LOST PROPHETS

A damp but thoroughgoing and often illuminating chronicle of competing economic theories from the 1960's through the early 1990's, by veteran Wall Street Journal economics editor Malabre (Within Our Means, 1990, etc.). Malabre offers a chronicle of a profession in increasing disarray. From the sedate confidence of die-hard 1960's Keynesians such as Paul Samuelson, an advisor to Presidents Kennedy and Johnson, through the growth of the influential, self-promoting group of monetarists led by Milton Friedman in the 1970's, to supply-siders such as Arthur B. Laffer under Reagan, Malabre argues that economists' ability to predict—let alone control—the course of American business activity has steadily deteriorated even as economists have grown in number and stature. Measured by the ability to forecast employment, profits, growth, inflation, and recession—or the effect of floating exchange rates, tax policy, deficit spending, or the money supply on any of the above—Arthur Burns beats Alan Greenspan every time. Much technical analysis of post-WW II economic trends (for example, monitoring the effects on currencies and international trade of the abandonment in 1971 of the Bretton Woods agreement on fixed exchange rates) fills out the author's report, leavened by amusing tales from his long acquaintance with economists of every stripe (at one point, Malabre runs into a Federal Reserve Bank governor in a London topless bar). Malabre ends by resuscitating the theory of the business cycle: For serious readers. (First printing of 20,000)