Review of Keynesian Economics

Contents:

**About the Journal**

Review of Keynesian Economics is indexed in the Clarivate Analytics Social Sciences Citation Index.

The Review of Keynesian Economics (ROKE) is dedicated to the promotion of research in Keynesian economics. Not only does that include Keynesian ideas about macroeconomic theory and policy, it also extends to microeconomic and meso-economic analysis and relevant empirical and historical research. The journal provides a forum for developing and disseminating Keynesian ideas, and intends to encourage critical exchange with other macroeconomic paradigms.

**Aims and scope**

It is widely recognized that economic crises can sometimes trigger enormous change, both with regard to economic theory and the politics of governance. Today, the global economy is struggling with the fall-out from the financial crash of 2008 and the Great Recession of 2007-09. The economic crisis that these events have generated, combined with the failure of the mainstream economics profession, has again put the question of change on the table.

With regard to the economics profession, it stands significantly discredited owing to its failure to foresee the recession and the financial crash; its repeated over-optimistic forecasts of rapid recovery; and lack of plausibility surrounding its attempts to explain events. Reasonable people do not expect economists to predict the daily movements of the stock market, but they do expect them to anticipate and explain major imminent economic developments. On that score the profession failed catastrophically, revealing fundamental theoretical inadequacies.

This intellectual failure has prompted us to launch the Review of Keynesian Economics. At a time of journal proliferation some may wonder about the need for another journal. We would respond there is a proliferation of journals but that proliferation is essentially within one intellectual paradigm. As such, it obscures the fact that the range of theoretical inquiry is actually very narrow. A journal devoted to Keynesian economics is therefore needed both to correct this narrowness and because events have once again confirmed the profound relevance of Keynesian theory.

Reflection upon the intellectual history of macroeconomics over the past seventy-five years can help to understand the current predicament and need for this new journal. That history traces an arc, which first saw the eclipse of classical macroeconomics by Keynesian macroeconomics, and then saw the eclipse of Keynesian macroeconomics by a revived and re-tooled classical macroeconomics.

The crisis associated with the Great Depression of the 1930s inspired John Maynard Keynes to write The General Theory of Employment, Interest and Money, a book that explained the persistence of unemployment in monetary economies. Keynes' theory had enormous influence both inside and outside the academy, and his ideas on the importance of effective demand triggered a remaking of macroeconomics that saw Keynesian theory displace classical macroeconomic theory. That displacement was driven by the failure of classical theory to account for the Depression and the corresponding explanatory success of Keynesian theory. Moreover, not only did Keynesian theory provide an explanatory framework, it also offered practical policy recommendations. After World War II, the Keynesian theoretical revolution inspired new policy thinking that contributed to a twenty-five year period of unprecedented prosperity, now widely referred to as “The Golden Age” of capitalism or “The Age of Keynes”.

From 1945 to the early 1970s, the global economy witnessed an unparalleled period of prosperity that came to an end with the collapse of Bretton Woods (1971), the first oil crisis (1973) and the stock market crash of 1973-74. During this period of almost three decades, the world enjoyed rapid growth, low unemployment and reduced inequality, making Keynesian policies a success by most measures.

However, adherents of classical macroeconomic theory never accepted the legitimacy of Keynesian economics and they forged a counter-revolution, centered upon the University of Chicago and the work of Milton Friedman. In the 1960s and early 1970s the counter-revolution took the form of monetarism, and thereafter it evolved into new classical macroeconomics. The intellectual link between monetarism and new classical macroeconomics was animosity to Keynesianism and a dogmatic predisposition to laissez-faire conclusions.

The counter-revolutionaries were successful in their project and recaptured control of macroeconomics in the late 1970s. Their success was driven by a range of factors including their own intellectual imagination and innovation, intellectual staleness among Keynesians; the Cold War, which promoted laissez-faire ideology; and inflation and political conflict triggered by income distribution conflicts fostered first by full employment and then by the oil shocks of the 1970s.

Most importantly, the counter-revolutionaries opportunistically exploited the intellectual confusions created by the oil supply shocks of the early 1970s. Those shocks unleashed a new supply-side phenomenon of stagflation, which the counter-revolutionaries asserted disproved Keynesian macroeconomics. In retrospect, we know those assertions were false and Keynesian theories of conflict inflation gave a good account of developments, but the dispiritedness of the late 1970s initiated an era of reaction, which included reaction in economics.

It is important to emphasize that the demise of Keynesian economics was not caused by profound logical flaws or lack of supportive empirical evidence. Keynesianism (and other paradigms too) was accused of lacking micro-foundations, when in reality it has always had micro-foundations but rejects micro-foundations predicated on the implausible assumptions of homo economicus and Walrasian characterization of market processes. That Walrasian characterization fundamentally misrepresents economic reality, assuming the existence of institutions that do not exist (i.e. the auctioneer) and ignoring institutions that do exist (i.e. money and money contracting). In doing so, it ignores the macro-foundations that for Keynesians are the twin of micro-foundations.

The inflationary pressures of the 1970s, with the concomitant rise of conservatism in the form of the Reagan-Thatcher movements, were instrumental in the revival of classical macroeconomics and the repression of Keynesian economics. These forces have now waned but they have locked-in a legacy that is hard to reverse. That is because notions such as the natural rate of unemployment are entrenched in macroeconomics discussions and, most importantly, in teaching manuals.

The consequences of the return of classical macroeconomics have been enormous. For society it has entailed an era of neoliberal policy dominance that has contributed to wage stagnation and massive income inequality, which is significantly responsible for the Great Recession and the prospect of stagnation. Economic theory and politics often march hand-in-hand, with theory reinforcing politics and politics reinforcing theory. Together, they both drive policy, making economic theory vitally important for society.

In the end, economic theory is a contested terrain that is fought over by different intellectual tendencies, which may reflect different political and ethical values. In the years after World War II Keynesianism was ascendant, but since the late 1970s classical macroeconomics has been ascendant. Such ebbs and flows are reasonable, and even desirable, in an open society. However, what troubles us is that the period of classical re-ascendance has been characterized by what we think is a closing and monopolization of intellectual space, whereas the period of Keynesian ascendancy was marked by intellectual pluralism.

This closing of economics is significantly attributable to the laissez-faire ideological predispositions of new classical macroeconomics. It has also has been driven by economists' disdain for epistemological concerns, which has fostered intellectual intolerance and over-reach. Competing theoretical paradigms have been framed inappropriately in terms of truth versus error, a frame that inevitably drives exclusion of the paradigm labeled as being in error. This framing is supported by an erroneous belief that science produces a single true answer. Much vaunted mathematical rigor is built on conceptual narrowness and sloppiness, and the use of math is as much a rhetorical device for selective screening of ideas as it is for exploring the logical coherence of ideas.

These flawed practices have distorted the academy, and in doing so have had profoundly negative consequences for society. That concerns us in our dual identities as professional economists and citizens, and it is this concern that motivates the founding of the journal.

As the name signals, the journal promotes research in a particular paradigm -- the Keynesian paradigm. We make no apologies for this. Journals on international economics promote research in international economics: journals on finance promote research in financial economics. We have no objection to journals promoting particular types of economic research or thinking. What we object to is general-purpose and field journals only permitting research in a particular paradigm.

This journal is about Keynesian economics – without any qualifying adjective or prefix. Our aim is to encourage research and discourse in Keynesian economics – be it old Keynesianism, fundamental Keynesianism, neo-Keynesianism, Post Keynesianism, Sraffian Keynesianism, Kaleckian Keynesianism, or Marxist Keynesianism. The journal is open to all forms of Keynesianism, which we define as (1) holding that output and employment are normally constrained by aggregate demand, (2) holding that the problematic of aggregate demand shortage exists independently of price, nominal wage, and nominal interest rate rigidities, and (3) rejecting the claim that the real wage is equal to the marginal disutility of labor.

This openness to all forms of Keynesianism reflects a desire to avoid intellectual sectarianism, which we think has afflicted past Keynesian discourse. In our view, circumstance and ability certainly contributed to the success of the classical macroeconomics counter-revolutionaries, but so too did intellectual and sociological failure among Keynesians. Their tendency to apply arbitrary litmus tests and engage in intellectual sectarianism did a disservice to their project, and in doing so did disservice to society. We want to avoid repeating that history.

The contract with the journal publisher, Edward Elgar, was signed in 2011. We, the founding editors, are very happy with this timing as 2011 marked the seventy-fifth anniversary of Keynes' General Theory. The founding of the Review of Keynesian Economics is a fitting tribute and celebration of this anniversary. It is also part of the deeper response needed to meet these challenging economic times.

The journal is dedicated to the development of Keynesian theory and policy. In our view, Keynesian theory should hold a similar place in economics to that held by the theory of evolution in biology. Many individual economists still work within the Keynesian paradigm, but intellectual success demands institutional support that can leverage those individual efforts. The journal offers such support by providing a forum for developing and sharing Keynesian ideas. Not only does that include ideas about macroeconomic theory and policy, it also extends to microeconomic and meso-economic analysis and relevant empirical and historical research. We see a bright future for the Keynesian approach to macroeconomics and invite the economics profession to join us by subscribing to the journal and submitting manuscripts.

Statement of the Co-Editors

**The Godley-Tobin Lecture**

The Review of Keynesian Economics (ROKE) is honored to announce the creation of the Godley-Tobin lecture, an annual lecture to be delivered at the Eastern Economic Association meetings.

Wynne Godley and James Tobin represent the best among Keynesian economists. Both scholars insisted they were non-hyphenated Keynesians, meaning Keynesianism transcends the political disputes that often accompany economics. There is a deeper scientific validity to Keynesianism, something we reaffirmed in our inaugural statement of purpose for ROKE [see Palley, Rochon, and Vernengo, 2012].

Wynne Godley was an Oxford-trained economist, influenced by Philip Andrews and the views of the Oxford Economic Research Group on full-cost pricing. He was also a Treasury economist and Head of the Department of Applied Economics, University of Cambridge. He is remembered for the sophistication of his stock-flow consistent macroeconomic models that gave him a prescient sense of the unsustainability of the dot.com and housing bubbles in the 1990s and 2000s. Godley died in May, 2010.

James Tobin was educated at Harvard University and spent most of his career at Yale University. He was also a member of the celebrated Council of Economic Advisers (1961-62), during the Kennedy administration. His accomplishments and contributions to the profession are too many to cite, but it is specifically worth mentioning that he won both the John Bates Clark Medal (1955) and the Nobel Memorial Prize in Economic Sciences (1981). Tobin died in March, 2002.

Tobin and Godley shared an interest in stock–flow consistent macroeconomic modelling, a belief in the appropriateness of macroeconomic modelling based on aggregate functions rather than microeconomic parable models, and a belief in the importance and feasibility of full employment.

The Godley-Tobin lecture is intended to celebrate the intellectual achievements of Wynne Godley and James Tobin. We also hope the lectures will contribute to advancing their macroeconomic approach and interests, and help rescue macroeconomics from the narrow theoretical frame within which it is currently trapped.

2022 Godley-Tobin Lecture

As editors of ROKE, we are pleased to announce that Professor Paul Krugman has agreed to give the 2022 Godley – Tobin Lecture. Professor Krugman is Distinguished Professor of Economics at the Graduate Center of the City University of New York. He has also taught at MIT, Princeton University, and Yale University. Like James Tobin, Professor Krugman was awarded the Nobel Memorial Prize in Economics (2008) and the American Economics Association’s John Bates Clark Medal (1991).

Professor Krugman’s work has focused on international economics and macroeconomics. He is a prominent American public intellectual who is widely recognized for his regular column in The New York Times.

The title of Professor Krugman’s lecture is “The enduring relevance of Tobinomics”. 

The lecture will be held at Bucknell University, Lewisburg, PA on April 20, 2022, at 5.00pm and it will also be live streamed.

Past Godley-Tobin Lectures

2021 – Professor Marc Lavoie. “Godley versus Tobin on Monetary Matters”.

2020 – Professor Robert Shiller: “Animal Spirits and Viral Popular Narratives”

2019 – Professor Robert Rowthorn: “Keynesian Economics: Back from the Dead?” (available to watch here)

2018 – Professor James Galbraith: “A Global Macroeconomics–yes, Macroeconomics, Dammit–of Inequality and Income Distribution”

Thomas Palley, Esteban Pérez Caldentey and Matías Vernengo
Co-editors of ROKE

References

Palley, T.I., Rochon, L.-P., and Vernengo, M. "Economics and the economic crisis: The case for change," Review of Keynesian Economics, 1 (Autumn 2012), 1 – 4.

 

Contents:

**Editorial Team**

Co-Editors

  • Thomas Palley, Founding Editor Washington, DC, USA
  • Matías Vernengo, Founding Editor Bucknell University, US
  • Esteban Pérez Caldentey Financing for Development Unit, ECLAC, Chile Editor

Editor Emeritus

  • Louis-Philippe Rochon, Founding Editor Laurentian University, Canada

Editorial Board

  • José Antonio Ocampo, Colombia
  • Philip Arestis, UK
  • Nelson Barbosa, Brazil
  • Robert Blecker, USA
  • Peter Bofinger, Germany
  • Luiz Carlos Bresser-Pereira, Brazil
  • Robert Dimand, Canada
  • Sebastian Dullien, Germany
  • Amitava K. Dutt, USA
  • Barry Eichengreen, USA
  • Gerald Epstein, USA
  • Steve Fazzari, USA
  • Jayati Ghosh, India
  • Ilene Grabel, USA
  • John E. King, Australia
  • Marc Lavoie, Canada
  • Ian Mcdonald, Australia
  • Robert Pollin, USA
  • John Quiggin, Australia
  • Bob Rowthorn, UK
  • Peter Skott, Denmark
  • Robert M. Solow, Nobel Laureate in Economics 1987, USA
  • Lance Taylor, USA
  • Anthony P. Thirlwall, UK

**Associate Editors**

  • Martín Abeles, Economic Commission for Latin America and the Carribean, Argentina
  • Joerg Bibow, Skidmore College, USA
  • Julia Braga, Federal Fluminense University, Brazil
  • Laura Carvalho, University of São Paulo, Brazil
  • Thomas Dallery, Université du Littoral Côte d'Opale, France
  • Ariel Dvoskin, Central Bank of Argentina (BCRA) and National Scientific and Technical Research Council (CONICET), Argentina
  • Fabio Freitas, Federal University of Rio de Janeiro
  • Daniela Gabor, University of the West of England, UK
  • Daniele Girardi, University of Massachusetts Amherst, USA
  • Aleksandr V. Gevorkyan, The Peter J. Tobin College of Business, St. John's University, USA
  • Eckhard Hein, Berlin School of Economics and Law, Germany
  • Aninna Kaltenbrunner, University of Leeds, UK
  • Y.K. Kim, University of Massachusetts Boston, USA
  • Karsten Kohler, Leeds University Business School, University of Leeds, UK
  • Dany Lang, University Sorbonne Paris Nord, France
  • Emiliano Libman, Centro de Estudios de Estado y Sociedad (CEDES), Argentina
  • J.W. Mason, John Jay College, City University of New York, USA
  • Gabriel Mathy, American University, USA
  • Jo Michele, University of the West of England, UK
  • Gary Mongiovi, St John's University, USA
  • Michalis Nikiforos, University of Geneva, Switzerland
  • Maria Nikoladi, University of Greenwich, UK
  • Jose Luis Oreiro, Universidade de Brasília, Brazil
  • Antonella Palumbo, Roma Tre University, Italy
  • Ricardo Pariboni, University of Siena, Italy
  • Ignacio Perrotini Hernández, Universidad Nacional Autonoma de Mexico, Mexico
  • Jean-Francois Ponsot, University Pierre Mendès France, Grenoble, France
  • Codrina Rada, University of Utah, US
  • Arslan Razmi, University of Massachusetts Amherst, USA
  • Stephanie Seguino, University of Vermont, USA
  • Franklin Serrano, Federal University of Rio de Janeiro, Brazil
  • Mark Setterfield, New School for Social Research, USA
  • Ricardo Summa, Federal University of Rio de Janeiro, Brazil
  • Engelbert Stockhammer, Kingston University, UK
  • Daniele Tavani, Colorado State University, USA
  • Jan Toporowski, The School of Oriental and African Studies, University of London, UK
  • Leonardo Vera, Universidad Central de Venezuela, Venezuela
  • Takashi Yagi, Meiji University, Japan
  • Gennaro Zezza, Università di Cassino e del Lazio Meridionale, Italy

**Author Submissions**

Call for Papers and Author Guidelines

ROKE adheres to a double-blind review process. The editors are looking for research-quality papers on a wide variety of topics in economics and political-economy. Articles should be sent by email, and should not be more than 8,000 words, including references and bibliography.

Submissions and editorial queries should be sent to Thomas Palley (mail@thomaspalley.com). All submissions should be in Adobe PDF format. Authors should send a title page with abstract and author affiliation & contact information, plus an anonymous manuscript without author information or thanks to colleagues. Final accepted articles will be delivered in Word. Book reviews should be sent to Matías Vernengo (mv587062@gmail.com).

Style/Submissions Guide

Article manuscripts should be prepared in accordance with our house style guidelines: ROKE Guidance

The final version of your article should be accompanied by a completed copy of the Author Information Form: ROKE Information Form

Terms of Publication

If your article is accepted for publication, you will be asked to sign our standard License to Publish form: ROKE Contributor Agreement