Economic Theory in Retrospect and Prospect

In this chapter, we summarize and critically evaluate the salient features of major schools of economic thought that have withstood the test of time, continuing to generate ideas and arguments shaping the landscape of economic policy. Our primary focus lies in the essence of economic theory, discussing its prospects as we embrace the concept of a long-run perspective in which phases of economic growth are succeded with downturns, forming a protracted, long wave-like evolutionary pattern. Economic history repeatedly underscores that during the depressionary periods prevailing economic theories by necessity go through testing. Their inability to offer satisfactory explanations and solutions to prevailing issues creates fertile ground for the emergence of alternative economic theories. These alternative theories establish themselves during the subsequent recovery stage, emphasizing the dynamic nature of economic thought in response to real-world challenges.