Post-Keynesian economics[1] is a
school of economic thought with its origins in
The General Theory of
John Maynard Keynes, although its subsequent development was influenced to a large degree by
Michał Kalecki,
Joan Robinson,
Nicholas Kaldor and
Paul Davidson. Keynes's biographer
Lord Skidelsky writes that the Post Keynesian school has remained closest to the spirit of Keynes's own work.
[2][3]
[edit] Introduction
The term
post-Keynesian was first used to refer to a distinct school of economic thought by Eichner and Kregel (1975)
[4] and by the establishment of the
Journal of Post Keynesian Economics in 1978. Prior to 1975, and occasionally in more recent work,
Post Keynesian could simply mean economics carried out after 1936, the date of Keynes's
The General Theory.
[5] Post-Keynesian economists are united in maintaining that Keynes's theory is seriously misrepresented by the two other principal Keynesian schools:
neo-Keynesian economics which was orthodox in the 1950s and 60s – and by
New Keynesian economics, which together with various strands of
neoclassical economics has been dominant in mainstream macroeconomics since the 1980s. Post-Keynesian economics can be seen as an attempt to rebuild economic theory in the light of Keynes's ideas and insights. However even in the early years Post Keynesians such as
Joan Robinson sought to distance themselves from Keynes himself and much current post-Keynesian thought cannot be found in Keynes. Some Post Keynesians took an even more progressive view than Keynes with greater emphases on worker friendly policies and re-distribution. Robinson,
Paul Davidson and
Hyman Minsky were notable for emphasising the effects on the economy of the practical differences between different types of investments in contrast to Keynes more abstract treatment.
[6]
The theoretical foundation of post-Keynesian economics is the principle of
effective demand, that demand matters in the long as well as the short run, so that a competitive market economy has no natural or automatic tendency towards
full employment.
[7] Contrary to the views of New Keynesian economists working in the neo-classical tradition, Post-Keynesians do not accept that the theoretical basis of the market failure to provide full employment is rigid or sticky prices or wages. Post-Keynesians typically reject the
IS/LM model of
John Hicks, which was very influential in neo-Keynesian economics.
[citation needed]
The positive contribution of post-Keynesian economics
[8] has extended beyond the theory of aggregate employment to theories of income distribution, growth, trade and development in which money demand plays a key role, whereas in neoclassical economics these are determined by the 'real' forces of technology, preferences and endowment. In the field of monetary theory, post-Keynesian economists were among the first to emphasise that the money supply responds to the demand for bank credit,
[9] so that the central bank can choose either the quantity of money or the interest rate but not both at the same time. This view has largely been incorporated into
monetary policy, which now targets the interest rate as an instrument, rather than the quantity of money. In the field of finance, Hyman Minsky put forward a theory of financial crisis based on
financial fragility, which has recently received renewed attention.
[10]
[edit] Strands
There are a number of strands to post-Keynesian theory with different emphases. Joan Robinson regarded
Michał Kalecki’s theory of effective demand to be superior to Keynes’s theories. Kalecki's theory is based on a class division between workers and capitalists and imperfect competition.
[11] She also led the critique of the use of aggregate production functions based on homogeneous capital – the
Cambridge capital controversy – winning the argument but not the battle.
[12] Much of
Nicholas Kaldor’s work was based on the ideas of increasing returns to scale, path dependency, and the key differences between the primary and industrial sectors.
[13] Paul Davidson[14] follows Keynes closely in placing time and uncertainty at the centre of theory, from which flow the nature of money and of a monetary economy.
Monetary circuit theory, originally developed in continental Europe, places particular emphasis on the distinctive role of money as means of payment. Each of these strands continues to see further development by later generations of economists, although the school of thought has been marginalized within the academic profession.
[edit] Current work
[edit] Journals
Much post-Keynesian research is published in the
Journal of Post Keynesian Economics (founded by
Sidney Weintraub and
Paul Davidson), the
Cambridge Journal of Economics, the
Review of Political Economy and the
Journal of Economic Issues (JEI).
There is also a UK academic association, the
Post Keynesian Economics Study Group (PKSG).
[edit] Kansas City School
In the US, there is a center of Post Keynesian work at the
University of Missouri – Kansas City, dubbed "
The Kansas City School", together with the
Center for Full Employment and Price Stability, which has run a
Post Keynesian Conference and
Post Keynesian Summer School, together with a group blog,
Economic Perspectives from Kansas City. Their research emphasis includes
Neo-Chartalism,
job guarantee programs, and economic policy.
[edit] Australia
[edit] University of Newcastle
The
University of Newcastle, in
New South Wales, Australia, houses CofFEE, the
Centre of Full Employment and Equity, an active educational, research and collaborative organisation whose focus is on policies "restoring
full employment" and achieving an economy that delivers "equitable outcomes for all". CofFEE's work is on Post-Keynesian macroeconomics, labour economics, regional development and monetary economics.
[edit] Major post-Keynesian economists
Major post-Keynesian economists of the first and second generations after Keynes include:
[edit] See also
- ^ There is semantic dispute as to whether there should be a hyphen between Post and Keynesian, which is symbolic of an intellectual dispute over the nature of the school of thought. The American journal of the same name does not use the hyphen despite its grammatical correctness, and the objection to its use dates partly back to Paul Samuelson's claim to be a post-Keynesian. However Harcourt 2006 uses the hyphen, following Joan Robinson's original use of the phrase. This article standardizes on post-Keynesian for consistency without implying support for Davidson's 'narrow tent' definition of the school of thought – termed Fundamental Keynesian by Lavoie (2005), Journal of Post Keynesian Economics, 27 (3) 371.
- ^ Skidelsky 2009, p. 42
- ^ Financial markets, money and the real world, by Paul Davidson, pp. 88–89
- ^ Eichner and Kregel 1975
- ^ King 2002, p. 10
- ^ Hayes 2008
- ^ Arestis 1996
- ^ For a general introduction see Holt 2001
- ^ Kaldor 1980
- ^ Minsky 1975
- ^ Robinson 1974
- ^ Pasinetti 2007
- ^ Harcourt 2006, Pasinetti 2007
- ^ Davidson 2007
[edit] References
- Arestis, Philip (1996). "Post-Keynesian economics: towards coherence". Cambridge Journal of Economics 20: 111–135.
- Davidson, Paul (2007). John Maynard Keynes. Palgrave Macmillan.
- Eichner and Kregel (1975). "An Essay on Post-Keynesian Theory: A New Paradigm in Economics". Journal of Economic Literature 13: 1293–1314.
- Harcourt, Geoff (2006). The Structure of Post-Keynesian Economics. Columbia University Press.
- Hayes, M.G. (2008). The Economics of Keynes: A New Guide to the General Theory. Edward Elgar Publishing. ISBN 978-1-84844-056-2.
- Kaldor, Nicholas (1980). "Monetarism and UK economic policy". Cambridge Journal of Economics 4: 271–218.
- King, J.E. (2002). A history of post Keynesian economics since 1936. Edward Elgar Publishing. ISBN 978-1-84064-420-3.
- Minsky, Hyman (1975). John Maynard Keynes. Columbia University Press.
- Pasinetti, Luigi (2007). Keynes and the Cambridge Keynesians. Columbia University Press.
- Robinson, Joan; Eatwell, John (1974). An Introduction to Modern Economics (2 ed.). McGraw Hill.
- Skidelsky, Robert (2009). Keynes: The Return of the Master. Allen Lane. p. 42. ISBN 978-1-84614-258-1.
[edit] Further reading
[edit] External links
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