Where Have We Been and Where Are We Going?

Improving our understanding of the nature of economic change entails that we draw on the only laboratory that we have--the past. But "understanding" the past entails imposing order on the myriad facts that have survived to explain what has happened--that is theory. The theories we develop to understand where we have been come from the social sciences. Therefore there is a constant give and take between the theories we develop, and their application to explain the past. To begin we need to assess what we have learned from the past and then assess the usefulness of the tools at hand--i.e. the rationality assumption and growth theory we employ in economics? We will then go on to explore in subsequent sections some recent development that offer the promise of improving our understanding of the past and of where we are going.

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