Monday, December 01, 2008

On John Maynard Keynes

I think Chapter 12 of the General Theory is insightful. Chapter 17 draws on Sraffa's concept of own rates of interest, which Sraffa introduced in his critique of Hayek. Apparently Sraffa was not enthusiastic about Keynes' theory of liquidity preference. As I recall, the connections between Keynes and the more junior Sraffa go quite a bit further back. Sraffa translated Keynes' Tract on Monetary Reform into Italian. A major thesis of this book is that monetary authorities should worry more about unemployment and inflation inside their country than exchange rate stability. Apparently this was Sraffa's thesis, presented in Italy at the end of World War I.

Update: I suppose I ought to mention my game, which is closer to hydraulic keynesianism. I did get the idea for the underlying model from Kalecki.

1 comment:

Anonymous said...

of course, if Austrian theory of the business cycle is so strong then Hayek would not have lost the business cycle debates of the 1930s...

So it is hard to take criticism of Keynes seriously without discussing Kaldor and Sraffa and their critiques of von Hayek.

Equally, talking about von Hayek and inflation without mentioning that Joan Robinson (in 1943!) noted that inflation would become a problem due to the erosion of workplace discipline due to full employment seems strange.

Robinson was right in that Keynes did not break sufficiently from the neo-classical tradition, making it easy for the "Keynesianism" of the post-war period to flourish.

I'm hoping that the current crisis will allow post-Keynesian economics to become mainstream. Give how badly the orthodoxy has worked so far, it suggests that, as in the 1930s, lessons could be learned and progress main.

Who knows, maybe economics will become more like a science?

An Anarchist FAQ