The basic argument is the following. Governments already have economic planning bureau’s - the US for example have the Council of Economic Advisers to the President. [ [6] Current forecasts are conditional on the assumption that the government will do as planned and promised. Such forecasts often fail, and can be forecasted to fail if one takes an independent position. Proper forecasting requires that the economic adviser not only has a scientific attitude, but also a scientific position, and is able to tell and indeed tells the public that plans or promises will fail if there is scientific reason for thinking so. Given the experience of the 20th century, it appears that strong constitutional safeguards are required to provide for this public function. Hence an Economic Supreme Court.
Keynes (1936) already formulated a ‘general theory’ for political economy. Keynes subsumed the ‘classical’ approach as a special case. [7]
Keynes’s theory is rich in many respects and poor in other. On the poor side: Keynes’s book is not exact on many issues, and proper models like the IS-LM model were only developed by Hicks, Meade and others. Samuelson (1947) presented the first integration of both the competitive model and the utility maximising calculus, only then giving body to the notion of ‘classical’. [8] However, on the rich side: Keynes’s book was and still is a source of inspiration for new research angles. Note that Samuelson coined the phrase ‘neoclassical synthesis’ for ‘his’ conceptual integration of classical processes at the micro level and Keynesian processes at the macro level. This synthesis endures till today, as e.g. Colignatus (1990a), Blanchard (1999) and Krugman (1999) acknowledge. It is important to note, though, that Samuelson’s phrase is a bit awkward, since Keynes himself already proposed such synthesis - he namely did not abandon micro-economics. It would be wrong to associate Keynes only with the macro-economic leg of the synthesis. Thus the neoclassical synthesis is actually the Keynesian synthesis itself. But we may as well use the phrase ‘neoclassical synthesis’, if only to acknowledge the role of others. [9]
Keynes remains vitally present, not only for reasons of polical economy but also in the standard macro-economic core. A student who considers recent textbooks on economics, such as Mankiw (1992 and 1998) or Dornbusch & Fischer (1994), notes that the core of macro-economics still derives from Keynes (1936) and from the interpretation of his theory by the IS-LM model developed by Hicks (1937) and others. The ongoing discussion since 1936 can only be understood by properly including these original theoretical roots. Krugman gives a useful refresher in his “The return of depression economics” (1999). Flanning & Mahony (1998, 2000) provide a recommendable modern summary companion to The General Theory that is a testimony of its relevance. The theoretical extension with the Phillipscurve in its relation to unemployment and inflation belongs to this tradition. Also practical economic modelling, such as the models Athena and MIMIC of the Dutch Central Planning Bureau rely on that macro-economic core, see CPB (1990) and Graafland and De Mooij (1998).
There are also good reasons to remain modest about the novelty of the ‘new synthesis’ proposed in these pages. Keynes had an open eye to the policy making process and social philosophy. Similarly, Public Choice theorists like Buchanan and Tullock have not suggested that other factors like the macro-economy itself were not important - they only emphasised the importance of Public Choice. In that sense the presently proposed extension with institutional economics, information and Public Choice is no real extension.
In addition, the three pillars of the Trias Politica are not fully independent already. There are rather numerous dependencies instead. A modern nation has decentralised much power, and created hundreds of ‘independent organisations’ - so that some speak about ‘myrias politica’ instead of ‘trias politica’.
However, from the very definition of ‘political economy’ it follows that the function of analysing, theorising and forecasting the management of the state is a part of management itself, and this function indeed can be in danger of the other three branches.