Important changes are taking place in the world economy which are not adequately dealt with by either Keynesian or monetarist theories. Too much emphasis placed on what is happening in the American and western European economies can blind us to important developments in such nonwestern economies as the OPEC nations. (IS)

The major new development in American economics is the abandonment of neo-Keynesian economics and the reliance on modern monetarism and the rational expectation approach. The result is a stagnant economy with high unemployment. The reasons for this change and its implications are discussed. Suggestions for change are made. (IS)