Revolutions have a nasty way of devouring their progenitors and replacing them by a lesser and more arrogant breed who, in the name of the revolution, seek to consolidate its gains only to betray it in the process. The Keynesian revolution, in the realm of ideas, is a case in point, though in this instance the creator of the revolution was not quite the revolutionary others had made him out to be. Keynes himself, according to Joan Robinson, did not grasp the full import of his General Theory, and shortly after its publication in 1936 there were many heated discussions between him and his followers over what the General Theory “really” meant. The fact is that Keynes had never fully broken with his neoclassical upbringing at Cambridge under the tutelage of Alfred Marshall. His neoclassical heritage showed clearly in the opening pages of his General Theory. Though he rejected “Postulate II” of neoclassical theory, namely, that the supply of labor depends positively on the real wage, he did not openly reject “Postulate I,” that the demand for labor is inversely related to the level of real wages. This half-way break with neoclassicism was to generate a great deal of mischief.1 Still, his rejection of the neoclassical view that all unemployment was voluntary was, itself, a major breakthrough. Indeed, the notion of involuntary unemployment was the foundation of his revolution.
KeywordsCentral Bank Fiscal Policy Real Wage Capital Accumulation Full Employment
Unable to display preview. Download preview PDF.
- 1.See Jean de Largentaye, “A Note on the General Theory of Employment, Interest and Money,” Journal of Post Keynesian Economics, Spring 1979.Google Scholar
- 2.John Maynard Keynes, The Economic Consequences of the Peace (New York: Harcourt, Brace and Howe, 1920), pp. 10–11Google Scholar
- 3.John Maynard Keynes, The General Theory of Employment, Interest, and Money (New York: Harcourt, Brace, 1936), p. 372.Google Scholar
- 4.See Michal Kalecki, Selected Essays on the Dynamics of the Capitalist Economy (New York: Cambridge University Press, 1971), Ch. 6.Google Scholar
- 6.See, for example, George Gilder, Wealth and Poverty (New York: Basic Books, 1981).Google Scholar
- For a critical evaluation of supply-side economics, see Stephen Rousseas, The Political Economy of Reaganomics: A Critique (Armonk, N. Y: M. E. Sharpe, Inc., 1982).Google Scholar
- 8.Alessandro Roncaglia, Sraffa and the Theory of Prices (Chichester: John Wiley & Sons, 1978), p. 106.Google Scholar
- 9.Luigi Pasinetti, Growth and Income Distribution: Essays in Economic Theory (London: Cambridge University Press, 1974), p. 43.Google Scholar