Post Keynesianism

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Post-Keynesianism is a branch of economics that, among other schools, follows John Maynard Keynes .

In a broad definition, post- Keynesianism includes all economists who further developed Keynes' theory after his death (1946) without turning to neoclassical synthesis (see below).

The Postkeynesians in the narrower sense are characterized by the following points:

  1. They emphasize the role of uncertainty about the future, despite which companies must make investment decisions, as well as other aspects that make it difficult to predict the effects of behavioral changes and economic policy interventions. They hold that there is no tendency towards equilibrium with full employment .
  2. They call for the distribution of income to be included in the theoretical analyzes, following the example of Michal Kalecki .
  3. They think it is more realistic to assume that companies set the prices of their products by adding a mark-up to the unit costs (or unit labor costs) instead of setting prices so that marginal sales and marginal costs match in order to maximize profits in the short term .

They strongly oppose the neoclassical appropriation of Keynes 'theory by the "neoclassical synthesis", the building of which became the dominant "Keynesian" theory after the Second World War, although it reinterpreted Keynes' theory in a neoclassical way. Post-Keynesianism is therefore also in contrast to the "New Keynesian Economics", which build a bridge to neoclassical theory in the sense that the Keynesian theory applies in the short term when prices and wages are not flexible, but in the long term the neoclassical theory applies. The Post-Keynesians, on the other hand, insist on the long-term validity of the Keynesian theory. Therefore, they reject general equilibrium theory and use, for example, stock-flow consistent models instead of equilibrium models .

Insecurity instead of risk

Your starting point is that economic decisions are made under uncertainty , not under predictable risk . The economic subjects try to counter this uncertainty by concluding fixed contracts, which are supposed to build bridges into an uncertain future, so to speak. The most important economic contracts are the determination of the wage level and loan agreements in which the loan amount, term and interest rate are determined. This results in rigidities for wages, interest rates and, derived therefrom, for prices . Because of these rigidities, no price mechanism can work that adjusts market imbalances in the short term. Rather, the economic agents adapt to the quantities, so that permanent market imbalances can occur.

Investments determine the savings

As for Keynes, the targeted investment rather than volume after the planned savings , but conversely, the savings fits in circulation related to the investments through multiplier processes.

Influence of distribution

Michal Kalecki, from whom the Post-Keynesians adopted a lot, used this context to work out the central position of companies not only for investment, employment and growth, but also for income distribution. For this he assumes - inspired by the classical economy - a classic savings function , according to which the workers as a whole spend their wages on consumption. This has the consequence that all expenditures of the companies as a group for wages as well as their own expenditures (for consumption and for investments) flow back to this group. Therefore: "The workers spend what they earn, the capitalists get what they spend."

Price formation through "mark-up"

Post-Keynesians reject as unrealistic the theory that companies maximize their short-term profit by setting their prices so that marginal costs and marginal sales match. They consider the market form of complete competition , in which the marginal turnover is equal to the given market price, to be an even less realistic special case. Rather, they assume that companies set prices by adding a certain mark-up to unit labor costs or to total unit costs. They set this mark-up depending on the competitive situation and balance of power and do not change it constantly.

Rejection of the classic dichotomy

Money is not a "veil" that ultimately does not influence the "real" economy (production, employment, etc.) or only influences it in the short term, but monetary variables also have a long-term influence on production and employment. The Post-Keynesians reject the classic dichotomy and the neutrality of money .

Rejection of Say's law

Like Keynes and Marxist economics , the post-Keynesians dispute the validity of Say's law . If money is hoarded in an uncertain world, i.e. money is in demand as a store of value, this interrupts the money cycle and there is a general oversupply of goods.

From a post-Keynesian point of view, this is so because money cannot be produced by private individuals, but is created institutionally by the central banks . The production of money as legal tender is not possible for private individuals. Here the Post-Keynesians criticize Karl Marx , in which a monetary commodity, e.g. B. Gold, which underlies the monetary system, so that private individuals could also produce their money (gold) at any time if more money is to be kept in uncertain times. On this basis, Say's law could not be refuted. The Marxist economy must therefore be understood as a “monetary value theory” (including Michael Heinrich ).

Endogenous money supply

The money supply is not exogenous ; H. determined by the central bank. This sets the interest rate that it charges the banks for refinancing transactions. When it comes to interest rate control, the central bank does not control the amount of central bank money issued itself. Their development is determined solely by the demand from commercial banks. A money supply multiplier or multiple money creation à la Milton Friedman is irrelevant against this background, since the development of the amount of central bank money issued is not subject to the central bank's control. Banks add a mark-up to the central bank rate when lending. The credit demand resulting from this interest rate is satisfied or “accommodated” by the central bank and the banks, whereby only creditworthy credit seekers come into play. The credit supply is therefore fully elastic at an interest rate set by the central bank - according to the “accommodationists” or “horizontalists”. The “structuralists”, on the other hand, assume that the interest rate demanded by the central bank will eventually rise as the demand for credit rises.

Post-Keynesian economists (main representatives)

Leading figures of post-Keynesianism are the British economist Joan Robinson (1903–1983), the Polish economist Michal Kalecki (1908–1986) and Roy F. Harrod and Evsey D. Domar . Important representatives are also Victoria Chick , Nicholas Kaldor , Steve Keen , Jan Kregel , Marc Lavoie , Luigi Pasinetti and William Vickrey in the UK , Sidney Weintraub , Paul Davidson , Richard M. Goodwin and Hyman Minsky in the USA . In Germany z. B. Eckhard Hein and Arne Heise (see literature) published on post-Keynesian theory. In a broader sense, the development theorist and political scientist Hartmut Elsenhans could also be assigned to this direction.

Important journals for Post Keynesians are the Cambridge Journal of Economics (since 1977), Journal of Post Keynesian Economics (since 1978), Metroeconomica , Review of Keynesian Economics (since 2012) and the European Journal of Economics and Economic Policies: Intervention .

literature

  • Paul Davidson : The Post Keynesian school. In: Brian Snowdon & Howard R. Vane (Eds.): Modern Macroeconomics. Elgar Publishing, Cheltenham 2005, pp. 451-473
  • Christoph Deutschmann : Left Keynesianism . Athenaeum, Frankfurt 1973, ISBN 3-7610-5871-3
  • Karl Dietrich, Hubert Hoffmann, Jürgen Kromphardt , Karl Kühne, Heinz D. Kurz, Hajo Riese & Bertram Schefold: Post-Keynesianism. Economic theory in the tradition of Keynes, Kalecki and Sraffa. With a selected bibliography by Ottmar Kotheimer. Metropolis, Marburg 1987, ISBN 3-926570-00-8
  • Alfred Eichner: A Guide to Post-Keynesian Economics . White Placus, New York 1979.
  • GC Harcourt: The Structure of Post-Keynesian Economics: The Core Contributions of the Pioneers . Cambridge University Press, 2006, ISBN 978-0-521-83387-5 .
  • Eckhard Hein : money, effective demand and capital accumulation. A view from a Marxian, Keynesian and post-Keynesian perspective. Duncker & Humblot, Berlin 1997, ISBN 3-428-08958-8
  • Eckhard Hein: Distribution and Growth. A paradigm-oriented introduction with a special focus on post-Keynesian theory. Metropolis, Marburg 2004, ISBN 3-89518-452-7
  • Eckhard Hein: Money, Distribution Conflict and Capital Accumulation. Contributions to "Monetary Analysis". Macmillan, Palgrave (Basingstoke and New York) 2008, ISBN 0-230-52157-6
  • Arne Heise : A Post Keynesian Theory of Economic Policy - Filling a Void. Journal of Post-Keynesian Economics, Vol. 31, pp. 383-401.
  • John Edward King (Ed.): The Elgar companion to post Keynesian economics . Edward Elgar Publishing, 2003, ISBN 978-1-84064-630-6 .
  • John Edward King (Ed.): A history of post Keynesian economics since 1936 . Edward Elgar Publishing, 2003, ISBN 978-1-84376-650-6 .
  • Marc Lavoie : Post-Keynesian Economics: New Foundations, Cheltenham, Edward Elgar . 2014, 660 pages, ISBN 978-1-84720-483-7

Web links

Individual evidence

  1. ↑ s. the introduction to Gregory N. Mankiw & David Romer, New Keynesian Economics. 2 volumes. Harvard (MIT Press 1991) or N. Kaldor, Alternative Theories of Distribution. Review of Economics Studies. Vol 23 (1955/56)
  2. ↑ E. Caverzasi, A. Godin: Post-Keynesian stock-flow consistent modeling: a survey . In: Cambridge Journal of Economics . tape 39 , no. 1 , January 2015, p. 157-187 , doi : 10.1093 / cje / beu021 . Pre-printed as Working Paper 745, Levy Institute , 2013.
  3. ↑ Joan Robinson : "A Further Note". The Review of Economic Studies 36, No. 2 (1969): pp. 260-62.
  4. ^ Workers spend what they get, Capitalists get what they spend. In: Southern Economic Journal. Vol. 57, No. 2 (January), Chattanooga Tenn 1991, pp. 868-870. ISSN  0038-4038 (Review of "Macroeconomic Problems and Policies of Income Distribution: Functional, Personal, and International, edited by Paul Davidson and Jan A. Kregel , Aldershot, England and Brookfield. Edward Elgar Publishing Co., 1989.").
  5. ↑ On Marxist economics see Eckhard Hein 2008, Chapter 5 “Monetary Analysis in Marx's Economics.” P. 13ff.
  6. ↑ On Marxist economics see Eckhard Hein 2008, Chapter 5 “Monetary Analysis in Marx's Economics.” P. 18ff.
  7. ↑ On Marxist economics see Eckhard Hein 2008, Chapter 5 “Monetary Analysis in Marx's Economics.” P. 43ff.
  8. ↑ Hartmut Elsenhans: Eurocrisis, Neoliberalism and the Keynesian Solution . Journal of European Studies, Vol. 31, 2015, pp. 1-26 .
  9. ^ Giuseppe Fontana, Bill Gerrard: The future of Post Keynesian economics . In: Banca Nazionale del Lavoro Quarterly Review . tape 59 , no. 236 , March 2006, p. 49-80 , p. 62 ( uniroma1.it ).
  10. ^ Postkeynesianism , exploring-economics.org, accessed December 3, 2018.