A Post Keynesian Positive Contribution to Theory

  • Louise Davidson


Much of the Post Keynesian literature of the last two decades, including some that I have contributed to, is devoted to demonstrating the analytical shortcomings of orthodox neoclassical theory. This negative literature has played an important role in making even orthodox economists aware of the severe limitations of neoclassical theory and its resultant policy pronouncements. Some neoclassical scholars have grudgingly admitted the value of this negative Post Keynesian literature, while stubbornly refusing to admit that Post Keynesian theory has made any positive contributions to ‘Theory’. For example, James Tobin has written:

A school of self-styled post-Keynesians regard any synthesis or reconciliation, in substance or language, of Keynes and neoclassical economics, as a betrayal of the revolution. They reject equilibrium analysis altogether, stress the historical, institutional, and evolutionary aspects of economic development, and emphasize the macroeconomic implications of the noncompetitive structure of modern economies. Their valid points do not add up to a coherent theory. (Tobin, 1985, p. 115, emphasis added)


Income Elasticity Orthodox Economist Macroeconomic Implication Post Keynesian Economic Payment Equilibrium 
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  1. Davidson, P. (1987–8), ‘A Modest Set of Proposals for Resolving the International Debt Problem’, Journal of Post Keynesian Economics, 10.Google Scholar
  2. Davidson, P. (1991), International Money and the Real World, revised edition (London: Macmillan).Google Scholar
  3. Solow, R. (1976), ‘Alternative Approaches to Macroeconomics’, Canadian Journal of Economics, pp. 343–4.Google Scholar
  4. Thirlwall, A. P. (1979), ‘The Balance of Payments Constraint as an Explanation of International Growth Rate Differences’, Banca Nazionale del Lavoro Quarterly Review, 128, pp. 45–53.Google Scholar
  5. Tobin, J. (1985), ‘Theoretical Issues in Macroeconomics’, in Issues in Contemporary Macroeconomics and Distribution, by G. R. Feiwel (ed.) (Albany: State University of New York Press) p. 115.Google Scholar

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© Paul Davidson 1999

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  • Louise Davidson

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