Post-Keynesian economics

Post-Keynesian economics
[1]
is a school of economic thought with its origins in The General Theory of John
Maynard Keynes, although its subsequent development was influenced to a large degree by Micha
Kalecki, Joan Robinson, Nicholas Kaldor and Paul Davidson. Keynes's biographer Lord Skidelsky writes that the
Post Keynesian school has remained closest to the spirit of Keynes's own work.
[2][3]

Introduction
The term post-Keynesian was first used to refer to a distinct school of economic thought by Eichner and Kregel
(1975)
[4]
and by the establishment of the Journal of Post Keynesian Economics in 1978. Prior to 1975, and
occasionally in more recent work, post-Keynesian could simply mean economics carried out after 1936, the date
of Keynes's The General Theory.
[5]

Post-Keynesian economists are united in maintaining that Keynes's theory is seriously misrepresented by the
two other principal Keynesian schools: neo-Keynesian economics which was orthodox in the 1950s and 60s
and by New Keynesian economics, which together with various strands of neoclassical economics has been
dominant in mainstream macroeconomics since the 1980s. Post-Keynesian economics can be seen as an
attempt to rebuild economic theory in the light of Keynes's ideas and insights. However even in the early years
Post Keynesians such asJoan Robinson sought to distance themselves from Keynes himself and much current
post-Keynesian thought cannot be found in Keynes. Some Post Keynesians took an even more progressive
view than Keynes with greater emphases on worker friendly policies and re-distribution. Robinson, Paul
Davidson and Hyman Minsky were notable for emphasising the effects on the economy of the practical
differences between different types of investments in contrast to Keynes more abstract treatment.
[6]

The theoretical foundation of post-Keynesian economics is the principle of effective demand, that demand
matters in the long as well as the short run, so that a competitive market economy has no natural or automatic
tendency towards full employment.
[7]
Contrary to the views of New Keynesian economists working in the neo-
classical tradition, Post-Keynesians do not accept that the theoretical basis of the market failure to provide full
employment is rigid or sticky prices or wages. Post-Keynesians typically reject the IS/LM model of John Hicks,
which was very influential in neo-Keynesian economics.
[citation needed]

The positive contribution of post-Keynesian economics
[8]
has extended beyond the theory of aggregate
employment to theories of income distribution, growth, trade and development in which money demand plays a
key role, whereas in neoclassical economics these are determined by the real forces of technology, preferences
and endowment. In the field of monetary theory, post-Keynesian economists were among the first to emphasise
that the money supply responds to the demand for bank credit,
[9]
so that the central bank can not control the
quantity of money, but only manage the interest rate by managing the quantity of monetary reserves.
This view has largely been incorporated into monetary policy, which now targets the interest rate as an
instrument, rather than the quantity of money. In the field of finance, Hyman Minsky put forward a theory of
financial crisis based on financial fragility, which has recently received renewed attention.
[10]

Strands
There are a number of strands to post-Keynesian theory with different emphases. Joan Robinson
regarded Micha Kaleckis theory of effective demand to be superior to Keyness theories. Kalecki's theory is
based on a class division between workers and capitalists and imperfect competition.
[11]
She also led the critique
of the use of aggregate production functions based on homogeneous capital the Cambridge capital
controversy winning the argument but not the battle.
[12]
Much of Nicholas Kaldors work was based on the
ideas of increasing returns to scale, path dependency, and the key differences between the primary and
industrial sectors.
[13]

Paul Davidson
[14]
follows Keynes closely in placing time and uncertainty at the centre of theory, from which flow
the nature of money and of a monetary economy. Monetary circuit theory, originally developed in continental
Europe, places particular emphasis on the distinctive role of money as means of payment. Each of these
strands continues to see further development by later generations of economists, although the school of thought
has been marginalized within the academic profession.
The most common type of Post-Keynesianism is a combination of original Keynes, Hyman Minsky, Modern
Monetary Theory, Chartalism, and Functional Finance, with some Marxist influences.
Current work
Journals
Much post-Keynesian research is published in the Journal of Post Keynesian Economics (founded by Sidney
Weintraub and Paul Davidson), the Cambridge Journal of Economics, the Review of Political Economy and
the Journal of Economic Issues (JEI), and of course the Review of Keynesian Economics (ROKE).
UK
There is also a UK academic association, the Post Keynesian Economics Study Group (PKSG).
US
In the United States, there are several universities with a post-Keynesian bent.
The New School for Social Research
The University of Massachusetts, Amherst
Bucknell University
Kansas City School
In the US, there is a center of Post Keynesian work at the University of Missouri Kansas City, dubbed "The
Kansas City School", together with the Center for Full Employment and Price Stability, which has run a Post
Keynesian Conference and Post Keynesian Summer School, together with a group blog, Economic
Perspectives from Kansas City. Their research emphasis includes Neo-Chartalism, job guarantee programs,
and economic policy.
Canada
In Canada, post-Keynesians can be found at the University of Ottawa, and Laurentian University.
Australia
University of Newcastle
The University of Newcastle, in New South Wales, Australia, houses CofFEE, the Centre of Full Employment
and Equity, an active educational, research and collaborative organisation whose focus is on policies
"restoring full employment" and achieving an economy that delivers "equitable outcomes for all". CofFEE's work
is on Post-Keynesian macroeconomics, labour economics, regional development and monetary economics. The
aim of the research conducted by CofFEE is world class and is leading the clear path to developing successful
model to a new global economy that achieves full employment without the consequences suffered by traditional
neo-liberal economic policies.
Major post-Keynesian economists
Main article: List of Post-Keynesian economists


Post-Keynesian Economics Family Tree
Major post-Keynesian economists of the first and second generations after Keynes include:
Victoria Chick
Paul Davidson
Alfred Eichner
Wynne Godley
Augusto Graziani
Geoff Harcourt
Michael Hudson
Nicholas Kaldor
Micha Kalecki
Steve Keen
Jan Kregel
Marc Lavoie
Paolo Leon
Abba P. Lerner
Hyman Minsky
Basil Moore
Edward Nell
[15]

Luigi Pasinetti
Joan Robinson
George Shackle
Anthony Thirlwall
Fernando Vianello
William Vickrey
Sidney Weintraub