Challenging the Supply-side Vision of the Long Run
Edited by Mark Setterfield
Chapter 9: Longer-run Aspects of Kaleckian Macroeconomics
9. Longer-run aspects of Kaleckian macroeconomics Tracy Mott1 INTRODUCTION The significance of Ôlonger-runÕ factors was soon appealed to as a counter to the conclusions of ÔKeynesianÕ macroeconomics following the publication of J.M. KeynesÕs General Theory in 1936. The first major use of such was by A.C. Pigou (1943). The idea that money wage and price-level changes would eventually occur in response to aggregate demand effects on output and employment was well acknowledged by Keynes. What Keynes denied that Pigou sought to demonstrate was that money wage or price-level movements are capable of restoring the full employment level of output in an economy. PigouÕs argument was never championed as a device that would continuously maintain full employment, and many economists who found the logic of the argument convincing held that its workings would require too long a time for it to have practical significance. Coupled with the notion of the stability of the demand for money, however, ÔmonetaristsÕ, led by Milton Friedman, posited that the return to a level of output consistent with the Ônatural rateÕ of unemployment would occur soon enough as to make the use of activist demand-management policies pointless and perhaps even destabilizing.2 The occurrence of price inflation at levels of unemployment thought to be significantly above full employment in the industrialized capitalist economies in the 1970s was taken by many as supportive of this view. Most macroeconomists were willing to agree that in the Ôlong runÕ, aggregate output and employment are determined by the supplies...
You are not authenticated to view the full text of this chapter or article.
Elgaronline requires a subscription or purchase to access the full text of books or journals. Please login through your library system or with your personal username and password on the homepage.
Non-subscribers can freely search the site, view abstracts/ extracts and download selected front matter and introductory chapters for personal use.
Your library may not have purchased all subject areas. If you are authenticated and think you should have access to this title, please contact your librarian.