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Post Keynesian economics

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, 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 in all runs.

Post Keynesian economists believe that a capitalist economy has no natural tendency towards full employment. Investment is a major determinant of the level of aggregate demand. Decisions on the level and direction of investment are made in anticipation of future events, which agents cannot know even probabilistically, in some sense. Post Keynesians emphasize the need for government policy to support institutions to support employment and incomes.

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 unemployment is a temporary or medium run phenomenon. Government pump-priming may be desirable, but if wages and prices were perfectly flexible, mainstream Keynesian economists believe, the labor market would eventually clear.

There are divisions within Post Keynesian economics, e.g. between American Post Keynesians such as Paul Davidson and the Cambridge (England) - Italian branch.

Post Keynesian economics emphasizes macroeconomics. Many Post Keynes look to American Institutionalists 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.

Major Post Keynesian Economists

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