Post-Keynesian economics

• 1. Origins And Naming

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  The term post-Keynesian first appeared in print during 1975 when Alfred Eichner and Jan Kregel used it to describe a distinct school of thought. This label emerged years after John Maynard Keynes published The General Theory in 1936, which had previously served as the sole anchor for all related economic theories. Before that specific year, any economist working after 1936 could simply be called post-Keynesian without belonging to a unified group. The establishment of the Journal of Post Keynesian Economics in 1978 solidified this identity into an institutional reality. Historians note that Robert Skidelsky argues this school remains closest to the original spirit of Keynes' work compared to other interpretations. Early members like Joan Robinson sought to distance themselves from Keynes even while building upon his ideas. Some later thinkers adopted more progressive views than Keynes himself regarding worker-friendly policies and redistribution.

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• 2. Theoretical Foundations

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  Effective demand serves as the core principle where demand matters in both the long run and short run. A competitive market economy possesses no natural tendency toward full employment according to these theorists. They reject the idea that rigid prices or sticky wages cause market failure to provide jobs. Post-Keynesians typically dismiss the IS-LM model created by John Hicks because they argue endogenous bank lending outweighs central banks money supply for interest rates. Money supply responds to the demand for bank credit rather than being controlled directly by a central authority. Central banks can only manage interest rates by controlling monetary reserves instead of fixing quantity. This view has largely been incorporated into mainstream economics which now targets interest rates as instruments. Hyman Minsky put forward a theory of financial crisis based on financial fragility that received renewed attention recently. The field extends beyond aggregate employment to theories of income distribution, growth, trade, and development.

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• 3. Key Figures And Debates

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  Joan Robinson regarded Michał Kalecki's theory of effective demand to be superior to Keynes' own theories. Kalecki based his work on class division between workers and capitalists alongside imperfect competition. Robinson led the critique against using aggregate production functions based on homogeneous capital during the Cambridge capital controversy. She won the argument but lost the battle within the broader academic community. Piero Sraffa influenced this post-Keynesian position significantly though he drew more inspiration from David Ricardo than Keynes. Nicholas Kaldor focused much of his work on increasing returns to scale and path dependence. He highlighted key differences between primary and industrial sectors in economic analysis. Paul Davidson follows Keynes closely by placing time and uncertainty at the center of all theory. Fundamental uncertainty flows from these placements to determine the nature of money and monetary economies. Internal disagreements exist regarding how far to distance themselves from Keynes original writings versus expanding them.

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• 4. Strands And Evolution

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  Monetary circuit theory originally developed in continental Europe places particular emphasis on the distinctive role of money as means of payment. Stock-flow consistent models enable a consistent description of receivables and liabilities as well as cash flows. Modern Monetary Theory emerged independently when Warren Mosler modeled currency itself as a public monopoly. This approach recognizes that coercive taxation drives the currency through tax credits while price levels function off state prices. Subsequent academics associated with MMT used macroeconomic modeling by Wynne Godley to expand the framework. They incorporated some ideas from Hyman Minsky regarding labor markets alongside chartalism and functional finance. Recent attempts provide micro-foundations for capacity underutilization as a coordination failure justifying government intervention. These interventions take the form of aggregate demand stimulus to address market failures effectively. Each strand continues to see further development by later generations of economists working within the tradition.

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• 5. Institutional Presence

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  The Post-Keynesian Economics Society formed in 1988 as the Post-Keynesian Economics Study Group before changing its name in 2018. Philip Arestis and Victoria Chick founded this United Kingdom academic association to support the field globally. Research appears regularly in journals like Review of Keynesian Economics, Cambridge Journal of Economics, and Journal of Economic Issues. Sidney Weintraub and Paul Davidson established the Journal of Post Keynesian Economics specifically for this purpose. The UK hosts post-Keynesian economists at institutions including SOAS University of London and University of Greenwich. Cambridge Econometrics developed an Energy-Environment-Economy Model for Europe used by the European Commission. The New School in New York City and University of Massachusetts Amherst host significant programs in the US. Erasmus University Rotterdam and Maastricht University maintain strong presence in the Netherlands. Berlin School of Economics and Law offers master's degree courses in International Economics and Political Economy of European Integration. The Centre of Full Employment and Equity operates out of University of Newcastle in Australia.

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