured that the capitalist system was a viable alternative to socialism, because deep depressions were no longer a threat.
