Abstract

To many, economics is seen as increasingly divorced from reality. I shall argue that one of the causes of this divorce is the attachment to closed-system theorising, and advocate instead the method of open systems with partial and temporary closures. Definitions of closed and open systems are examined. It is evident that there are many different criteria which may define open systems. Theorists differ in their emphasis on one or other criterion. There are also different dimensions of openness: openness to non-economic factors; the openness of economic theories themselves; the interplay of micro- and macro-economics; and the treatment of time. These are explored, using Keynes’s General Theory as a case study of an open system.

JEL Classification: A10; B31; B40; B50; E12.