Edited by Paul Davidson
Chapter 10: Full employment policies must consider effective demand and structural and technological change: a prime point of Pasinetti's political economy
10. Full employment policies must consider eﬀective demand and structural and technological change: a prime point of Pasinetti’s political economy Mathew Forstater After Keynes and Sraﬀa, heterodox political economy has taken several diﬀerent lines of development. Some, especially American post Keynesians such as Davidson, Minsky and their followers, have elaborated Keynes’s emphasis on the role of money and ﬁnance and the uncertainty of investor expectations, and its implications for aggregate eﬀective demand and the determination of aggregate employment. The relative inattention of the American post Keynesians to issues of structural and technological change and the implications of the theory of value and distribution for the theory of output and employment in the economy as a whole reﬂects The General Theory, where Keynes ignored technology and perhaps himself never ‘fully escaped’ the marginalist approach to value and distribution. Other heterodox economists have focused on one or the other of Sraﬀa’s ‘negative’ and ‘positive’ contributions. The former regards the critique of the neoclassical (or marginalist) theory of value and distribution, the latter the revival of classical and Marxian approaches to the same topic. Both of these projects have been the focus of neo-Ricardian (or Sraﬃan) political economists. For the most part, Sraﬃans have paid relatively little attention to money and uncertainty on the one hand, and technical change on the other, while considerable attention has been paid to eﬀective demand, in particular the attempt to reconcile the principle with Sraﬃan price theory...
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