An Introduction to Post-Keynesian Economics
Marc Lavoie | 2006-10-03 00:00:00 | Palgrave Macmillan | 168 | Economics
This book offers an easy to read introduction to post-Keynesian economics, showing that there is an alternative to neoclassical economics and its free-market economic policies. Post-Keynesian economics is founded on realistic assumptions and stylized facts, such as interest targeting by central banks or constant average variable costs in manufacturing and services. The author shows how these more realistic foundations give rise to macroeconomic implications that are entirely different from those of received wisdom with regards to employment, output growth, inflation and monetary theory. For instance, the author demonstrates that higher minimum wages or real wages can increase both labour employment and the corporate profit rates, and that faster output growth need not lead to higher inflation.
Reviews
Post Keynesian economics is a broadly defined school of economic thought that takes their inspiration from the work of J. M. Keynes. To arrive at an understanding of the essential features of this school, one must be presented a coherent and detailed explanation of the assumptions and theories that guide their thought. This is not really done in this book.
In fact, the book is not even really Post Keynesian. Post Keynesian economics (note the capital P and the absence of the hyphen) is an American phenomenon that was begun by Paul Davidson. But now, Paul Davidson is regarded as the most important "fundamenalist Keynesian" in a broadly defined field known as Post Keynesian ecnomics. Other traditions and views have found their way into this school, and have supplanted and implicitly rejected a lot of the contributions Paul Davidson made early in his career. This book is written from one of these views, namely, the Kaleckian view. The entire book is an extension and explication of Kaleckian thought. The reader is introduced to Kaleckian mark-up pricing, the French monetary (mesoeconomic) circuit theory, Kaleckian profit determination theory, Kaleckian growth models, and so on.
The author is doing a great disservice to the Post Keynesian school (broadly defined) by presenting this book as an "Introduction" to Post Keynesian Economics. Little to no mention is made of uncertainty, historical time, the essential properties of money, liquidity preference, and Minsky's Financial Instability Hypothesis. The author introduces these topics only briefly in the book, and then passes onto other (Kaleckian) things.
I would not encorage beginning students to read this book if they are seeking to gain an understanding of Post Keynesian economics. This is not Post Keynesian economics. Reading this book, I am convinced that the author does not believe in uncertainty, has a confused understanding of historical time, does not think it worthwhile to articulate Davidson's economic scheme, and thinks that Minsky's contributions are only a prelude to the French monetary circuit theory. READERS BEWARE.
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