New Keynesian Economics/Post Keynesian Alternatives

New Keynesian Economics/Post Keynesian Alternatives

New Keynesian Economics/Post Keynesian Alternatives

New Keynesian Economics/Post Keynesian Alternatives


Leading post Keynesian economists challenge new Keynesianism both on the grounds that it is not Keynesian, and does not provide an adequate account of our current economic problems.


It is a pleasure and a privilege to write a Foreword to Roy Rotheim’s volume on New Keynesian Economics/Post Keynesian Alternatives. I have known Roy since he was a graduate student and have noted with sustained admiration his range of scholarship, sound judgement and fine analytical abilities. I also know personally most of the contributors to the volume, and their writings, and for them too I have much respect. What inspires them all is their thorough understanding of both the economy and Keynes’s interpretation of it. So the contributors are not expressing mere piety sixty years on from the publication of The General Theory and fifty years on from the death of Keynes; rather, it is that they recognize deep insights when they see them and want to build on the basis of those insights. To do so not only means making the positive contributions to theory and policy which characterize this volume but also requires the need to criticize error, no matter how well intentioned the perpetrators of it.

Thus, the New Keynesian theories are criticized because they are a thorough misnomer. They are based on a misinterpretation of Keynes which has disastrous consequences for understanding and policy. That Keynes-type results in the economy emanate from price-stickiness is a howler in two senses: it is a false reading of The General Theory and, more importantly, of how the economy actually works. If we are ever to get a just, equitable and efficient society, policies which try to increase the flexibility of markets are exactly the wrong ones to propose—that way lies greater instability, crisis and ultimately chaos. the essays in this collection are therefore greatly to be welcomed as an offset to this highly influential but misleading school of thought. the essays show the value of knowing what the really great in the profession actually said and, even more important, what the economy itself is able to tell us.

Now read on.

G. C. Harcourt


March 1997 . . .

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