Macroeconomics without Equilibrium or Disequilibrium

Abstract

This paper uses a simulation model² to describe the role which banks have to play when decisions by households and firms are taken under conditions of uncertainty, and when production, distribution and investment all take time. The first objective of the study is to supplement the narrative method used perforce by Keynes and his followers before the computer age. But it also adumbrates an alternative way of looking at the world — alternative, that is, to the neoclassical paradigm which is used by ‘IS/LM’ Keynesians, new Keynesians, monetarists of both kinds, quantity rationers and almost all writers of modern textbooks. Its title emulates Kaldor (1985) and its contents derive largely from Hicks (1989) and from Tobin’s work read seriatim.

I owe a special debt to George McCarthy who has helped and guided me throughout in all manner of ways. I am also indebted to Stephanie Clark, Anwar Shaikh and Malcolm Sawyer for extensive discussions; and to Robert Solow and Lance Taylor who both wrote careful critiques of an earlier draft.