The Structure of Post-Keynesian Economics: The Core Contributions of the Pioneers
Harcourt, G. C., History of Economics Review
Abstract: This paper summarises the key elements of Geoffrey Harcourt's (2006) book of the same title. Special emphasis is given to the contribution of the Cambridge pioneers, such as John Maynard Keynes, Richard Kahn, Joan Robinson, Nicholas Kaldor, Michal Kalecki, Richard Goodwin, Piero Sraffa, Luigi Pasinetti, and Dennis Robertson. The objective of their approaches is to comprehend the dynamics of an advanced capitalist economy, particularly in the context of a monetary system of production. Here, investment leads and saving follows, while the marginal propensity to save of capitalists is greater than that of workers. The economic surplus is produced in the consumption goods sector, and utilised in the capital goods sector. Mark-up pricing is important for the determination of the surplus, as is the trade off between profit-margins and sales. Kalecki's principle of increasing risk plays a role in the cyclical dynamics, as does the two-sided relationship between profitability and accumulation. The prevailing business climate is important in determining future expectations, while endogenous money and credit help to finance investment. Growth is thus endogenous in these models of finance, accumulation and profit, while potential conflict plays a role in the pricing and investment decisions and in the process of inflation. A general policy vision emanates from these foundations.
I start, first, by thanking the original inhabitants of the land on which we are now meeting for their courtesy in having us as their guests. Secondly, I must apologise to Peter Groenewegen and John King as they have already heard me talking on the present topic at the ESHET Conference in Porto in April 2006. Also, following John King's comments as discussant of the paper at Porto (I thoughtfully lent him the page proofs of the book on which the paper was based, Harcourt (2006), to read on the day the paper was presented), I feel I should have subtitled the book, The Core Contributions of the Cambridge Pioneers. But, as I quote Dennis Robertson in the Preface to the book as saying, 'it can't be helped now' (Robertson 1957, p. 7).
When writing the book, I had in mind two sets of readers: first, undergraduate and graduate students who may be looking for alternative approaches to thinking about theoretical, applied and policy issues in economics. By presenting a structure of the thought (and its origins) that I have found so helpful over my working life I hope at least to interest and possibly even enthuse this first set. Second, I also hope that what I have written may interest teachers and researchers in economics, not so much perhaps for the details of the analysis, with which many would be familiar, but for the way in which one person at least sees the interconnections and interrelationships that have emerged as our discipline has evolved and developed.
The ideas in the book themselves have evolved and developed for me over the past fifty years, in both lectures and research. My model is not exactly Dennis Robertson's three volumes of Lectures on Economic Principles in Cambridge (1957, 1958, 1959); but I suppose it has something in common with them, even with his admission that 'if it is all wrong, it can't be helped now' (Robertson 1957, p. 7). I trust, though, that I have not written in quite so querulous a tone as that into which Robertson sometimes lapsed, for I remain, as ever, a happy and enthusiastic, even optimistic, person who nevertheless is willing to admit that he may be wrong.
I wrote the first draft of the Preface in April 2005, in the fiftieth year since I first came to Cambridge in September 1955. Half my working life has been spent here (the other half in Adelaide, most happy years) and I count myself most fortunate to have studied and taught in such a stimulating and satisfying, even if sometimes so cantankerous an environment.
Much more than this, though, in 2005 Joan and I celebrated our Golden Wedding anniversary on 30th July. …