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Keynes, Uncertainty and the Global Economy

Beyond Keynes, Volume Two

Edited by Shelia C. Dow

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 11: Keynes, Post Keynesians and methodology

Sheila C. Dow


Sheila C. Dow I INTRODUCTION The purpose of this chapter is to address the judgment expressed by some that, while Keynes made valuable contributions to the development of economic theory, those contributions are subsumed in more technically advanced modern theory. In comparison, Keynes’s economic theory is limited by the narrower range of theoretical techniques available at the time. This judgment tends to be embedded in the broader methodological position that economics, by and large, progresses over time, and technical advance is part of that process. The implication is, therefore, not only that subsequent theoretical developments are an improvement on Keynes, but that not much will be gained by considering earlier (by definition less developed) stages of thought. This chapter questions the argument that, in itself, technical advance has allowed macroeconomic theory to supersede the economics of Keynes. It is argued that such a judgment should address the methodological shift which has occurred in macroeconomics, along with technical change, from an open-system approach to a closed-system approach. The logic of Keynes’s methodology, which is carried forward in Post Keynesian economics, requires that the scope of application of formal techniques in general, and the choice of a closed-system methodology in particular, be justified in terms of the nature of the subject matter. The focus of the chapter is thus to question the notion that technical progress in economics is methodologically neutral. The argument rests on an understanding of Keynes’s methodology as differing from the methodology underlying many of those...

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