Heterodox Analysis of Financial Crisis and Reform

Heterodox Analysis of Financial Crisis and Reform

History, Politics and Economics

Edited by Joëlle Leclaire, Tae-Hee Jo and Jane Knodell

Though the worst of the financial crisis of 2008 has, with hope, ebbed, it has forever changed the economy in the United States and throughout the rest of the world. Using the financial and economic crisis as a catalyst, this volume examines how to better regulate the financial system and what to expect in the future if no steps are made toward reform. This book lays the foundation for those steps by providing concrete ideas that will push policy in the direction of jobs growth and widespread prosperity.

Chapter 6: Sismondi, Marx and Veblen: Precursors of Keynes

John F. Henry

Subjects: economics and finance, financial economics and regulation, institutional economics, post-keynesian economics


John F. Henry INTRODUCTION This chapter addresses the relationship of three precursors of John Maynard Keynes, Simonde de Sismondi, Karl Marx and Thorstein Veblen, to the theoretical position advanced in The General Theory of Employment, Interest, and Money (hereafter GT). Before proceeding, a small caveat is in order. I do not argue that Sismondi, Marx, Veblen and Keynes shared the equivalent general theory in their respective analyses of a capitalist order. In most respects, Marx and Veblen delved much more deeply into this social order than did Keynes, thus, drawing out more clearly various underlying relationships. There is probably one very good reason for the greater profundity of Marx and Veblen in particular. Both were not only critical of capitalist society, but also wanted to see it destroyed and replaced by a quite different social order that was claimed to be superior to capitalism. To achieve such an end required a more or less ‘complete’ examination of capitalist society. Keynes’s objective was of a smaller order of magnitude. While he certainly was critical of various features of capitalism, his program was basically to save capitalism from itself. And this requires less of a general theory than that of a Marx or a Veblen. For some secondary literature that examines some of the relationships that I want to discuss here, see Fan-Hung (1939), Kregel (1980), Wray (2007), Mouhammed (1999) and Sardoni (1987). THE MAIN RELATIONSHIPS: MARX, VEBLEN, KEYNES Marx, Veblen and Keynes are ‘embedded’ theorists. They saw the economy integrated in...

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