A New Guide to Post Keynesian Economics

A New Guide to Post Keynesian Economics

A New Guide to Post Keynesian Economics

A New Guide to Post Keynesian Economics

Synopsis

Eichner's classic A Guide to Post-Keynesian Economics (1978) is still seen as the definitive staging post for those wishing to familiarize themselves with the Post-Keynesian School. This book brings the story up to date. The main representatives of Post-Keynesianism from both sides of the Atlantic are represented here, including Paul Davidson, Geoff Harcourt and Sheila Dow.

Excerpt

Joan Robinson wrote the Foreword to the first Guide to Post-Keynesian Economics (Eichner, 1978). She concluded that the authors of the various essays, by “throwing off the paralysis of neoclassical equilibrium” were “explaining…the problems of prices, employment, distribution, growth and stagflation in the actual, historical evolution of an ever changing world.” She did not expect definitive answers to be found quickly so “there [was] plenty of work still to do” (Robinson, 1979:xxi). the essays in the present Guide are progress reports on the response to her challenge.

But hers was not the only challenge that had to be faced over the intervening years. Those decades saw the rise of monetarism and new classical macroeconomics, both as the dominant approach to theory and as the rationale for policy. While there have been signs recently that New Keynesian theory has been making an effective counterattack, and that the most harsh policies of the 1970s, 1980s, and 1990s are being modified, there is little doubt that we still live in an era that Robinson (1964) herself memorably dubbed (even before it occurred) “Pre-Keynesian theory [and policy] after Keynes.” Short-period real business cycle and long-period endogenous growth happenings are overwhelmingly analyzed by using representative agent models, where the representative agent is often a Ramsey maximizer. How Frank Ramsey would have squirmed to have seen his conception so grossly misplaced and misused. Even in its proper setting he was pretty scathing about it. in a letter to Keynes (26 June 1928), which he enclosed with his paper on a mathematical theory of saving for the Economic Journal, Ramsey (1928) wrote, “Of course the whole thing is a waste of time.” It had distracted him from “a book on logic [because] it [was] much easier to concentrate on than philosophy and the difficulties that arise rather [obsessed him]” (Keynes, 1983:784).

The overlap between these models and views of the world, and those which characterize the Post Keynesian approach, is little to non-existent. As Chari (1998) pointed out in his laudatory evaluation of the contributions of Robert Lucas, macroeconomics has never been the same since Lucas came upon the scene. (Whether it has improved or advanced is another matter.) I spoke recently to the World Conference of Social Economists who were meeting in Cambridge on what Marx and Keynes would have made of the last thirty years or so of

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