Post-Keynesian economics is a

school A school is the educational institution (and, in the case of in-person learning, the Educational architecture, building) designed to provide learning environments for the teaching of students, usually under the direction of teachers. Most co ...

of economic thought with its origins in '' The General Theory'' of

John Maynard Keynes John Maynard Keynes, 1st Baron Keynes ( ; 5 June 1883 – 21 April 1946), was an English economist and philosopher whose ideas fundamentally changed the theory and practice of macroeconomics and the economic policies of governments. Originall ...

, with subsequent development influenced to a large degree by Michał Kalecki,

Joan Robinson Joan Violet Robinson ( Maurice; 31 October 1903 – 5 August 1983) was a British economist known for her wide-ranging contributions to economic theory. One of the most prominent economists of the century, Robinson incarnated the "Cambridge Sc ...

Nicholas Kaldor Nicholas Kaldor, Baron Kaldor (12 May 1908 – 30 September 1986), born Káldor Miklós, was a Hungarian-born British economist. He developed the "compensation" criteria called Kaldor–Hicks efficiency for welfare spending, welfare comparisons ...

, Sidney Weintraub, Paul Davidson,

Piero Sraffa Piero Sraffa Fellow of the British Academy, FBA (5 August 1898 – 3 September 1983) was an influential Italian Political economy, political economist who served as lecturer of economics at the University of Cambridge. His book ''Production of Co ...

, Jan Kregel and Marc Lavoie. Historian

Robert Skidelsky Robert Jacob Alexander Skidelsky, Baron Skidelsky, (born 25 April 1939) is a British economic historian. He is the author of a three-volume, award-winning biography of British economist John Maynard Keynes (1883–1946). Skidelsky read histor ...

argues that the post-Keynesian school has remained closest to the spirit of Keynes' original work. It is a heterodox approach to economics based on a non-equilibrium approach.

Introduction

The term "post-Keynesian" was first used to refer to a distinct school of economic thought by Eichner and Kregel (1975) 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 ''General Theory''. Post-Keynesian economists are united in maintaining that Keynes' theory is seriously misrepresented by the two other principal Keynesian schools:

neo-Keynesian economics The neoclassical synthesis (NCS), or neoclassical–Keynesian synthesisMankiw, N. Gregory. "The Macroeconomist as Scientist and Engineer". ''The Journal of Economic Perspectives''. Vol. 20, No. 4 (Fall, 2006), p. 35. is an academic movement and ...

, which was orthodox in the 1950s and 60s, and

new Keynesian economics New Keynesian economics is a school of macroeconomics that strives to provide microfoundations, microeconomic foundations for Keynesian economics. It developed partly as a response to criticisms of Keynesian macroeconomics by adherents of new ...

, which together with various strands of

neoclassical economics Neoclassical economics is an approach to economics in which the production, consumption, and valuation (pricing) of goods and services are observed as driven by the supply and demand model. According to this line of thought, the value of a go ...

has been dominant in mainstream

macroeconomics Macroeconomics is a branch of economics that deals with the performance, structure, behavior, and decision-making of an economy as a whole. This includes regional, national, and global economies. Macroeconomists study topics such as output (econ ...

since the 1980s. Post-Keynesian economics can be seen as an attempt to rebuild economic theory in the light of Keynes' ideas and insights. However, even in the early years, post-Keynesians such as Joan Robinson sought to distance themselves from Keynes, and much current post-Keynesian thought cannot be found in Keynes. Some post-Keynesians took a more progressive view than Keynes himself, with greater emphases on worker-friendly policies and redistribution. Robinson, Paul Davidson and Hyman Minsky emphasized the effects on the economy of practical differences between different types of investments, in contrast to Keynes' more abstract treatment. 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 Full employment is an economic situation in which there is no cyclical or deficient-demand unemployment. Full employment does not entail the disappearance of all unemployment, as other kinds of unemployment, namely structural and frictional, may ...

. Contrary to the views of new Keynesian economists working in the neoclassical tradition, post-Keynesians do not accept that the theoretical basis of the market's failure to provide full employment is rigid or sticky prices or wages. Post-Keynesians typically reject the IS–LM model of

John Hicks Sir John Richard Hicks (8 April 1904 – 20 May 1989) was a British economist. He is considered one of the most important and influential economists of the twentieth century. The most familiar of his many contributions in the field of economics ...

, which is very influential in neo-Keynesian economics, because they argue endogenous bank lending to be more significant than central banks' money supply for the interest rate. The contribution of post-Keynesian economics has extended beyond the theory of aggregate employment to theories of

income distribution In economics, income distribution covers how a country's total GDP is distributed amongst its population. Economic theory and economic policy have long seen income and its distribution as a central concern. Unequal distribution of income causes e ...

, growth, trade and development in which money demand plays a key role, whereas in neoclassical economics these are determined by the forces of technology, preferences and endowment. In the field of monetary theory, post-Keynesian economists were among the first to emphasise that money supply responds to the demand for bank credit, so that a

central bank A central bank, reserve bank, national bank, or monetary authority is an institution that manages the monetary policy of a country or monetary union. In contrast to a commercial bank, a central bank possesses a monopoly on increasing the mo ...

cannot 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 mainstream economics and

monetary policy Monetary policy is the policy adopted by the monetary authority of a nation to affect monetary and other financial conditions to accomplish broader objectives like high employment and price stability (normally interpreted as a low and stable rat ...

, which now targets the interest rate as an instrument, rather than attempting to accurately control the quantity of money. In the field of finance, Hyman Minsky put forward a theory of financial crisis based on financial fragility, which has received renewed attention.

Main features

In 2009 Marc Lavoie listed the main features of post-Keynesian economics: * Effective demand * Historical and dynamic time He also lists 5 auxiliary features: * The possible negative impact of flexible prices * The monetary production of the economy * Fundamental uncertainty * Relevant and contemporary microeconomics * Pluralism of theories and methods

Strands

There are a number of strands to post-Keynesian theory with different emphases. Joan Robinson regarded Michał Kalecki's theory of effective demand to be superior to Keynes' theories. Kalecki's theory is based on a class division between workers and capitalists and

imperfect competition In economics, imperfect competition refers to a situation where the characteristics of an economic market do not fulfil all the necessary conditions of a perfectly competitive market. Imperfect competition causes market inefficiencies, resulting in ...

. Robinson 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. The writings of

were a significant influence on the post-Keynesian position in this debate, though Sraffa and his neo-Ricardian followers drew more inspiration from

David Ricardo David Ricardo (18 April 1772 – 11 September 1823) was a British political economist, politician, and member of Parliament. He is recognized as one of the most influential classical economists, alongside figures such as Thomas Malthus, Ada ...

than Keynes. Much of

's work was based on the ideas of increasing

returns to scale In economics, the concept of returns to scale arises in the context of a firm's production function. It explains the long-run linkage of increase in output (production) relative to associated increases in the inputs (factors of production). In th ...

path dependence Path dependence is a concept in the Social science, social sciences, referring to processes where past events or decisions constrain later events or decisions. It can be used to refer to outcomes at a single point in time or to long-run equilibria ...

, and the key differences between the primary and industrial sectors. Paul Davidson follows Keynes closely in placing time and

uncertainty Uncertainty or incertitude refers to situations involving imperfect or unknown information. It applies to predictions of future events, to physical measurements that are already made, or to the unknown, and is particularly relevant for decision ...

at the centre of theory, from which flow the nature of money and of a monetary economy.

Monetary circuit theory Monetary circuit theory is a heterodox theory of monetary economics, particularly money creation, often associated with the post-Keynesian school. It holds that money is created endogenously by the banking sector, rather than exogenously by cen ...

, 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. An important method is stock-flow consistent models, which enable a consistent description of receivables and liabilities as well as cash flows. Modern Monetary Theory is a relatively recent offshoot independently pioneered by Warren Mosler that models the currency itself as a public monopoly as the micro foundation of macro economics, thereby augmenting the theory of effective demand, recognizing that coercive taxation drives the currency (the tax credit) and that the price level is necessarily a function of prices paid by the state. Subsequent MMT associated academics have used macroeconomic modelling of Wynne Godley and incorporated some of Hyman Minsky's ideas on the labour market, as well as chartalism and functional finance. Recent work in post-Keynesian economics has attempted to provide micro-foundations for capacity underutilization as a coordination failure, justifying government intervention in the form of aggregate demand stimulus.

Current work

Journals

Much post-Keynesian research is published in the '' Review of Keynesian Economics'' (ROKE), 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).

United Kingdom

There is also a United Kingdom academic association, th
Post-Keynesian Economics Society
(PKES). It was founded by Philip Arestis and Victoria Chick in 1988 as the Post-Keynesian Economics Study Group (PKSG) and changed its name in 2018. In the UK, post-Keynesian economists can be found in: *

SOAS University of London The School of Oriental and African Studies (SOAS University of London; ) is a public research university in London, England, and a member institution of the federal University of London. Founded in 1916, SOAS is located in the Bloomsbury area ...

University of Greenwich The University of Greenwich is a public university located in London and Kent, United Kingdom. Previous names include Woolwich Polytechnic and Thames Polytechnic. The university's main campus is at the Old Royal Naval College, which along wi ...

University of Leeds The University of Leeds is a public research university in Leeds, West Yorkshire, England. It was established in 1874 as the Yorkshire College of Science. In 1884, it merged with the Leeds School of Medicine (established 1831) and was renamed Y ...

Kingston University Kingston University London is a Public university, public research university located within the Royal Borough of Kingston upon Thames, in South London, South West London, England. Its roots go back to the Kingston Technical Institute, founded ...

King's College London King's College London (informally King's or KCL) is a public university, public research university in London, England. King's was established by royal charter in 1829 under the patronage of George IV of the United Kingdom, King George IV ...

, International Political Economy *

Goldsmiths, University of London Goldsmiths, University of London, formerly Goldsmiths College, University of London, is a constituent research university of the University of London. It was originally founded in 1891 as The Goldsmiths' Technical and Recreative Institute by ...

* University of the West of England, Bristol * University of Hertfordshire *

Cambridge University The University of Cambridge is a Public university, public collegiate university, collegiate research university in Cambridge, England. Founded in 1209, the University of Cambridge is the List of oldest universities in continuous operation, wo ...

, Land Economy *

Birmingham City University Birmingham City University (abbrev. BCU) is a university in Birmingham, England. Initially established as the Birmingham College of Art with roots dating back to 1843, it was designated as a polytechnic (United Kingdom), polytechnic in 1971 an ...

University College London University College London (Trade name, branded as UCL) is a Public university, public research university in London, England. It is a Member institutions of the University of London, member institution of the Federal university, federal Uni ...

, Institute for Innovation and Public Purpose *

Open University The Open University (OU) is a Public university, public research university and the largest university in the United Kingdom by List of universities in the United Kingdom by enrolment, number of students. The majority of the OU's undergraduate ...

University of Winchester The University of Winchester is a public research university based in the city of Winchester, Hampshire, England. The university has origins tracing back to 1840 as a teacher training college, but was established in 2005. Winchester University ...

Working on post-Keynesian economic foundations, the UK-based global economics

consultancy A consultant (from "to deliberate") is a professional (also known as ''expert'', ''specialist'', see variations of meaning below) who provides advice or services in an area of specialization (generally to medium or large-size corporations). Con ...

, Cambridge Econometrics, developed a computer-based ''

Energy Energy () is the physical quantity, quantitative physical property, property that is transferred to a physical body, body or to a physical system, recognizable in the performance of Work (thermodynamics), work and in the form of heat and l ...

- Environment-

Economy An economy is an area of the Production (economics), production, Distribution (economics), distribution and trade, as well as Consumption (economics), consumption of Goods (economics), goods and Service (economics), services. In general, it is ...

Model for Europe'' (E3ME)

economic model An economic model is a theoretical construct representing economic processes by a set of variables and a set of logical and/or quantitative relationships between them. The economic model is a simplified, often mathematical, framework designed ...

. It is used by

European Commission The European Commission (EC) is the primary Executive (government), executive arm of the European Union (EU). It operates as a cabinet government, with a number of European Commissioner, members of the Commission (directorial system, informall ...

to analyse medium and long-term effects of its environmental and economic policies.

United States

In the United States, there are several universities with a post-Keynesian bent: *

The New School The New School is a Private university, private research university in New York City. It was founded in 1919 as The New School for Social Research with an original mission dedicated to academic freedom and intellectual inquiry and a home for p ...

, New York City * The

University of Massachusetts Amherst The University of Massachusetts Amherst (UMass Amherst) is a public land-grant research university in Amherst, Massachusetts, United States. It is the flagship campus of the University of Massachusetts system and was founded in 1863 as the ...

* The

University of Utah The University of Utah (the U, U of U, or simply Utah) is a public university, public research university in Salt Lake City, Utah, United States. It was established in 1850 as the University of Deseret (Book of Mormon), Deseret by the General A ...

, Salt Lake City *

Bucknell University Bucknell University is a Private college, private Liberal arts colleges in the United States, liberal-arts college in Lewisburg, Pennsylvania, United States. Founded in 1846 as the University at Lewisburg, it now consists of the College of Arts a ...

, Lewisburg, Pennsylvania *

Denison University Denison University is a Private university, private liberal arts college in Granville, Ohio, United States. One of the earliest colleges established in the former Northwest Territory, Denison University was founded in 1831. It was first called ...

, Granville, Ohio * Levy Economics Institute at

Bard College Bard College is a private college, private Liberal arts colleges in the United States, liberal arts college in Annandale-on-Hudson, New York. The campus overlooks the Hudson River and Catskill Mountains within the Hudson River Historic District ...

, Annandale-on-Hudson, New York * University of Missouri–Kansas City *

University of Denver The University of Denver (DU) is a private research university in Denver, Colorado, United States. Founded in 1864, it has an enrollment of approximately 5,700 undergraduate students and 7,200 graduate students. It is classified among "R1: D ...

Colorado State University Colorado State University (Colorado State or CSU) is a Public university, public Land-grant university, land-grant research university in Fort Collins, Colorado, United States. It is the flagship university of the Colorado State University Syst ...

, Fort Collins * The

University of Massachusetts Boston The University of Massachusetts Boston (stylized as UMass Boston) is a Public university, public US-based research university. It is the only public research university in Boston and the third-largest campus in the five-campus University of Ma ...

John Jay College of Criminal Justice The John Jay College of Criminal Justice (John Jay) is a public college focused on criminal justice and located in New York City. It is a senior college of the City University of New York (CUNY). John Jay was founded as the only liberal arts col ...

City University of New York The City University of New York (CUNY, pronounced , ) is the Public university, public university system of Education in New York City, New York City. It is the largest urban university system in the United States, comprising 25 campuses: eleven ...

, New York City

Netherlands

Erasmus University Erasmus University Rotterdam ( ; abbreviated as EUR) is a public university, public research university located in Rotterdam, Netherlands. The university is named after Desiderius Erasmus, Desiderius Erasmus Roterodamus, a 15th-century Christia ...

, Rotterdam * International Institute of Social Studies, The Hague *

Maastricht University Maastricht University (abbreviated as UM; ) is a public university, public research university in Maastricht, Netherlands. Founded in 1976, it is the second youngest of the thirteen List of universities in the Netherlands, Dutch universities. In ...

, Maastricht *

University of Groningen The University of Groningen (abbreviated as UG; , abbreviated as RUG) is a Public university#Continental Europe, public research university of more than 30,000 students in the city of Groningen (city), Groningen, Netherlands. Founded in 1614, th ...

, Groningen

France

* Sorbonne Paris North University

Canada

In Canada, post-Keynesians can be found at the

University of Ottawa The University of Ottawa (), often referred to as uOttawa or U of O, is a Official bilingualism in Canada, bilingual public research university in Ottawa, Ontario, Canada. The main campus is located on directly to the northeast of Downtown Ot ...

and

Laurentian University Laurentian University (), officially Laurentian University of Sudbury, is a mid-sized Bilingualism in Canada, bilingual public university in Greater Sudbury, Ontario, Canada, incorporated on March 28, 1960. Laurentian offers a variety of undergr ...

Germany

In Germany, post-Keynesianism is very strong at the Berlin School of Economics and Law and its master's degree courses: International Economics .A.and Political Economy of European Integration .A. Many German Post-Keynesians are organized in the Forum Macroeconomics and Macroeconomic Policies.

Australia

University of Newcastle

The University of Newcastle in New South Wales, Australia, houses the post-Keynesian

think-tank A think tank, or public policy institute, is a research institute that performs research and advocacy concerning topics such as social policy, political strategy, economics, military, technology, and culture. Most think tanks are non-governme ...

the Centre of Full Employment and Equity (CofFEE).

Major post-Keynesian economists

Major post-Keynesian economists of the first and second generations after Keynes include: * Marc Lavoie * Philip Arestis * Victoria Chick * Alfred Eichner * James Crotty * Paul Davidson * Wynne Godley * Geoff Harcourt * Donald J. Harris * Michael Hudson *

* Michał Kalecki * Frederic S. Lee * Augusto Graziani *

Steve Keen Steve Keen (born 28 March 1953) is an Australian economist and author. He considers himself a post-Keynesian, criticising neoclassical economics as inconsistent, unscientific, and empirically unsupported. Keen was formerly an associate profe ...

* Jan Kregel * Paolo Leon * Abba P. Lerner * Hyman Minsky * Basil Moore * Edward J. Nell *

Luigi Pasinetti Luigi L. Pasinetti (12 September 1930 – 31 January 2023) was an Italian economist of the post-Keynesian school. Pasinetti was considered the heir of the " Cambridge Keynesians" and a student of Piero Sraffa and Richard Kahn. Along with them, ...

* George Shackle * Anthony Thirlwall * Fernando Vianello * William Vickrey * L. Randall Wray * Dimitri B. Papadimitriou * Sidney Weintraub

Notes

References

* * * * * * * * * * *

External links

Structure of Post Keynesian Economics-Geoff Harcourt

* ttp://macropolis.wikispaces.com/file/view/Introduction+to+Post-Keynesian+Economics+-+Lavoie.pdf Presentation of post Keynesian economics Marc Lavoie
Samuelson and the Keynes/Post Keynesian Revolution:by Paul Davidson

* ttps://academic.oup.com/cje/article-abstract/20/1/111/1716931 Post-Keynesian economics: towards coherence Cambridge Journal of Economics {{Authority control Keynesian economics