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This chapter investigates the nature of the transformation of macroeconomics by focusing on the impact of the Great Depression on economic doctrines. There is no doubt that the Great Depression exerted an enormous influence on economic thought, but the exact nature of its impact should be examined more carefully. In this chapter, I examine the transformation from a perspective which emphasizes the interaction between economic ideas and economic events, and the interaction between theory and policy rather than the development of economic theory. More specifically, I examine the evolution of what became known as macroeconomics after the Depression in terms of an ongoing debate among the “stabilizers” and their critics. I further suggest using four perspectives, or schools of thought, as measures to locate the evolution and transformation; the gold standard mentality, liquidationism, the Treasury view, and the real-bills doctrine. By highlighting these four economic ideas, I argue that what happened during the Great Depression was the retreat of the gold standard mentality, the complete demise of liquidationism and the Treasury view, and the strange survival of the real-bills doctrine. Each of those transformations happened not in response to internal debates in the discipline, but in response to government policies and real-world events.

Responds to George Tavlas’ comments in “More on the Chicago tradition”, in this issue, and once again assesses the contribution of individuals to “the Chicago tradition” of the 1930s.

The paper investigates the utility of economic theory for post‐Communist economic transformation. It serves to explain the main reasons for market reform failure in different post‐Communist countries.

A literature review suggests that after the collapse of the Communist system there was no economic theory of transition to market. Whenever one considers the transition of post‐Communist economies to a market system (which, in fact, is nothing but post‐Communist transition to capitalist economies), it has to be placed on record, as this kind of transition has no precedent in history.

The main mistake of gradualists stems from their overlooking some very important conditions for successful transition: political guarantees and internal assets for reforms. And the success of shock therapy rests on the paradox, “the worse, the better”.

There is as yet no special economic theory of post‐Communist transformation and it is just developing. This paper helps one to understand the main features of shock therapy and gradualism for designing the framework of such a theory. It is geared towards researchers and students interested in the theoretical aspects of the post‐Communist economic transition to markets.

While the economy is showing tangible signs of improvement, one fact remains clear: today's planner must complement his knowledge of the strategic forces acting on his firm's industry with a general understanding of the nature and sources of national economic volatility. Indeed, if planners want to chart successful strategies for their businesses, they must minimize the negative effects stemming from an unpredictable economy.

This paper aims to study the formation and amplification mechanism of the financial crisis and business cycle and also discuss the related optimal rules for the central bank and government.

This study is developed basically on a simple financial business cycle model by embedding credit constrains into the DSGE model.

The model in this paper puts forward an explanation for the mechanism of cycles' formation. Using this it finds that: the financial lever in modern economy is the offender of the USA financial crisis, which created the cycles and amplified it into the crisis when the financial lever multiple was increased to much greater levels, and that the traditional policy rule is not good enough for a long running growth process.

The findings in this study suggest that to keep the financial lever multiple under a safe level and to reform the policy rule to be good enough for a long run growth process is necessary.

According to the model's principle, the paper claims that: the development of the financial and credit markets during recent years has increased the volatility of the economic cycle – excessive credit abuse has become the root cause of the instability of the economy system; the proportion of the mortgage loan and similar financial products in the economy should be controlled strictly; it is necessary to recheck the traditional standpoint of the monetary policy. Rule policy by the Keynesian model exists as a short‐term problem, thus it is not sufficient to study the questions related to technological shocks.

The model in this paper explains well the mechanism of cycles and crisis' formation. The findings under the modeling economy give a safe level for financial lever multiples for the first time. The financial business cycle model being used in studying the Chinese economy is a pioneering and exploratory experiment.

The theme of micro‐foundation of economic theory has not been adequately addressed. This is true even of those who pioneered the area of micro‐foundation of macro‐economics. The great missing link in economic theory, both of micro‐economics and macro‐economics, is the inability to methodologically integrate ethical and moral values through preference mapping. This missing methodology disables the study of institutions, policy formulation and normative statements of structural transformation. On the other hand, such issues are once again haunting the human race in the murky and troubled global relations today – from capitalism to war to governance. This paper addresses the preference mapping and embedding of ethical and moral issues as endogenous dynamics in economic theory. The approach is rigorous and methodological.

The librarian and researcher have to be able to uncover specific articles in their areas of interest. This Bibliography is designed to help. Volume IV, like Volume III, contains features to help the reader to retrieve relevant literature from MCB University Press' considerable output. Each entry within has been indexed according to author(s) and the Fifth Edition of the SCIMP/SCAMP Thesaurus. The latter thus provides a full subject index to facilitate rapid retrieval. Each article or book is assigned its own unique number and this is used in both the subject and author index. This Volume indexes 29 journals indicating the depth, coverage and expansion of MCB's portfolio.

A feature of twentieth century development has been the decline in the proportion of resources whose use is determined by the market mechanism and a corresponding increase in the significance of central planning. The decline of the market constitutes a paradigm crisis for the majority of non‐Marxist economists, who analyse market allocation intensively yet barely consider the political decision‐making process. An attempt to explain both the level and distribution of government expenditure has been made in the last decade through an “economic theory of politics” which is part of a wider attempt centred on the University of Chicago to unify the social sciences around the concept of individual optimising behaviour, extended from market consumption to such spheres as crime, education, marriage, religion and suicide as well as politics.

Ideology as a mixture of consciously or unconsciously accepted ideas and beliefs provides the underlying support or rationalisation for fundamental features of thought and action in a society. A vigorously promoted contending ideology may at any given time also influence developments. Value judgments, which are likewise not based on the logical rules of observation and verification, may for present purposes be taken as concerned with less comprehensive or less fundamental matters than ideology.

The paper aims to offer a new perspective on the strictly microeconomic nature of all of Islamic economics. Writers in this field continue to work in the mainstream tradition without noticing the micro‐interface of the theoretical nature of Islamic economics. This paper aims to address this issue.

The paper provides a comparative study of received literature in the history of economic thought and contrasts the ethical foundations of Islamic economics from the mainstream dichotomy between microeconomic and macroeconomic parts.

There is a cogent microeconomic foundation of Islamic economics for the economy‐wide treatment of ethical economic issues and problems including the policy framework.

This is a theoretical exploration. The empirical part is yet to be expanded upon.

The paper has practical implications for graduate students on policy formulation and economic theorizing, by making them analytically aware on the extensive relevance of microeconomics in the building block of ethical content of economic theory, policy and institutions.

The paper presents original thinking along lines of microeconomic foundations of macroeconomic theory from the social and ethical vantage points of Islamic economics and finance that writers in this field should not ignore. The paper is meant for serious students and academics of economic theory and ethical social policy embedded in the economic treatment.