A Post-Keynesian Perspective
Chapter 6: Equilibrium and Path-dependence from a Perspective of Uncertainty
I should, I think, be prepared to argue that, in a world ruled by uncertainty with an uncertain future linked to an actual present, a final position of equilibrium, such as one deals with in static economics, does not properly exist. (CWK, XXIX: 222, in a letter to H.D. Henderson, May 1936) PROLOGUE: ‘A LONG STRUGGLE OF ESCAPE’ This chapter covers an important methodological aspect of the macroeconomic discussion that began in 1936. As mentioned in the introductory chapter, there is a crucial, methodologically-based dividing line that runs through the history of macroeconomic theory and which defines the various schools of macroeconomic theory. It is the evaluation of whether an empirically anchored macroeconomic system can be analysed by using the general equilibrium method. This is an important dividing line on the analytical level (World 2). There are many reasons for this, reasons that have been explored in a vast quantity of macroeconomic literature since 1936. Not all the authors of these numerous books and articles have explicitly made clear that this fundamental question has been and still is a very crucial undercurrent in the debate between the orthodox and the heterodox macroeconomists. If they had, fewer bookshelves might have been needed (and much shadow boxing could have been avoided). In all fairness, it should be mentioned that it is only within the past 20–30 years that it has become clearer that there is such a methodological gulf separating the two positions. This is a comprehension process for which the...
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