Post-Keynesian economics

Post-Keynesian economics
Name	Post-Keynesian economics
Founder	John Maynard Keynes, Michal Kalecki, Joan Robinson
Established	1950s–1960s
Region	United Kingdom, United States, France
Main interests	Macroeconomics, Monetary policy, Income distribution
Notable people	Paul Davidson, Hyman Minsky, Piero Sraffa, Nicholas Kaldor, Joan Robinson, John Maynard Keynes, Michal Kalecki, James Tobin, Jan Kregel, Geoffrey Harcourt

Contents

Post-Keynesian economics is a heterodox school of economic thought that extends ideas developed by John Maynard Keynes, Joan Robinson, Michal Kalecki, and Piero Sraffa into a sustained critique of mainstream Neoclassical economics, Monetarism, and New Keynesian economics. It emphasizes uncertainty, the endogeneity of money, and the centrality of effective demand, drawing on contributions from scholars associated with institutions like Cambridge (UK), Cambridge (Massachusetts), and The New School.

Overview and Origins

Post-Keynesianism emerged through debates involving Cambridge Circus, Cambridge Capital Controversy, Critique of Neoclassical Synthesis, Cambridge School, Bretton Woods system collapse, and reactions to policy regimes influenced by Milton Friedman, Friedrich Hayek, Ludwig von Mises, Robert Lucas Jr., and Thomas Sargent. Foundational texts include works by John Maynard Keynes (notably The General Theory of Employment, Interest and Money), Piero Sraffa (influencing Sraffa's Production of Commodities by Means of Commodities debates), and Michal Kalecki (with connections to Kalecki's Political Aspects of Full Employment), while institutional growth involved groups around Cambridge Journal of Economics, Review of Political Economy, Journal of Post Keynesian Economics, and networks at University of Cambridge, University of Cambridge (Massachusetts), The New School for Social Research, King's College London, and University of Missouri–Kansas City.

Post-Keynesian theory centers on ideas elaborated by John Maynard Keynes and refined by Joan Robinson, Nicholas Kaldor, Hyman Minsky, and Paul Davidson. Key concepts include fundamental uncertainty as discussed by Frank Knight and John Maynard Keynes; endogenous money as articulated by Ludwig von Mises critics and formalized in work by Nicholas Kaldor and Wynne Godley; effective demand debates against Say's Law and responses to Robert Solow growth models; and financial fragility linked to Hyman Minsky's Financial Instability Hypothesis with resonance in analyses of crises like Great Depression, 1973 oil crisis, and Global Financial Crisis (2007–2008). Distributional dynamics feature in models by Nicholas Kaldor, Piero Sraffa, and Sidney Weintraub, while theory of the firm and pricing draws on Joan Robinson and Edward H. Chamberlin traditions. Interest-rate determination references debates involving John Hicks, Alfred Marshall, Gunnar Myrdal, and Jan Tinbergen.

Methodologically Post-Keynesians align with traditions associated with John Maynard Keynes, Piero Sraffa, and Joan Robinson that emphasize historical time, path dependence, and rejection of representative agent models advanced by Robert Lucas Jr. and Thomas Sargent. They engage with philosophers and methodologists such as Karl Popper critics, link to Frank Knight on uncertainty, and contrast with positivist approaches exemplified by Milton Friedman and Paul Samuelson. Empirical strategies often employ structural macroeconomic models developed at University of Cambridge, The New School, and University of Missouri–Kansas City, and draw on data-focused projects like those undertaken by Wynne Godley and Marc Lavoie.

Policy recommendations derive from theoretical commitments and often contrast with prescriptions from Milton Friedman, Robert Lucas Jr., and Ben Bernanke. Post-Keynesian policy emphasizes active fiscal policy inspired by John Maynard Keynes and Michal Kalecki, support for full employment reminiscent of Beveridge Report aims, progressive taxation debates related to Thomas Piketty discussions, and financial regulation informed by Hyman Minsky and Paul Davidson. Monetary policy views critique Federal Reserve System strategies used by Alan Greenspan and Ben Bernanke, preferring macroprudential regulation highlighted after the Global Financial Crisis (2007–2008). They advocate wage-led growth policies linked to Nicholas Kaldor and Joan Robinson traditions, industrial policy echoing Alexander Hamilton and Friedrich List precedents, and income distribution interventions connected to Karl Polanyi's social analysis.

Prominent figures include Hyman Minsky, Paul Davidson, Nicholas Kaldor, Joan Robinson, Piero Sraffa, Michal Kalecki, Geoffrey Harcourt, Jan Kregel, Wynne Godley, Marc Lavoie, Steve Keen, G. C. Harcourt, Kalecki's followers, and Franco Modigliani (in debates). Institutional centers and journals include Cambridge Journal of Economics, Journal of Post Keynesian Economics, Review of Political Economy, The New School, University of Cambridge, University of Cambridge (Massachusetts), King's College London, and University of Missouri–Kansas City. Debates within the tradition often contrast regulationist perspectives linked to Regulation School scholars, between monetary theorists influenced by Nicholas Kaldor and financial fragility proponents following Hyman Minsky, and between Cambridge controversies echoing Cambridge Capital Controversy positions.

Critics from Neoclassical economics, represented by figures such as Robert Lucas Jr., Milton Friedman, Gary Becker, and Thomas Sargent, argue Post-Keynesian models lack microfoundations and rigorous formalization exemplified in Arrow-Debreu frameworks and General equilibrium theory. Post-Keynesian responses invoke empirical relevance as in analyses of the Great Depression, stagflation of the 1970s, and the Global Financial Crisis (2007–2008), methodological critiques of Ragnar Frisch-style econometrics, and alternative foundations inspired by Piero Sraffa and John Maynard Keynes. Ongoing dialogues engage scholars from New Keynesian economics, Institutional economics, Marxian economics, and Austrian School circles over topics such as price formation, money endogeneity, and policy effectiveness, with exchanges occurring at venues like American Economic Association meetings and in journals like Economic Journal and Cambridge Journal of Economics.

Category:Schools of economic thought