The Oxford Handbook of Post Keynesian

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thinkers in Post-Keynesian Economics to give a panoptical survey of the theory ... I particularly enjoyed Jan Kregel's delicious morsel presenting “A Personal View ... Richard Arena and Stephanie Blankenburg impressed me with their “Sraffa, ...
Review: The Oxford Handbook of Post Keynesian Economics Volume 1: Theory and Origins. Brendan Markey-Towler School of Economics and Australian Institute for Business and Economics University of Queensland, Australia This book review could really consist of one line: The Oxford Handbook of Post-Keynesian Economics is edited by Geoff Harcourt and Peter Kreisler, therefore you ought immediately buy it. However if you are not acquainted with Geoff Harcourt, Peter Kriesler or Post-Keynesian Economics a bit more might need be said to persuade you of this. Geoff Harcourt is a towering figure not only in Post-Keynesian Economics but also Australian economics. Legend has it he was contacted by Jim Cairns personally to offer him the Governorship of the Reserve Bank of Australia on behalf of Gough Whitlam. He politely refused saying “thanks Jim, but I’m a real man, not a monetary man”. Whitlam’s loss was not only Fraser’s gain, it was also the gain of the University of Cambridge. Geoff Harcourt had already written the definitive history of how Cambridge had somehow won the battle but lost the war over the Massachusetts manner of treating capital as a single mass congealed by capital prices1. He stayed on at Jesus College and continued to take an active part in and observe the emergence of Post-Keynesian Economics, very much a Cambridge movement. Peter Kriesler is of the critical next generation of Post-Keynesian economists. This generation (very nearly all of whom have contributed to the volume under review) took the contributions of Joan Robinson, Piero Sraffa, Nicholas Kaldor and Luigi Pasinetti and began to turn their writings into a more workable theory of economics. Kriesler eventually returned from Cambridge to become one of the leaders of the distinctive Australian chapter of Post-Keynesian Economics. One struggles to imagine a better team to assemble and marshal an impressive array of leading thinkers in Post-Keynesian Economics to give a panoptical survey of the theory and origins of the field. Harcourt and Kriesler have achieved exactly what they set out to do with very few gaps and are to be commended for it. The list of contributing authors is a veritable “who’s who” of Post-Keynesian economics and they deliver a panoptical survey of the discipline all in one accessible place. On the strength of this first volume alone I can commend the Oxford Handbook of Post-Keynesian Economics heartily. This is a valuable contribution to economic literature. In fact, I believe a copy of this handbook ought to be on the shelf of every serious economist for the survey and introduction it gives to one of the three most compelling and “progressive” research programs (see Lakatos (1968-1969)) in economics. It is to Post-Keynesian Economics as Dopfer and Potts (2008) is to Evolutionary Economics and Mas-Collel et. al. (1995) is to Neoclassical Economics.

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See Harcourt, (1972) and Cohen and Harcourt (2003), in recent times Felipe and McCombie, (2013) have sought to rejoin the battle

A sophisticated economist must be able to form a non-flippant appraisal of each of these three different approaches to studying economic systems, their relative strengths and their shortcomings. Several chapters in particular I should wish to note as having particularly captured my attention. I particularly enjoyed Jan Kregel’s delicious morsel presenting “A Personal View of the Origin of Post-Keynesian Ideas in the History of Economics”. I think we’ve lost something of the pure intellectual delight of knowing the history of economic thought with the decline of it in our major journals. Economics is peculiar and delightful in the nexus it occupies between austere natural science and intellectual social science. Richard Arena and Stephanie Blankenburg impressed me with their “Sraffa, Keynes, and PostKeynesians: suggestions for a synthesis in the making” for reasons that will become apparent below. I applaud their bold effort to continue Luigi Pasinetti’s efforts to synthesise the work of Piero Sraffa and Keynes and move toward a more workable general theory of the economy. I think more needs to be done to make this synthesis intellectually competitive as a model of the economy, but their effort is most welcome. I similarly appreciated Randall Wray’s chapter simply entitled “Money”, which seeks to develop a theory of money which might serve as an alternative to the tendency of Neoclassical Economics to view it as a mere veil over barter. He provides an impressive organisation of Heterodox Monetary theory which nicely complements Victoria Chick and Shelia Dow’s chapter on “Post-Keynesian theories of money and credit” as well as Giuseppe Fontana’s “Single-period analysis and continuation analysis of endogenous money”. I must commend to the reader Marc Lavoie’s touching study of his great teacher Wynne Godley “Post-Keynesian Monetary Economics, Godley-Like”. Godley is in Post-Keynesian Economics of a similar stature as Pasinetti for his contribution of the central concept of Stock-Flow Consistent modelling. Lavoie here gives a valuable insight into the man behind the thinking and offers us a new rich understanding of his work. Prue Kerr and Roberto Scazzieri’s “Structural Economic Dynamics and the Cambridge Tradition” I recommend to all Evolutionary Economists. They provide an interesting history of the somewhat minority view in Post-Keynesian Economics that growth must come from inter-sectoral interactions. There is much to be done in integrating the insights of Post-Keynesian Economics with those of Evolutionary Economics, and this provides a good bridge-point between the two literatures. I would commend Edward Nell’s chapter “Reinventing Macroeconomics: what are the questions?” to all supervisors of Macroeconomics PhDs. It provides an excellent entry point and map of the PostKeynesian and other literature on macroeconomics and the questions yet to be answered therein. Penultimately, simply for its being terrific fun for its being a little weird and close to my own heart, I would strongly commend to the reader Vela Velupillai’s “Postkeynesian precepts for nonlinear, endogenous, nonstochastic, business cycle theories”. Velupillai is to my mind more a complexity scholar, and here brings exotic concepts like Turing stopping problems and their interaction with nonlinear dynamics to the attention of a field curiously both highly commensurate and as yet not explicitly connected with them. Finally, I would commend to the reader’s attention to Robert Dixon and Jan Toporowski’s “Kaleckian Economics”. The work of Michal Kalecki is increasingly becoming as core a foundation for Post-

Keynesian Economics as the work of John Maynard Keynes for the attention it pays to the distribution of income and wealth and aggregate structural flows. Dixon and Toporowski provide as good an introduction to his thinking and its direct descendants as I have seen. The only criticisms I have are not of the Oxford Handbook of Post-Keynesian Economics itself but of the discipline it provides a snapshot of. I offer them as an explanation for why I came away from this work not fired with enthusiasm to extend and apply the insights presented within it. I hope by their raising to indicate what I believe to be a direction for the research program to become yet more progressive. Firstly, I came away feeling that I never can quite work out what Post-Keynesian Economics as a research program (and that caveat is important) is for, I can only work out what it is against. The origins of Post-Keynesian Economics are entirely rooted (as this volume shows) in a deep dissatisfaction with a narrowly construed (see Hart, (2013)) Marhsallian neoclassical economics, and all subsequent alternative models presented by Post-Keynesian Economics arise out of those criticisms. Those are typically either that Keynes has been misread or that some other author (usually the Polish economist Kalecki) has wrongly been assigned to relative obscurity. These criticisms are fair, but I tire of them easily. At least for me, I feel I am more interested in what the Post-Keynesians think the economy looks like than what they think is wrong with other views. Secondly, there seems an agreement across the overwhelming majority of the discipline upon a “horses for courses” approach for modelling. That is, there ought to be no general theory readily applicable to whatever problem comes to hand, but rather a building of specific theories for specific phenomena. However, I maintain that not only the scientific ethic, but practicality demands unity and generality. This is unpopular, but I think Post-Keynesian economics needs to look toward developing a general theory of the economy. I am sure many Post-Keynesians will sharply disagree with me on this and cite Joan Robinson’s line that a complete theory would be “just another box of tricks”, or that “a theory which explains everything explains nothing”. However, Popper (1934) is quite emphatic that a scientific theory is defined by its excluding of certain courses of events from the realm of possibility, but this is only to say that it specifies a certain course of events will arise and not others. To not seek to explain whatever events may arise actually goes against the scientific ethic to understand the world. Practicality similarly demands unity and generality, and for better or worse practicality is what governs the success of a scientific research program. Cognitively taxed human beings find it easier to keep a theoretical paradigm unified by a simple core principle in mind for application to whatever problem comes to light. From the present volume we can see that Post-Keynesian economics is yet to move fully in this direction. The closest the field comes to a general core theory is Godley and Lavoie (2006), but this work presents an accounting framework (Stock-Flow Consistent Models), not a simple core unifying principle. Evolutionary Economics has one (that economic behaviour is subject to the evolutionary process of origination/variation, selection/diffusion and retention), as does Neoclassical Economics (that people more or less maximise utility under constraints), and this makes their application as modes of thought by the practitioner a far easier task. This being said, we must not deny the valuable advances made by Post-Keynesian Economics thus far, and it is still less to deny the value of this admirable effort on the part of Harcourt and Kriesler to make a sprawling and vast literature accessible to all and sunder. I congratulate Harcourt and Kriesler,

and commend their Oxford Handbook of Post-Keynesian Economics to every serious economist in the world.

References Cohen, A.J. and Harcourt, G.C. (2003); Retrospectives: Whatever Happened to the Cambridge Capital Theory Controversies?; Journal of Economic Perspectives; Vol.17, No.1, pp.199-214 Dopfer, K. and Potts, J. (2008); The General Theory of Economic Evolution; Routledge, London Felipe, J. and McCombie, J.S.L. (2013); The Aggregate Production Function and the Measurement of Technical Change; Edward Elgar, Cheltenham Godley, W. and Lavoie, M. (2006); Monetary Economics; Palgrave MacMillan, Basingstoke Harcourt, G.C. (1972); Some Cambridge Controversies in the Theory of Capital; Cambridge University Press, Cambridge Harcourt, G.C. and Kriesler, P. (eds.), (2013); The Oxford Handbook of Post-Keynesian Economics, Volume 1: Theory and Origins; Oxford University Press, Oxford Hart, N. (2013); Alfred Marshall and Modern Economics; Palgrave MacMillan, Basingstoke Lakatos, I. (1968-1969); Criticism and the Methodology of Scientific Research Programmes; Proceedings of the Aristotelian Society; Vol.69 (New Series), pp.149-186 Mas-Colell, A., Whinston, M.D. and Green, J.R. (1995); Microeconomic Theory; Oxford University Press, Oxford Popper, K. (1934); Logic of Scientific Discovery; Routledge, London