Keynes s General Theory After Seventy Years. This is IEA conference volume no. 147

Transcription

1 Keynes s General Theory After Seventy Years This is IEA conference volume no. 147

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3 Keynes s General Theory After Seventy Years Edited by Robert W. Dimand Robert A. Mundell and Alessandro Vercelli

4 International Economic Association 2010 Softcover reprint of the hardcover 1st edition All rights reserved. No reproduction, copy or transmission of this publication may be made without written permission. No portion of this publication may be reproduced, copied or transmitted save with written permission or in accordance with the provisions of the Copyright, Designs and Patents Act 1988, or under the terms of any licence permitting limited copying issued by the Copyright Licensing Agency, Saffron House, 6-10 Kirby Street, London EC1N 8TS. Any person who does any unauthorized act in relation to this publication may be liable to criminal prosecution and civil claims for damages. The authors have asserted their rights to be identified as the authors of this work in accordance with the Copyright, Designs and Patents Act First published 2010 by PALGRAVE MACMILLAN Palgrave Macmillan in the UK is an imprint of Macmillan Publishers Limited, registered in England, company number , of Houndmills, Basingstoke, Hampshire RG21 6XS. Palgrave Macmillan in the US is a division of St Martin s Press LLC, 175 Fifth Avenue, New York, NY Palgrave Macmillan is the global academic imprint of the above companies and has companies and representatives throughout the world. Palgrave and Macmillan are registered trademarks in the United States, the United Kingdom, Europe and other countries. ISBN ISBN (ebook) DOI / This book is printed on paper suitable for recycling and made from fully managed and sustained forest sources. Logging, pulping and manufacturing processes are expected to conform to the environmental regulations of the country of origin. A catalogue record for this book is available from the British Library. A catalog record for this book is available from the Library of Congress

5 Contents List of Figures Acknowledgments Notes on Contributors vii viii ix Introduction 1 1 Whose Keynes? 8 Roger E. Backhouse and Bradley W. Bateman 2 The General Theory in Keynes s Biographies 28 Maria C. Marcuzzo 3 The Legacy of Keynes as Public Intellectual 43 Sherry D. Kasper 4 Mr Keynes and the Liberals 63 Alessandro Vercelli 5 Corporatism and Keynes: His Views on Growth 91 Edmund S. Phelps 6 Keynes, Art and Aesthetics 101 Gilles Dostaler 7 Keynes and the Social Sciences: Contributions Outside of Economics, with Applications to Economic Anthropology and Comparative Systems 120 Mathew Forstater 8 Keynes Enduring Legacy 133 Richard N. Cooper 9 The Principle of Effective Demand: The Key to Understanding the General Theory 136 Colin Rogers v

6 vi Contents 10 Getting Rid of Keynes? A Reflection on the Recent History of Macroeconomics 157 Michel De Vroey 11 Aggregate Demand, Employment and Equilibrium with Marginal Productivity: Keynesian Adjustment in the Craft Economy 197 Edward J. Nell 12 Keynes s Approach to Money: What can be Recovered? 222 L. Randall Wray 13 Keynes s Revolutionary and Serious Monetary Theory 241 Paul Davidson 14 Preliminary Draft: Was There a (Methodological) Keynesian Revolution? 268 Sheila C. Dow 15 What Keynesian Revolution? A Reconsideration Seventy Years After The General Theory 287 Robert W. Dimand Index 312

7 List of Figures Figures 4.1 Labour market and effective demand Adjustment in the craft economy Behavior of profits Consumption moves with Investment Adjustment in the mass production economy Effects of interest on saving and investment The Central Bank s interest rate determines employment 215 vii

8 Acknowledgments We are very grateful to the Monte dei Paschi di Siena for its generous sponsorship of the International Economic Association conference Keynes s General Theory After Seventy Years, July 3 to 6, 2006, to the University of Siena for its support of the conference, and to Valerie Natzios and Robert Mundell for their wonderful hospitality at the Palazzo Mundell in Santa Colomba, where the conference was held. In addition to the more formal papers collected here, the participants in the conference had the great treat of hearing C. Lowell Harris s recollections of how Keynes s General Theory was received at Columbia University in 1937, when Professor Harris began his graduate studies there. We thank Fay Sun for her work on the index to this volume. Thanks are also due to Siena for being Siena: in addition to the seventieth anniversary of the publication of Keynes s General Theory, the conference also marked the centenary of Keynes s visit to Siena, and one can easily understand why he was so delighted with Siena and Tuscany. viii

9 Notes on Contributors Roger E. Backhouse is Professor of the History and Philosophy of Economics at the University of Birmingham. His books include The Ordinary Business of Life/The Penguin History of Economics (Princeton University Press/Penguin Books, 2002), The Cambridge Companion to Keynes (co-edited with Bradley W. Bateman, Cambridge University Press, 2006), and The History of the Social Sciences since 1945 (co-edited with Philippe Fontaine, Cambridge University Press, 2010). Bradley W. Bateman is the provost and executive vice-president of Denison University. He is the author of Keynes s Uncertain Revolution and co-editor (with Roger Backhouse) of The Cambridge Companion to Keynes. His work on the religious influences on American economics has appeared in many journals, including the Journal of Economic Perspectives, History of Political Economy, and the Journal of the History of Economic Thought. He is working on a book on the religious influences in the formation of American economics in the late Nineteenth and early Twentieth Century and how the discipline subsequently became secularized. Richard N. Cooper is Maurits Boas Professor of International Economics at Harvard University. He taught at Yale University from 1963 to 1977, and was in public service on several occasions, including as Under- Secretary of State for Economic Affairs, chairman of the Federal Reserve Bank of Boston, and chairman of the National Intelligence Council. Paul Davidson is Visiting Scholar at the New School for Social Research, Bernard Schwartz Center for Economic Policy Analysis. He is the editor of the Journal of Post Keynesian Economics, the author of John Maynard Keynes (Palgrave Macmillan, Great Thinkers in Economics, 2007), the author, co-author, or editor of 21 other books, and the author of more than 200 articles. Michel De Vroey, Professor at the University of Louvain, Belgium), is the author of Involuntary Unemployment: The Elusive Quest for a Theory (Routledge, 2004). He is working on a book on the history of ix

10 x Notes on Contributors macroeconomics, a subject on which he has published extensively. He held visiting positions at Paris-Sorbonne, Duke University, Clemson University, and the University of British Columbia. Robert W. Dimand is Professor of Economics at Brock University and Adjunct Professor at McMaster University, Canada. He is the author of The Origins of the Keynesian Revolution (Elgar and Stanford University Press, 1988), co-author of A History of Game Theory, Vol. 1: From the Beginnings to 1945 (Routledge, 1996), co-editor of A Biographical Dictionary of Women Economists (Elgar, 2000) and editor of The Origins of Macroeconomics (10 volumes, Routledge, 2004). He has been a visiting professor at Connecticut College and the Universities of Paris II (Assas-Panthéon) and Dijon. He is currently writing the volume on James Tobin in the Palgrave Macmillan series Great Thinkers in Economics. Gilles Dostaler is Professor of Economics at the Université du Québec à Montréal, Canada. He specializes in the history of economic thought. He wrote extensively on Keynes, Hayek, Marx, and other prominent thinkers. He has published, among other works, Economic Thought since Keynes (with Michel Beaud, Edward Elgar, 1995, and Routledge, 1997), Le libéralisme de Hayek (La Découverte, 2001), Keynes and his Battles (Edward Elgar, 2007), Capitalisme et pulsion de mort (with Bernard Maris, Albin Michel, 2009), and Keynes par-delà l économie (Thierry Magnier, 2009). Sheila C. Dow is Professor of Economics at Stirling University. She is co-editor (with Alexander Dow), of A History of Scottish Economic Thought (Routledge, 2006), and author of Economic Methodology: An Inquiry (Oxford University Press, 2002), The Methodology of Macroeconomic Thought (Elgar, 1996) and other publications in methodology, history of economic thought, Post Keynesian economics, monetary theory, and regional finance. She is Director of SCEME, an associate editor of the Journal of Economic Methodology, and special advisor on monetary policy to the UK House of Commons Treasury Select Committee. Mathew Forstater is Associate Professor of Economics and Black Studies at the University of Missouri Kansas City and Director of the Center for Full Employment and Price Stability at UMKC. He is the author of Little Book of Big Ideas: Economics (ANC Books, 2007) and co-editor (with L. Randall Wray) of Keynes for the Twenty-First Century (Palgrave Macmillan, 2008).

11 Notes on Contributors xi Sherry Davis Kasper is a Professor of Economics at Maryville College, Tennessee. She is the author of The Revival of Laissez-Faire: A Case Study of its Pioneers (Elgar, 2002). Her recent work focuses on the role of economists as public intellectuals and civility in intellectual discourse. Maria Cristina Marcuzzo holds a First Degree in Philosophy (University of Milan) and MSc in Economics (London School of Economics). She is Professor of Economics at the University of Rome La Sapienza and is currently president of the European Society for the History of Economic Thought. She has worked on classical monetary theory (co-author of Ricardo and the Gold Standard, 1991) and on the Cambridge School of Economics (co-editor of The Economics of Joan Robinson, 1996, and of Economists in Cambridge, 2005, and author of several articles in various journals). She is currently editing a collection of her papers on Keynes. Robert A. Mundell, Professor of Economics at Columbia University, won the Royal Bank of Sweden Prize in Economic Science in Memory of Alfred Nobel (the Nobel Prize in Economics) in His many publications include International Economics (Macmillan, 1968), Monetary Theory: Inflation, Interest, and Growth in the World Economy (Goodyear, 1971), and A Reconsideration of the Twentieth Century (Nobel Lecture, American Economic Review, 2000). Edward J. Nell is Professor of Economics at the New School for Social Research in New York. He has taught at Wesleyan University and the University of East Anglia and has been a visiting professor at the Universities of Bremen, Paris, Rome, Siena, Orleans, and Nice. A Fellow of the Lehrman Institute, a Bard Center Fellow, and fellow and teaching member of the Centro di Studi Economici Avanzati, he is the author of Rational Economic Man (with Martin Hollis, 1975), Prosperity and Public Spending (1988), Keynes After Sraffa (1990), and Transformational Growth and Effective Demand (1992), and the editor of Growth, Profits and Property (1980) and Free Market Conservatism (1984). Edmund S. Phelps, born in 1933 in Chicago, received his B.A. from Amherst in 1955 and his Ph.D. from in After appointments at Yale and Pennsylvania he joined Columbia in He founded the Center on Capitalism and Society in He won the 2006 Nobel Prize in Economics. In 2009 he was named Chevalier of the Legion of Honor and received the Premio Pico della Mirandola and the Kiel Global Economy Prize, and a Phelps Chair was established in his honor

12 xii Notes on Contributors at the Universidade de Buenos Aires. In 2001 he was honoured with a Festschrift conference and volume. Colin Rogers has a Doctorate of Commerce from the University of South Africa and is currently an Associate Professor of Economics at the School of Economics, University of Adelaide, South Australia. His research interests focus on the foundations of monetary theory, the international monetary system and the economics of Keynes. His publications, including Money, Interest and Capital: A Study in the Foundations of Monetary Theory (Cambridge University Press, 1989) and a chapter in A Second Edition of the General Theory (ed. Harcourt and Riach, Routledge, 1997), have stressed the importance of the principle of effective demand for understanding the integration of money and real forces in Keynes s General Theory. Alessandro Vercelli is Professor of Economics at the University of Siena. He is the author of Methodological Foundations of Macroeconomics: Keynes and Lucas (Cambridge University Press, 1991) and co-editor of Macroeconomics: A Survey of Research Strategies (Oxford University Press, 1992). L. Randall Wray is a Professor of Economics at the University of Missouri-Kansas City as well as Research Director, the Center for Full Employment and Price Stability (at UMKC), and Senior Scholar at the Levy Economics Institute of Bard College, NY. A student of Hyman P. Minsky while at Washington University in St. Louis, Wray has focused on monetary theory and policy, macroeconomics, financial instability, and employment policy. He is the author of Understanding Modern Money: The Key to Full Employment and Price Stability (Elgar, 1998) and Money and Credit in Capitalist Economies (Elgar, 1990) and the editor of Credit and State Theories of Money (Elgar, 2004). Wray received a B.A. from the University of the Pacific and an M.A. and Ph.D. from Washington University in St. Louis.