Academic journal article Review of Social Economy

The "Closure" Assumption as a First Step: Neo-Ricardian Economics and Post-Keynesianism

Academic journal article Review of Social Economy

The "Closure" Assumption as a First Step: Neo-Ricardian Economics and Post-Keynesianism

Article excerpt

I. INTRODUCTION

The position of neo-Ricardian economics(1) remains controversial. Specifically, there is significant debate regarding the extent to which neo-Ricardianism can be incorporated within a coherent Post-Keynesian perspective. Related to this, though as a prior concern, is the question of whether coherence in Post-Keynesian economics is achievable on any conception. While some authors express misgivings regarding the search for coherence(2) others claim that an adequate account of Post-Keynesian economics can be identified at a substantive level.(3) But the argument that appears to have gained most ground is that coherence must rather be located at a methodological or philosophical level and specifically rooted in a common adherence to critical realism. Lawson (1994), in particular, suggests that if anything can render intelligible the most important nominal features of Post-Keynesian economics, including its opposition to orthodoxy, relative openness toward methodological reflection, emphasis upon institutions and historical processes, and sensitivity to agents' own conceptions and their expectations, then it must be something like a shared commitment to a broadly critical realist perspective.(4) Much of the time neo-Ricardian authors appear to share a similar set of concerns. They repeatedly emphasize the importance of history, the role of social institutions and express a deep rooted distrust of orthodox economics.(5) But, despite such apparent correspondences, one discerns within Post-Keynesianism a continuing sense of disquiet regarding neo-Ricardian economics. That is to say the Post-Keynesian-neo-Ricardian relationship appears to represent a longstanding puzzle within this literature.(6) It is significant to note that Lawson, when elaborating the key characteristics of Post-Keynesianism, consciously sets to one side neo-Ricardian economics. This strategy is defended precisely on the basis that the relationship between neo-Ricardianism and Post-Keynesianism constitutes a highly contested issue. Lawson writes:

If coherence within Post-Keynesianism cannot be found amongst those features that appear to be widely agreed upon by Post-Keynesians, then the inclusion of controversial features is unlikely to change matters. Alternatively, if coherence can be brought to, or found within, the agreed features, it should then be that much easier to assess whether, conditional upon coherence being required, those features not considered here do, or could, or should not, etc., belong.

(1994: 506)

In this paper I indicate how anchoring Post-Keynesianism within critical realism does serve to clarify its relationship with neo-Ricardian economics. Specifically in adopting this strategy, I not only outline a suitable criterion for assessing whether neo-Ricardian economics belongs within a coherent Post-Keynesianism but also provide an account which renders intelligible the noted continuing uncertainty expressed by Post-Keynesians on whether to embrace neo-Ricardianism. The paper is structured as follows. In section II I briefly review the arguments, central to Lawson's thesis, that

1 orthodoxy must be characterized by its method (rather than any substantive claim), and in particular by its (unquestioning) acceptance of deductivism, and

2 that Post-Keynesian coherence lies in its adopting a non-deductivist perspective along the lines of critical realism.

In section III I argue that neo-Ricardianism remains tied to deductivism, indicating that it underpins the main theoretical contributions of its proponents, and is fairly explicit in their general methodological reflections. My conclusion, set out in section IV, is that neo-Ricardianism cannot sustain the, albeit often hesitant, moves toward critical realism typical of Post-Keynesianism but rather must, ultimately, be seen as constrained in the manner of orthodox approaches.

II. CRITICAL REALISM, DEDUCTIVISM, AND CLOSURE

In considering whether neo-Ricardianism belongs within a coherent Post-Keynesian economics, and in attempting to make sense of the continuing puzzle surrounding the relationship between neo-Ricardianism and Post-Keynesianism, my contention is that it is useful to turn to the recent methodological literature and in particular to a set of contributions systematized as critical realism. …

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