This book sees Keynes as neither villain nor hero and develops a sympathetic ‘left’ critique. Keynes was an avowedly elitist and pro-capitalist economist, whom the left should appropriate with caution. But his analysis provides insights at a level of concreteness which Marx’s analysis largely ignored and which were concerned with issues of the modern world which Marx could not have foreseen. A critical Marxist engagement can simultaneously increase the power of Keynes’s insight and enrich Marxism. To understand Keynes, whose work is liberally invoked but seldom read, the book first puts Keynes in context, explaining his biography and the extraordinary times in which he lived, his philosophy and his politics. The book describes Keynes’s developing critique of ‘the classics’, of mainstream economics as he found it, and summarises the General Theory. It shows how Keynes provides an enduringly valuable critique of orthodoxy but vital insights rather than a genuinely general theory. The book then develops a Marxist appropriation of Keynes’s insights. It argues that Marxist analysis of unemployment, of money and interest, and of the role of the state can be enriched through such a critical engagement. The book addresses Keynesianism after Keynes, critically reviewing the practices that came to be known as ‘Keynesianism’ and different theoretical traditions that have claimed his legacy. It considers the crisis of the 1970s, the subsequent anti-Keynesian turn, the economic and ecological crises of the twenty-first century, and the prospects of returning to Keynes and Keynesianism.
“Classics”’, would have it, here the attempted reconciliation with the mainstream is overt and Keynes’s criticisms become a special case of the system he was criticising.
Second, the chapter looks at market imperfections, considering alternative NewKeynesian and ‘post-Keynesian’ accounts, with briefer notes on money and financial instability. Despite declarations of mutual hostility, the relatively moderate NewKeynesians and the putatively more radical post-Keynesians have much in common. As Shaikh ( 2016 ) has argued, the emphasis for both remains on imperfections
Part of the reason for the rarity of post-prefixes in economics may be that
economists are much more sympathetic towards the prefixes ‘neo’ and
‘new’. The two editions of the New Palgrave contain entries for
‘neo-classical’, neoclassical synthesis, neoclassical growth theory,
neo-Ricardian economics, new classical macroeconomics, new economic geography, new
institutional economics, newKeynesian macroeconomics, and new open economy macroeconomics.
The prefixes ‘new’ and ‘neo’ can even be
Towards a critical but constructive appraisal of Keynes’s thought
the old economic orthodoxy as ‘microeconomics’, which could proceed as if the Keynesian revolution had never happened.
A second strand is distinguished here in its emphasis on ‘market imperfections’. For ‘new-Keynesians’ this implies that the mainstream claims of market efficiency need not hold. It can lead to some profound criticisms of conventional thinking and crude pro-market policy proposals. For example, Stiglitz, the ‘godfather’ of NewKeynesianism (Mott 1989 ), opposed the International Monetary Fund (IMF) structural adjustment programmes and austerity in
Theory accepts this smallness, abstracting from the real conditions of monopoly. But even small firms are seldom price-takers in any literal sense. In some industries something close to this may occur, such as when a farmer takes her stock to auction. But it is atypical. Firms often decide on the selling price before goods leave the factory. Many consumer goods are literally manufactured with the price on the box. A mainstream or ‘NewKeynesian’ literature simultaneously acknowledges and trivialises these processes as ‘menu costs’, but it is the free market which is
much larger state than in those years,
the existence of a social ‘safety net’ and the belief that government had a responsibility for the common good in periods of crisis. In other words, the Thatcherism
and the neoliberal ‘revolution’ constrained classical Keynesian notions and moved
them a long way down the economic policy agenda, but they were not removed
altogether. Indeed, the pre-crisis policy regime has been described in terms of ‘newKeynesianism’ (Hall, 2013: 146). Furthermore, because the government’s crisis
The advent of crisis and the building of
exposed to one economic perspective – is relatively new. As Chris Giles, the Economics
Editor of the Financial Times, has put it:
There was a time when any self-respecting economics undergraduate
could distinguish between neo-Keynesian, new-Keynesian and postKeynesian thinking; they would write essays on the difference between
Marxist and monetarist policies; and they would have to know how
classical economists, such as Adam Smith, influenced the neoclassical
school and how new classical economics developed subsequently in the
1970s. Economics teaching was about
implied in Beveridge’s report’, and that the ‘way to build a prosperous economy lies in social renewal’.12
The second dominant approach was informed by a Keynesian response to the
deficit crisis, which advocated public investment to stimulate job creation and economic growth. The newKeynesians in and around Labour shared with Blue Labour
the understanding that capitalism was unstable and prone to crisis, however they did
not share its critical approach to the State. The central point of Keynesian economists was that the State should concentrate on creating employment