ABSTRACT
In 1821, Colonel Robert Torrens had confidently predicted that “with respect to Political Economy the period of controversy is passing away, and that of unanimity rapidly approaching. Twenty years hence there will scarcely exist a doubt respecting any of its fundamental principles”. Economists began to enjoy prestige as successful physicians who had mastered the anatomy of the economy. Economic diseases were still prevalent. To prescribe the correct cure was still difficult. But it was regarded mainly as a problem of diagnosis. By the end of the nineteenth century, the “marginalist” approach had become established as the highest expression of orthodox theology. Supply and demand analysis makes economic problems delightfully simple. A cure for inflation and unemployment can be worked out in a few minutes. Supply and demand analysis finally laid to rest the old superstitious fear of saving by “proving” that, as long as markets were competitive, saving could not be a cause of unemployment.
