Chick at 80 seminar 11th of July University College London Anders Ekeland Statistic s Norway SSB andersekelandssbno Luigi Pasinettis Keynes and the Cambridge Keynesians ID: 560100
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Slide1
The Victoria
Chick at 80 seminar, 11th of July,University College, LondonAnders Ekeland, Statistics Norway, SSBanders.ekeland@ssb.no
Luigi
Pasinetti's
Keynes and the Cambridge Keynesians
a ‘Revolution in Economics’
to be accomplished
.
(Cambridge Univ
. press, 2007)
Some critical commentsSlide2
Page
2Pasinetti’s starting points“In terms of economic policy their success was immediate.In terms of economic theory Keynes’ original ideas failed to achieve wide acceptance.” Economic science, essentially continued to do ‘business as usual’, i.e. with a Walrasian engine at is core”. But how fundamental was Keynes’ break with Marshalls?Can we use equilibrium models – even classical ones like Smith, Ricardo and Marx at all?Can one analyse any macro question with static accounting identities?Slide3
Page
3Keynes critique of the classical model Pasinetti does not discuss Keynes’ “Postulates of the Classical Economics”, Chap. 2, of the GT, at all. The two postulates that Keynes singles out for discussion is:I. The wage is equal to the marginal product of labour.II. The utility of the wage when a given volume of labour is employed is equal to the marginal disutility of that amount of employment. “The disutility of labour is a piece of Marshallian luggage that Keynes thoughtlessly carried with him”. Joan Robinson, in Economic Philosphy, discsussing involuntary unemployment, pages 90-92Slide4
Page
4Haavelmo 1977 paper«The Keynesian revolution»“[…] Instead of starting directly with the problem, how the high unemployment level of around 30 % should be explained, Keynes had a tendency to start with how such an underemployment should be explained in a neo-classical model. […] The most important error that was committed was the one to try to explain the world of the thirties by means of a Walras-model. The model was irrelevant. Especially it was misleading to analyse saving-investment processes with the aid of an ordinary supply-demand scheme. […] Keynes looked at a dynamic-demanding phenomenon, which one could not shed light on by static exchange-market models of the classical variety.” Haavelmo concludes that since Keynes “did not build an explicit dynamic theory, he was always in a logical danger-zone, and that created a lot of confusion.” [My italics and translation from Norwegian]
Pasinetti
writes, that is
is
possible to:
“…
assemble (perfectly orthodox) arguments that Keynes had used earlier in similar contexts. In this way, one may even conclude that, essentially, there is essentially nothing new, in spite of the claims to the contrary. In a nutshell, ‘it was all in Marshall’, whose orthodoxy was, after all, on many points ambiguous.” (p. 6
)Slide5
Page
5Kaldor: …preserving the pre-exitisting buildingIn his paper to the centenary conference of Keynes’ birth, with the title “Keynesian economics after fifty years” Kaldor writes: “…that while Keynes took every opportunity to emphasise the novelty of his approach, and his rejection of the ‘fundamental postulates’ of the ‘classical economists’ […] this merely disguised the extent to which his theory suffered from an almost slavish adherence to prevailing (Marshallian) doctrine – to which his own ideas were ‘fitted’ more in the manner of erecting an extra floor or balcony here or there, while preserving the pre-existing building.” (Kaldor 1983, p. 6)“There is no mention of imperfect competition or its consequences in the General Theory. This prompted Jean de Largentaye, the French translator of the General Theory, to say that the acceptance of Marshallian micro-economics by Keynes made it possible for his opponents ‘to invoke the authority of the General Theory in favour of views directly contrary to his essential teaching’.” (ibid, p. 14) [My italics]Slide6
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6“The missed Keynes-Schumpeter connection”[Goodwin] “…most of all, regretted the absence of Schumpeter among the authors explicitly mentioned for inspiration” … when the CJE was established[Marx, Keynes, Kalecki, Joan Robinson and Kaldor]Pasinetti writes that Schumpeter’s review of GT was: “significant – extraordinarily caustic and sarcastic” (p. 27). Schumpeter is very critical to the connection between employment and output: “… [the]reasoning on the assumption that variations in output are uniquely related to variations in employment imposes the further assumption that all production functions remain invariant. Now the outstanding feature of capitalism is that they do not, on the contrary, they are constantly revolutionized. The capitalist process is essentially a process of change of the type which is being assumed away in this book, and all of its characteristic phenomena and problems arise from the fact that it is such a process.” [My italics]