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Keynes and Macroeconomics After 70 Years

Keynes and Macroeconomics After 70 Years

Critical Assessments of The General Theory

Edited by L. Randall Wray and Matthew Forstater

In this substantial new collection, esteemed Post-Keynesian scholars reassess the relevance of Keynes’s The General Theory to a broad array of topic areas, ranging from the environment, investment finance, exchange rates, and socialism, as well as inquiries into general Post-Keynesian theory.

Chapter 1: Heterodox Macroeconomics: What, Exactly, Are We Against?

John E. King

Subjects: economics and finance, post-keynesian economics


John E. King* INTRODUCTION In his review of my History of Post Keynesian Economics Since 1936 (King 2002), Bradley Bateman claims that I, and other heterodox macroeconomists, are attacking a straw man: [W]hy does he not ask hard questions, such as why behavioural macroeconomics and behavioural finance have flourished in the wake of the stock market’s collapse, while post-Keynesians are largely ignored? . . . Apart from an occasional aside that mainstream economics has become ever more technical, there is little (or no) recognition that mainstream economics (whatever that hoary term might mean) is not today what it was forty years ago. (Bateman 2004, p. 582) A similar charge is implicit in David Colander’s extensive writings on ‘Post Walrasian’ (more recently, ‘cutting-edge’) economics, in which ‘the old neoclassical orthodoxy, which we describe as an approach based on a holy trinity of rationality, greed, and equilibrium, is in the process of being replaced with a new orthodoxy, which can be described as an approach based on a holy trinity of purposeful behaviour, enlightened self-interest, and sustainability’ (Colander et al. 2004, p. viii). Those who continue to attack neoclassical economics, on this account, are badly behind the times. This argument needs to be taken seriously by all heterodox macroeconomists. Even if it proves to be entirely wrong it can do great damage, as a familiar historical example will confirm. In the early 1970s, Frank Hahn attempted to dismiss the importance of the Sraffa–Robinson critique of neoclassical capital theory by claiming that...

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