Joan Robinson argued that it is the task of Post-Keynesians to reconcile the work of Keynes and Sraffa. The central difficulty is to reconcile equilibrium with uncertainty and the solution lies within Keynes’s distinction between short-, medium- and long-term expectation and furthermore between the long term and the technical long period. Recognition that the ‘expectations’ of Keynes’s state of short-term expectation are equilibrium prices, in a carefully defined and qualified sense, makes it possible to replace his Marshallian concept of normal prices with Sraffa’s prices of production. There is a definite case for seeking to recast the principle of effective demand without the Marshallian theory of value. The task is to achieve this without losing either an empirically useful concept of equilibrium or the concept of fundamental uncertainty.
Giuseppe Fontana, Mark (M.G.) Hayes and Jonathan Perraton
The contributions in this special issue on inflation targeting were presented at the Spring Seminar of the Post Keynesian Economics Study Group (PKSG) held at Balliol College, Oxford (UK) in April 2008. PKSG was founded in 1988 by Philip Arestis and Victoria Chick. The purpose of the Study Group (now formally a professional association) is to encourage collaboration among scholars and students of Post Keynesian economics, defined broadly as economics centred on the principle of effective demand. A detailed account of the history of PKSG can be found in Hayes (2008).