Edited by Jesper Jespersen and Mogens Ove Madsen
Chapter 2: The economist who mistook his model for a market
Can we expect Post Keynesian economics to be embraced and taught in mainstream academia? If ever there were a compelling case for Post Keynesian economics in both theory and policy it would be now in light of the anemic recovery in the global recession of 2007–9 and the levels of high unemployment that have persisted long after that recession was to have ended officially. Interventionist policies during that recession were, however, too late and too little, hampered by an antipathy among policy makers toward such policies. At one level removed there was also a corresponding economic mainstream view based on closed system thinking – predicated on the impossibility of economic fluctuations for the economy as a whole – that admitted to no theoretical basis for lending support to these policies. In the place of expansionary fiscal and monetary policies that were put into force we are now seeing a call for a return to economic growth by the traditional policies of fiscal austerity and monetary restraint. The persistently high and prolonged unemployment world-wide is deemed to be structural, not remediable by interventionist monetary or fiscal policies.
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