Keynes, Uncertainty and the Global Economy
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Keynes, Uncertainty and the Global Economy

Beyond Keynes, Volume Two

Edited by Shelia C. Dow and John Hillard

The revival of interest in Keynesian economics since the late 1980s reinstates the importance of Keynes’s contribution to economic theory and policy. This is the second of two volumes in which authoritative contributions are presented by an outstanding group of international experts to celebrate Keynesian economics, and to review and further the developments of post Keynesian economics of recent years.
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Chapter 5: A Post Keynsian approach to the theory of the firm

Beyond Keynes, Volume Two

Stephen P. Dunn

Extract

5. Some elements of a Post Keynesian labour economics John E. King1 I INTRODUCTION When, some years ago, I tried (unsuccessfully) to articulate a Post Keynesian labour economics, I attributed my failure to the neglect of this branch of economics by Post Keynesian theorists, who had for the most part left criticism of neoclassical labour theory to radical political economists and institutionalists (King, 1990: 2–4, 236; cf. Sawyer, in King, 1995: 147–8). This is certainly an important part of the story, but I should have realized then (what is obvious now) that there are two further serious difficulties. The first is posed by the existence of a major division within the Post Keynesian ranks on the question of marginal productivity. This is associated with, but by no means identical to, the cleavage between ‘Fundamentalist Keynesians’ and Kaleckians, which in this context reduces to acceptance or rejection of Marshallian ‘microfoundations’.2 The correspondence is not complete, as, while many Kaleckians will have no truck with marginalism, others are prepared to allow the marginal product of labour some limited role in wage and employment determination in the short period (Rothschild, 1954; Riach, in King, 1995: 117–18; Riach, 1995). The consensus on basic principles which characterizes neoclassical labour economics is simply lacking among Post Keynesians. If anything, the second problem is even more serious. The raw material of labour economics is predominantly ‘micro’, while Post Keynesian theory is essentially macroeconomic. There are whole areas of applied microeconomics (the environment; transport;...

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