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Post-Keynesian economics is a school of thought which is based on the ideas of John Maynard Keynes. It differs from the interpretation of Keynes' ideas offered by mainstream Keynesian economics, such as the new Keynesian economics, emphasising in particular:- The importance of uncertainty, historical time, or non-ergodicity (as opposed to risk, logical time, and ergodic processes).
- The idea that money matters for the "real" economy (output, employment, etc.) in both the short and long runs.
Post-Keynesian economists believe that a capitalist
economy has no natural or automatic tendency towards full employment. Fixed investment is a major determinant of
the level of aggregate demand in closed or large economy. Decisions on the
level and direction of investment are made in
anticipation of future events, which agents cannot
know even probabilistically. Post-Keynesians emphasize the need for government fiscal policy to support institutions to support employment and incomes.
"Logical time" is the type of "time" seen in most economic models, i.e., comparative statics exercises in which an equilibrium is disturbed and the model automatically moves to a new, predetermined, equilibrium with no attention given by the economist to the process of getting there. On the other hand, "historical time," the present is nothing but a moment in the passage from the immutable past to the unknowable future (to paraphrase Joan Robinson). The economy is always a dynamic process and (almost) never in an equilibrium state. The actual process of going from situation A to situation B is path dependent, helping to determine the character of situation B rather than it being predetermined. Thus, the post-Keynesian conception of the "long run" differs from that of neoclassicals and various neoclassical schools of Keynesian economics.
Post-Keynesians believe, along with others, that what many
call Keynesianism is, in fact, a counterrevolution
against the economics of Keynes. Keynesianism,
as developed by many American economists, teaches that
involuntary unemploymentIn economics, a person who is able and willing to work yet is unable to find a paying job is considered unemployed . The unemployment rate measures the number of unemployed workers as a proportion of the total civilian labor force, where the latter includ is a temporary or medium-run
phenomenon. Government pump-primingLike other institutions, governments operate on a budget or try to do so. When the expenditures of a government (its purchases of goods and services, plus its tranfers (grants) to individuals and corporations) are greater than its tax revenues, it creates may be desirable,
but if wages and prices were perfectly flexible,
mainstream Keynesian economists believe, the labor
market would eventually clear, as in the classical theory of unemploymentIn economics, a person who is able and willing to work yet is unable to find a paying job is considered unemployed . The unemployment rate measures the number of unemployed workers as a proportion of the total civilian labor force, where the latter includ.
There are divisions within post-Keynesian economics, for example
between American post-Keynesians such as Paul Davidson
and the Cambridge (England) - Italian branch. The latter often focuses on issues of microeconomicsMicroeconomics is the study of the economic behaviour of individual consumers, firms, and industries and the distribution of production and income among them. It considers individuals both as suppliers of labour and capital and as the ultimate consumers o, especially the capital controversyThe capital controversy refers to a debate in economics concerning the nature and role of capital goods (or means of production) that occurred during the 1960s, largely between economists such as Joan Robinson and Piero Sraffa at the University of Cambrid, and is closely related to the neo-Ricardian schoolThe neo-Ricardian school is an economic school 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 Commodities by Means of Com.
Post-Keynesian economics emphasizes macroeconomicsMacroeconomics is the study of the entire economy in terms of the total amount of goods and services produced, total income earned, the level of employment of productive resources, and the general behavior of prices. Macroeconomics can be used to analyse.
Many post-Keynesians look to American InstitutionalistsIn economics, the institutional economics school goes beyond the usual economic focus on markets, to look more closely at human-made institutions. Institutional economics was once the dominant school of economics in the United States, including such famou
for microeconomics. Institutionalists include
such economists as Thorstein Veblen, John R. Commons,
Wesley Clair Mitchell, John Maurice Clark,
Clarence Ayres, Gunnar Myrdal (not an American), and
John Kenneth Galbraith.
