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 compu ...

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, Nicholas Kaldor, 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 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, 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 very short-term borrowing (borrowing by banks from each other to meet their short-term needs) or the money supply, often ...

, 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 will cause market inefficiency when it hap ...

. 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 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 than Keynes. Much of Nicholas Kaldor's work was based on the ideas of increasing

returns to scale In economics, returns to scale describe what happens to long-run returns as the scale of production increases, when all input levels including physical capital usage are variable (able to be set by the firm). The concept of returns to scale arises ...

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

uncertainty Uncertainty refers to Epistemology, 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 ...

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 is a relatively recent offshoot influenced by the macroeconomic modelling of Wynne Godley and 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 (economics) In economics, coordination failure is a concept that can explain recessions through the failure of firms and other price setters to coordinate. In an economic system with multiple equilibria, coordination failure occurs when a group of firms co ...

, 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 , mottoeng = "To learn, to do, to achieve" , former_name = Woolwich Polytechnic(1890–1970)Thames Polytechnic(1970–1992) , established = , type = Public university , budget = £214.9 million (2020) , administrative_staff = , chancel ...

* University of Leeds *

Kingston University , mottoeng = "Through Learning We Progress" , established = – gained University Status – Kingston Technical Institute , type = Public , endowment = £2.3 m (2015) , ...

* King's College London, International Political Economy * Goldsmiths, University of London * University of the West of England, Bristol * 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 The Open University (OU) is a British 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 underg ...

* 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 Utah The University of Utah (U of U, UofU, or simply The U) is a public research university in Salt Lake City, Utah. It is the flagship institution of the Utah System of Higher Education. The university was established in 1850 as the University of D ...

, Salt Lake City * Bucknell University, 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 a ...

, Granville, Ohio * Levy Economics Institute at

Bard College Bard College is a private liberal arts college in Annandale-on-Hudson, New York. The campus overlooks the Hudson River and Catskill Mountains, and is within the Hudson River Historic District—a National Historic Landmark. Founded in 18 ...

, 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. Founded in 1864, it is the oldest independent private university in the Rocky Mountain Region of the United States. It is classified among "R1: Doctoral Univ ...

* Colorado State University, Fort Collins * The University of Massachusetts Boston * John Jay College of Criminal Justice at

City University of New York The City University of New York ( CUNY; , ) is the public university system of New York City. It is the largest urban university system in the United States, comprising 25 campuses: eleven senior colleges, seven community colleges and seven pr ...

, 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 The University of Ottawa (french: Université d'Ottawa), often referred to as uOttawa or U of O, is a bilingual public research university in Ottawa, Ontario, Canada. The main campus is located on directly to the northeast of Downtown Ottaw ...

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 * Donald J. Harris * Michael Hudson * Nicholas Kaldor * Michał Kalecki * Frederic S. Lee * Augusto Graziani * Steve Keen * Jan Kregel * Marc Lavoie * Paolo Leon * Abba P. Lerner * Hyman Minsky * Basil Moore * Edward J. Nell * Luigi Pasinetti * Joan Robinson * George Shackle * Anthony Thirlwall *

Fernando Vianello Fernando Vianello (17 August 1939 – 10 August 2009) was an Italian economist and academic. Together with Michele Salvati, Sebastiano Brusco, Andrea Ginzburg and Salvatore Biasco, he founded the Faculty of Economics of the University of Modena ...

* 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