Friday, 13 March 2009

Of General & Special Cases

John Bellamy Foster talks the history of 20th Century economic thought, and explains how today's Keynesians have implicitly accepted that they're making a special case, not a general one. But their master thought it was the other way round:

"In referring to his analysis as “the general theory” Keynes distinguished this from orthodox neoclassical theory, which he referred to as a “special case,” the characteristics of which “happen not to be those of the economic society in which we actually live,” and which therefore led to results which were “misleading and disastrous....

Today figures like Krugman are seen as partly challenging these conclusions, and as representing the return of Keynesian economics. But this is not a return to Keynes in the sense of his general theoretical critique of capitalism’s fundamental flaws. Rather it is a return to Keynesianism as a “special case” of “depression economics,” where monetary policy is ineffective and expansive fiscal policy needs to be given priority. The ascendancy of neoclassical economics, which bastardized and subordinated Keynes’s mildly critical view of capitalism, is not itself challenged."

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