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 comp ...

economic thought Economics () is the social science that studies the production, distribution, and consumption of goods and services. Economics focuses on the behaviour and interactions of economic agents and how economies work. Microeconomics analyzes ...

with its origins in ''

The General Theory ''The General Theory of Employment, Interest and Money'' is a book by English economist John Maynard Keynes published in February 1936. It caused a profound shift in economic thought, giving macroeconomics a central place in economic theory and ...

'' 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 Michał Kalecki (; 22 June 1899 – 18 April 1970) was a Polish Marxian economist. Over the course of his life, Kalecki worked at the London School of Economics, University of Cambridge, University of Oxford and Warsaw School of Economics ...

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. B ...

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), d ...

, Sidney Weintraub, Paul Davidson, Piero Sraffa and

Jan Kregel Jan A. Kregel (born 19 April 1944) is an American post-Keynesian economist. Kregel has served since 2006 as Professor of Finance and Development at Tallinn University of Technology, Tallinn, Estonia. He is an adjunct professor at Johns Hopkins SA ...

. Historian

Robert Skidelsky Robert Jacob Alexander, 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 history at Jesus ...

argues that the post-Keynesian school has remained closest to the spirit of Keynes' original work. It is a

heterodox approach to economics Heterodox economics is any economic thought or theory that contrasts with orthodox schools of economic thought, or that may be beyond neoclassical economics.Frederic S. Lee, 2008. "heterodox economics," ''The New Palgrave Dictionary of 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 The neoclassical synthesis (NCS), neoclassical–Keynesian synthesis, or just neo-Keynesianism was a neoclassical economics academic movement and paradigm in economics that worked towards reconciling the macroeconomic thought of John Maynard Key ...

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

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

, 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 at ...

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 In economics, effective demand (ED) in a market is the demand for a product or service which occurs when purchasers are constrained in a different market. It contrasts with notional demand, which is the demand that occurs when purchasers are not ...

, 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 Nominal rigidity, also known as price-stickiness or wage-stickiness, is a situation in which a nominal price is resistant to change. Complete nominal rigidity occurs when a price is fixed in nominal terms for a relevant period of time. For exampl ...

or wages. Post-Keynesians typically reject the

IS–LM model IS–LM model, or Hicks–Hansen model, is a two-dimensional macroeconomic tool that shows the relationship between interest rates and assets market (also known as real output in goods and services market plus money market). The intersection 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 economi ...

, 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 ec ...

, 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 central b ...

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 a ...

, 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 Financial fragility is the vulnerability of a financial system to a financial crisis. Franklin Allen and Douglas Gale define financial fragility as the degree to which "...small shocks have disproportionately large effects." Roger Lagunoff and Stace ...

, which has received renewed attention.

Main features

In 2009

Marc Lavoie Marc Lavoie (born 1954)Marc Lavoie profile
at the

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

's theory of effective demand to be superior to Keynes' theories. Kalecki's theory is based on a

class division Class or The Class may refer to: Common uses not otherwise categorized * Class (biology), a taxonomic rank * Class (knowledge representation), a collection of individuals or objects * Class (philosophy), an analytical concept used differently ...

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 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 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 equilibria ...

, and the key differences between the primary and

industrial Industrial may refer to: Industry * Industrial archaeology, the study of the history of the industry * Industrial engineering, engineering dealing with the optimization of complex industrial processes or systems * Industrial city, a city dominate ...

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 of t ...

is a relatively recent offshoot influenced by the macroeconomic modelling of

Wynne Godley Wynne Godley (26 September 192613 May 2010) was an economist famous for his pessimism about the British economy and his criticism of the British government. In 2007, he and Marc Lavoie wrote a book about the " Stock-Flow Consistent" model, an a ...

and

's ideas on the labour market, as well as

chartalism In macroeconomics, chartalism is a heterodox theory of money that argues that money originated historically with states' attempts to direct economic activity rather than as a spontaneous solution to the problems with barter or as a means with whi ...

and

functional finance Functional finance is an economic theory proposed by Abba P. Lerner, based on effective demand principles and chartalism. It states that government should finance itself to meet explicit goals, such as taming the business cycle, achieving full emp ...

. 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 SOAS University of London (; the School of Oriental and African Studies) 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 a ...

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 , 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 , 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 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 Wo ...

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 The University of Hertfordshire (UH) is a public university in Hertfordshire, United Kingdom. The university is based largely in Hatfield, Hertfordshire. Its antecedent institution, Hatfield Technical College, was founded in 1948 and was ident ...

Cambridge University The University of Cambridge is a Public university, public collegiate university, collegiate research university in Cambridge, England. Founded in 1209 and granted a royal charter by Henry III of England, Henry III in 1231, Cambridge is the world' ...

, Land Economy *

Birmingham City University , mottoeng = "Do what you are doing; attend to your business" , established = 1992—gained university status1971—City of Birmingham Polytechnic1843—Birmingham College of Art , type = Public , affiliation = ...

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 research university and the largest university in the United Kingdom by number of students. The majority of the OU's undergraduate students are based in the United Kingdom and principally study off- ...

University of Winchester , mottoeng = Wisdom and Knowledge , established = 1840 - Winchester Diocesan Training School1847 - Winchester Training College1928 - King Alfred's College2005 - University of Winchester , type = Public research university ...

United States

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

The New School The New School is a 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 progressive thinkers. ...

, 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 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 De ...

, 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 Engineering ...

, 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 Founded in 1986 as the Jerome Levy Economics Institute, the Levy Economics Institute of Bard College is a nonprofit, nonpartisan public policy think tank. The purpose of its research and other activities is to enable scholars and leaders in busi ...

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 1860, ...

, Annandale-on-Hudson, New York *

University of Missouri–Kansas City The University of Missouri–Kansas City (UMKC) is a public research university in Kansas City, Missouri. UMKC is part of the University of Missouri System and one of only two member universities with a medical school. As of 2020, the university ...

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

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 ...

at City University of New York, New York City

Netherlands

* Erasmus University, Rotterdam *

International Institute of Social Studies The International Institute of Social Studies (ISS) of Erasmus University Rotterdam is an independent and international graduate school of policy-oriented critical social science. ISS was established in 1952 by Dutch universities and the Neth ...

, The Hague *

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

, Groningen

France

Sorbonne Paris North University Sorbonne Paris North University (french: Université Sorbonne Paris Nord) is a public university based in Paris, France. It is one of the thirteen universities that succeeded the University of Paris in 1968. It is a multidisciplinary university l ...

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 The Berlin School of Economics and Law (German: ''Hochschule für Wirtschaft und Recht''), abbreviated as BSEL, is a public institution of higher education and research founded on 1 April 2009 through the merger of the Berlin School of Economi ...

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 A think tank, or 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-governmental ...

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 Victoria Chick (April 8, 1936 – January 15, 2023) was a Post Keynesian economist known for her essays on monetary theory, banking and methodology. Her writing on Keynes's General Theory made her one of the foremost interpreters of his work. ...

Alfred Eichner Alfred S. Eichner (March 23, 1937February 10, 1988) was an American post-Keynesian economist who challenged the neoclassical price mechanism and asserted that prices are not set through supply and demand but rather through mark-up pricing. Eichn ...

* James Crotty * Paul Davidson *

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 After ...

* Donald J. Harris * Michael Hudson *

* Frederic S. Lee *

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

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. The major influences on Keen's thinking ...

Marc Lavoie Marc Lavoie (born 1954)Marc Lavoie profile
at the

Paolo Leon Paolo Leon (26 April 1935 – 11 June 2016) was an Italian Post Keynesian economist. He has served since 1992 as Professor of Public Economics at the University of Rome III in Rome, Italy and then as emeritus professor. Before that, he was Assista ...

Abba P. Lerner Abraham "Abba" Ptachya Lerner (also Abba Psachia Lerner; 28 October 1903 – 27 October 1982) was a Russian-born American-British economist. Biography Born in Novoselytsia, Bessarabia, Russian Empire, Lerner grew up in a Jewish family, which e ...

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 Luigi L. Pasinetti (born 12 September 1930) is an Italian economist of the post-Keynesian school. Pasinetti is considered the heir of the " Cambridge Keynesians" and a student of Piero Sraffa and Richard Kahn. Along with them, as well as Joan Rob ...

* George Shackle *

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 William Spencer Vickrey (21 June 1914 – 11 October 1996) was a Canadian-American professor of economics and Nobel Laureate. Vickrey was awarded the 1996 Nobel Memorial Prize in Economic Sciences with James Mirrlees for their research into the e ...

* L. Randall Wray *

Dimitri B. Papadimitriou Dimitri B. Papadimitriou (born 9 June 1946, in Thessaloniki) is a Greece, Greek-born United States, American economist, author, and college professor. He is President, Levy Economics Institute of Bard College since its inception in 1986 and Jero ...

* 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