Criticism from Post-Keynesian Economics - Philosophical Concept | Alexandria
Criticism from Post-Keynesian Economics, a dissenting voice in the grand theatre of economic thought, offers a profound challenge to the dominant neoclassical school. It is a critique rooted in the observed realities of capitalist economies, emphasizing uncertainty, the importance of history, and the inherently unstable nature of financial markets—a stark contrast to the equilibrium-seeking models that underpin neoclassical orthodoxy. This critique, sometimes misconstrued as simply "another Keynesian perspective," is far more radical, challenging the very foundations upon which mainstream economics is built. Are the simplified models truly adequate for understanding the complexities of our world?
The seeds of this criticism were sown even before the official birth of Keynesianism. While John Maynard Keynes’s General Theory (1936) ignited the initial spark, dissenting views began to surface almost immediately. Early references can be found in the writings of individuals like Michal Kalecki, whose independent discoveries largely mirrored Keynes's but with a more explicit focus on power and class structures. These early dissenters, operating against the backdrop of the Great Depression and the brewing storm of World War II, questioned the neoclassical assumption of a self-correcting market, highlighting the persistent unemployment and inequality that plagued the era.
Over time, Post-Keynesianism evolved, shaped by figures like Joan Robinson, Nicholas Kaldor, and Paul Davidson. Robinson, in particular, relentlessly attacked the neoclassical emphasis on marginal productivity theory, arguing that it lacked empirical basis and served primarily as a justification for existing income distribution. The Cambridge Capital Controversy, initiated in the 1950s, served as a pivotal moment, exposing deep logical flaws within neoclassical capital theory. Yet, despite these penetrating critiques, mainstream economics largely maintained its course. Why has neoclassical economics remained so resilient in the face of these powerful challenges? The answer likely lies in the elegance and mathematical tractability of its models, factors that, ironically, often come at the expense of real-world applicability.
Today, Criticism from Post-Keynesian Economics endures, finding renewed relevance in the wake of financial crises and growing inequality. Its emphasis on effective demand, liquidity preference, and the inherent instability of capitalism offers a compelling alternative narrative to the neoclassical story of efficient markets and rational individuals. It serves as a constant reminder that economics is not simply a set of mathematical equations, but a social science deeply intertwined with power, history, and human behavior. What role will this criticism play in shaping the future of economic thought, and will it finally succeed in dethroning the neoclassical paradigm?