Post-Keynesian economics is a

school A school is an educational institution designed to provide learning spaces and learning environments for the teaching of students under the direction of teachers. Most countries have systems of formal education, which is sometimes 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 whose ideas fundamentally changed the theory and practice of macroeconomics and the economic policies of governments. Originally trained in ...

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

Joan Robinson Joan Violet Robinson (''née'' Maurice; 31 October 1903 – 5 August 1983) was a British economist well known for her wide-ranging contributions to economic theory. She was a central figure in what became known as post-Keynesian economics. ...

Nicholas Kaldor Nicholas Kaldor, Baron Kaldor (12 May 1908 – 30 September 1986), born Káldor Miklós, was a Cambridge economist in the post-war period. He developed the "compensation" criteria called Kaldor–Hicks efficiency for welfare comparisons (1939), ...

, Sidney Weintraub, Paul Davidson, Piero Sraffa and Jan Kregel. Historian Robert Skidelsky argues that the post-Keynesian school has remained closest to the spirit of Keynes' original work. It is a heterodox approach to economics.

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, which was orthodox in the 1950s and 60s, and new Keynesian economics, 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 good ...

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' 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 Hyman Philip Minsky (September 23, 1919 – October 24, 1996) was an American economist, a professor of economics at Washington University in St. Louis, and a distinguished scholar at the Levy Economics Institute of Bard College. His research ...

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. 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 Richards 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 economic ...

, 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, 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, or monetary authority is an institution that manages the currency and monetary policy of a country or monetary union, and oversees their commercial banking system. In contrast to a commercial bank, a centra ...

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 control either the interest rate payable for federal funds, very short-term borrowing (borrowing by banks from each other to meet their short-term needs) or the money s ...

, 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. Robinson also led the critique of the use of aggregate production functions based on homogeneous capital – the

Cambridge capital controversy The Cambridge capital controversy, sometimes called "the capital controversy"Brems (1975) pp. 369-384 or "the two Cambridges debate", was a dispute between proponents of two differing theoretical and mathematical positions in economics that starte ...

– winning the argument but not the battle. The writings of Piero Sraffa were a significant influence on the post-Keynesian position in this debate, though Sraffa and his

neo-Ricardian The neo-Ricardian school is an economic school of thought that derives from the close reading and interpretation of David Ricardo by Piero Sraffa, and from Sraffa's critique of neoclassical economics as presented in his ''The Production of Comm ...

followers drew more inspiration from

David Ricardo David Ricardo (18 April 1772 – 11 September 1823) was a British political economist. He was one of the most influential of the classical economists along with Thomas Malthus, Adam Smith and James Mill. Ricardo was also a politician, and a ...

than Keynes. Much of

's work was based on the ideas of increasing returns to scale,

path dependence Path dependence is a concept in economics and the 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 equilibri ...

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

uncertainty Uncertainty refers to epistemic situations involving imperfect or unknown information. It applies to predictions of future events, to physical measurements that are already made, or to the unknown. Uncertainty arises in partially observable ...

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.

Modern Monetary Theory Modern Monetary Theory or Modern Money Theory (MMT) is a heterodox * * * * * * macroeconomic theory that describes currency as a public monopoly and unemployment as evidence that a currency monopolist is overly restricting the supply ...

is a relatively recent offshoot influenced by the macroeconomic modelling of Wynne Godley and

'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 (economics), 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). This was previously called the Post Keynesian Economics Study Group (PKSG) but changed its name in 2018. In the UK, post-Keynesian economists can be found in: * SOAS University of London * University of Greenwich *

University of Leeds , mottoeng = And knowledge will be increased , established = 1831 – Leeds School of Medicine1874 – Yorkshire College of Science1884 - Yorkshire College1887 – affiliated to the federal Victoria University1904 – University of Leeds , ...

* Kingston University * King's College London, International Political Economy *

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

University of the West of England, Bristol The University of the West of England (also known as UWE Bristol) is a public research university, located in and around Bristol, England. The institution was know as the Bristol Polytechnic in 1970; it received university status in 1992 and ...

* University of Hertfordshire *

Cambridge University , mottoeng = Literal: From here, light and sacred draughts. Non literal: From this place, we gain enlightenment and precious knowledge. , established = , other_name = The Chancellor, Masters and Schola ...

, Land Economy * Birmingham City University *

University College London , mottoeng = Let all come who by merit deserve the most reward , established = , type = Public research university , endowment = £143 million (2020) , budget = ...

, Institute for Innovation and Public Purpose * Open University * University of Winchester

United States

In the United States, there are several universities with a post-Keynesian bent: * The New School, New York City * The

University of Massachusetts Amherst The University of Massachusetts Amherst (UMass Amherst, UMass) is a public research university in Amherst, Massachusetts and the sole public land-grant university in Commonwealth of Massachusetts. Founded in 1863 as an agricultural college, ...

* The University of Utah, Salt Lake City *

Bucknell University Bucknell University is a private liberal arts college in Lewisburg, Pennsylvania. Founded in 1846 as the University at Lewisburg, it now consists of the College of Arts and Sciences, Freeman College of Management, and the College of Engineerin ...

, Lewisburg, Pennsylvania *

Denison University Denison University is a private liberal arts college in Granville, Ohio. One of the earliest colleges established in the former Northwest Territory, Denison University was founded in 1831. The college was first called the Granville Literary and ...

, Granville, Ohio * Levy Economics Institute at Bard College, Annandale-on-Hudson, New York * University of Missouri–Kansas City * University of Denver * Colorado State University, Fort Collins * The University of Massachusetts Boston *

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 art ...

at City University of New York, New York City

Netherlands

* Erasmus University, Rotterdam * International Institute of Social Studies, The Hague * University of Groningen, Groningen

France

* Sorbonne Paris North University

Canada

In Canada, post-Keynesians can be found at the University of Ottawa and Laurentian University.

Germany

In Germany, post-Keynesianism is very strong at the Berlin School of Economics and Law and its master's degree course: International Economics .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 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: * Victoria Chick * Alfred Eichner * James Crotty * Paul Davidson * Wynne Godley *

Geoff Harcourt Geoffrey Colin Harcourt (27 June 1931 – 7 December 2021) was an Australian academic economist and leading member of the post-Keynesian school. He studied at the University of Melbourne and then at King's College, Cambridge. Biography Aft ...

Donald J. Harris Donald Jasper Harris (born August 23, 1938) is a Jamaican-American economist and professor emeritus at Stanford University, known for applying post-Keynesian ideas to development economics. He is the father of the 49th and current vice president ...

* Michael Hudson *

* Michał Kalecki * Frederic S. Lee *

Augusto Graziani Augusto Graziani (4 May 1933 – 5 January 2014)ilmattino
retrieved 6th Ja ...

* Steve Keen * Jan Kregel * Marc Lavoie * Paolo Leon * Abba P. Lerner *

Basil Moore Basil John Moore was a Canadian post-Keynesian economist, best known for developing and promoting endogenous money theory, particularly the proposition that the money supply curve is ''horizontal,'' rather than upward sloping, a proposition known ...

* Edward J. Nell * Luigi Pasinetti *

George Shackle George Lennox Sharman Shackle (14 July 1903 – 3 March 1992) was an English economist. He made a practical attempt to challenge classical rational choice theory and has been characterised as a "post-Keynesian", though he is influenced as well by ...

Anthony Thirlwall Anthony Philip Thirlwall (born 1941) is Professor of Applied Economics at the University of Kent. He has made major contributions to regional economics; the analysis of unemployment and inflation; balance of payments theory, and to growth and deve ...

* 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 {{Portal bar, Business and economics Keynesian economics