Keynes’s Macroeconomics Rethought
Appendix: False novelties
John Maynard Keynes proposed an economic theory fundamentally different from those of the Classicals and the neoClassicals. In his sustained use, however, of a basic set of terms known to his predecessors, little difference is to be found; his was a vocabulary composed of virtually the same words of either one or the other school: equilibrium, production, competition, market clearing, the monetary economy, and many others. There is nonetheless much that is distinct in the respective meanings of some of these concepts. Again, there is a lot which is not so different in the understanding of the premises of their theories: the laws of supply and demand, of marginal productivity, utilization of cost–benefit analysis (profit maximization, cost minimization), the quantity theory of money, and so on. Nonetheless, the key premises regarding society’s macroeconomic goals and the motivation and rationality of the behaviour governing decision-making are, however, different. How different was Keynes’s methodology,1 by which we mean the way he went about showing what he wanted to show and what purpose he gave to his theorizing? It is not so much a general awareness of scientific objectivity in his methodology, through its use of mathematics or probability, which made it different, but Keynes’s theorizing of decision-making around expectations2 and uncertainty, which called for a unique notion of probability, his concept of non-numeric, non-comparable probabilities. Keynes’s theory had a particular approach to the study of production and market mechanisms, in relation to the spontaneity of supply and demand in the...
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