Macroeconomics after the financial crisis

23 May, 2016 at 12:43 | Posted in Economics | 8 Comments

olesewns bvokA new volume of Routledge Frontiers of Political Economy series is out, featuring accessible, informative and provocative contributions by leading Post-Keynesian scholars on the shortcomings of mainstream microfoundeds DSGE modeling and the need for new — relevant and realist — views on economic — both fiscal and monetary — policies.

Oh, and yes, yours truly is one of the contributors — as are e. g. James Galbraith, Engelbert Stockhammer, and Jesper Jespersen.

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  1. Pointing out “shortcomings” of mainstream economics and emphasizing the “need” for something new and relevant is becoming tiresome, and has been the hobby of Post Keynesians for 40 odd years. You guys have had a long time to come up with something new and relevant, and yet any such request is met with silence. It may be a fun pastime, but science it is not.

    • “You guys have had a long time to come up with something new and relevant, and yet any such request is met with silence.”

      You sound like an utter buffoon to me. Met with silence? lol….

      Here is just a small sample of PK research that is worth more than a million of your neoclassical garbage books and articles:

      Davidson, Paul. 2009. The Keynes Solution: The Path to Global Economic Prosperity (1st edn). Palgrave Macmillan, New York and Basingstoke.

      Lavoie, Marc. 2009. Introduction to Post-Keynesian Economics (2nd rev. edn.). Palgrave Macmillan, Basingstoke, UK.

      Skidelsky, R. J. A. 2010. Keynes: The Return of the Master (rev. and updated edn.). Penguin, London.

      King, J. E. 2012. The Elgar Companion to Post Keynesian Economics (2nd edn.). Edward Elgar, Cheltenham.

      Wray, L. Randall. 2012. Modern Money Theory: A Primer on Macroeconomics for Sovereign Monetary Systems. Palgrave Macmillan, New York.

      King, John E. 2015. Advanced Introduction to Post Keynesian Economics. Edward Elgar, Cheltenham.

      Advanced and Specialist Literature
      Hayes, Mark. 2006. The Economics of Keynes: A New Guide to The General Theory. Edward Elgar, Cheltenham.

      Pasinetti, Luigi L. 2007. Keynes and the Cambridge Keynesians: A ‘Revolution in Economics’ to be Accomplished. Cambridge University Press, Cambridge.

      Tily, Geoff. 2007. Keynes Betrayed: Keynes’s General Theory, The Rate of Interest and Keynesian Economics. Palgrave Macmillan, New York.

      Godley, Wynne and Marc Lavoie. 2007. Monetary Economics: An Integrated Approach to Credit, Money, Income, Production and Wealth. Palgrave Macmillan, New York, N.Y.

      Davidson, Paul. 2009. John Maynard Keynes (rev. edn.). Palgrave Macmillan, Basingstoke.

      Hein, Eckhard and Engelbert Stockhammer (eds.). 2011. A Modern Guide to Keynesian Macroeconomics and Economic Policies. Edward Elgar, Cheltenham.

      Keen, Steve. 2011. Debunking Economics: The Naked Emperor Dethroned? (rev. and expanded edn.). Zed Books, London and New York.

      Davidson, Paul. 2011. Post Keynesian Macroeconomic Theory: Foundation for Successful Economic Policies for the Twenty-First Century (2nd edn). Edward Elgar Publishing, Cheltenham.

      Harcourt, G. C. and Peter Kriesler (eds.). 2013. The Oxford Handbook of Post-Keynesian Economics. Volume 1: Theory and Origins. Oxford University Press, New York.

      Harcourt, G. C. and Peter Kriesler (eds.). 2013. The Oxford Handbook of Post-Keynesian Economics. Volume 2: Critiques and Methodology. Oxford University Press, New York.

      Jespersen, Jesper and Mogens Ove Madsen (eds.). 2013. Teaching Post Keynesian Economics. Edward Elgar, Cheltenham, UK.

      Lavoie, Marc. 2014. Post-Keynesian Economics: New Foundations. Edward Elgar, Cheltenham.

      Davidson, Paul. 2015. Post Keynesian Theory and Policy: A Realistic Analysis of the Market Oriented Capitalist Economy. Edward Elgar Publishing, Cheltenham, UK.

      • Dear Lord,

        That’s a nice syllabus for an introductory course on post Keynesian economics and various interpretation of what “Keynes really meant”. But I do not see any see anything new and relevant, although I had to admit that I did not read them all.

        Do you perhaps have an article or two that provides some new and relevant insights, and not mere petty stabs at mainstream economics? I would honestly be delighted to read them!

        The economists pre Keynes were more known as “classicals” than neoclassicals. But even then, I’m not sure how “having it our way” led to the great depression. Is the left to blame for the morass in Venezuela?

      • Pontus, the criticisms of Classical economics made by Keynes very much apply to Neo-classical (and New Classical) constructs of which a very close association exists. In many ways neo-classical and new-classical economics are even more extreme versions of classical economics. A Walrasian framework is fundamentally un-Keynesian, and critics argue that the neo-classical project forced Keynesian economics into a classical Walrasian framework and insisted on questionable micro-foundations to which it does not belong.

        On Venezuela, this is not a question of the merits of state planning or a market based economy. There are cases of both market economies and countries with high levels of state intervention succeeding and failing. An interesting question is why did countries in Europe, the US and East Asia succeed, but those in East Asia did not and why is there such a geographic bias. Japan, for example, is a country which had large government direction during its rapid economic development. But that alone is not the issue. It is not enough to explain its success. In areas of the world less successful – Africa, the Middle East and South America there are factors which explains their lack of success that relate to history and social structures which would have created problems whatever the level of government intervention in place. My guess in the Venezuelan case has something to do with oil prices that have collapsed in a country where institutions have not been well-developed, but which until now, has been propped up by high commodity prices in this oil-export revenue dependent economy.

        So how do you look at economic issues? There is not a standardised model as that would distort analysis. It is multi-disciplinary that gradually puts the interlinked pieces together.

      • Nanikore, thank you for a serious answer. It’s a rare occurrence not to be called a “fool” or “buffoon” when one has the audacity to question the holy scriptures of the Lord (Keynes).
        .
        My issue with statements such as
        .
        “You guys had your bloody way back in the 1920s and 1930s and it ended in the Great Depression and fascism in Europe. You should reflect on that with humility, you fool, before coming here and trolling Lars’ blog.”
        .
        Is that they have a very particular an unjustified selection bias. As you point out, Europe and the US have been very successful economically. Yet, there has been crises. Lord Keynes above (or below in this case) seems to think that the crises are mainstreams economists to blame, while the successes — which frankly dwarfs the blips that recessions mark on the grand scale of things — are to someone else’s credit. I wonder with which metric such a confidence of a black and white world stems from.
        .
        For Venezuela I somewhat agree with you. Oil generated dividends that were, through social contracts, distributed regressively throughout society. So far so good. But oil prices are flexible, but contracts are not. So when oil took a nosedive, the contracts remained. And with its past reputation, Venezuela does not have access to international lending markets. The inevitable outcome was hyperinflation and a crippled economy (mainstream theory, I believe, has a pretty accurate description of what money printing does to inflation, and what hyperinflation does to the economy).

      • “But I do not see any see anything new and relevant,”

        That is either a lie or a demonstration that you are profoundly stupid.

        Free markets do not naturally equilibrate to full employment equilibrium by wage and price flexibility. That is a central insight of Keynes and the development of his theory. Is that new and relevant, you clown? Is it a new and original view compared to neoclassical theory?

        But I’ll bet you actually agree with that myth of general equilibrium — being an advocate of neoclassical theory that might as well be the creation science of the economics profession.

        What about the view that the quantity theory is fundamentally wrong? Did you agree with that new and relevant view? Or do you continue to defend the intellectually bankrupt QT nonsense?

        “Lord Keynes above (or below in this case) seems to think that the crises are mainstreams economists to blame,

        Of course you are to blame. How many of your neoclassical charlatan friends predicted the financial crisis of 2008?

        It was the demands and policy advice of your profession — derived from neoclassical theory — such as financial deregulation, abandonment of full employment, deregulation of labour markets, driving of people into excessive private debt, denial even of the very concept of an asset bubble that caused that crisis. The degree of human suffering you caused should make you ashamed.

        But of course there is nothing but contemptible doubling down on your insanity, isn’t there. The same grotesque ignorance, stupidity, denialism, and fantasy world delusions.

        Go and look at Ireland or Greece and see how austerity and wage and price deflation has worked. That is why to a very great degree, by neoclassical insanity, a country like Germany was driven to fascism by 1933. You deserve nothing but contempt.

  2. “You guys have had a long time to come up with something new and relevant, and yet any such request is met with silence”

    Funny, that also sounds like a perfect description of neoclassical economics. You guys had your bloody way back in the 1920s and 1930s and it ended in the Great Depression and fascism in Europe. You should reflect on that with humility, you fool, before coming here and trolling Lars’ blog.

  3. “You guys have had a long time to come up with something new and relevant…”

    Thankfully the high priest of mainstream economics has clarified so many issues for us declaring that economics has solved the depression problem (bad luck about the timing of his pronouncement) and that the high unemployment of the depression years was voluntary and akin to the displaced workers taking an intended vacation.

    Unfortunately he slipped up a little, departing from the standard script, and admitted before a meeting of the Council on Foreign Relations that Obama’s post 2008 fiscal rescue package was probably necessary.

    No-one’s perfect.


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