Monday, January 23, 2017

Debunking Marxism 101 (Updated)

In the links below I update my series of posts debunking Marxist economics and ideology, to complement my series on Debunking Austrian economics 101.

As in the series on Austrian economics, not all posts actually debunk Marxism, but sometimes provide outlines or summaries of Marxist theory or interesting points on Marxism or Karl Marx’s life and thought. There are also some posts where constructive things can be said: on endogenous money, the falsity of Say’s law and the monetary theory of production, how some of Marx’s economic thought anticipated Keynes, but even here the discussions in Marx’s Capital are simply obsolete and have long been superseded by modern Post Keynesian theory, and are mainly of historical interest.

In what follows, sometimes Marxist economic theory will be debunked by means of Post Keynesian economics (which is what this blog advocates), though frequently I have my own original criticisms or follow the arguments of other critics of Marxism.

It is important to remember that Post Keynesian economics – although it has severe criticisms of laissez faire capitalism and neoclassical or Austrian economics – is still strongly distinct from Marxist economics. Post Keynesian economics is not Marxism, and leading Post Keynesians and economists whose work has been foundational for Post Keynesian economics have rejected the labour theory of value, the basis of Marxist economics.

John Maynard Keynes, for example, said that Marx’s theories were founded “on a silly mistake of old Mr Ricardo’s” (Skidelsky 1992: 517) – namely, the labour theory of value. For Michał Kalecki and Joan Robinson the labour theory of value was “metaphysical” (Brus 1977: 59; Robinson 1964: 39), and for Piero Sraffa it was “a purely mystical conception” (Kurz and Salvadori 2010: 199). If the labour theory of value is unsound, then the whole Marxist edifice constructed on it cannot but fall and collapse. Moreover, the classical Marxist idea of historical determinism is also incompatible with the Post Keynesian idea of the fundamental uncertainty of the future.

For Marx’s theory of the “law of value” in volume 1 of Capital, see here:
“Marx’s ‘Law of Value’ in Volume 1 of Capital,” February 4, 2016.
For an overview of why the labour theory of value is wrong, see this post:
“Why Marx’s Labour Theory of Value is Wrong in a Nutshell,” June 28, 2015.
For a detailed discussion of how Marx and Engels continued to think of the theory of value in volume 1 of Capital as an empirical theory of pre-modern commodity exchange before modern capitalism (where prices of production are anchors for the price system), see here:
“Engels’ View of the Theory of Value in Volume 1 of Capital in the 1890s,” August 12, 2015.
The posts below are divided into the following groups:
(i) Bibliographical Posts.
(ii) Marx and Engels’ Works Online
(iii) Karl Marx’s Life 1818–1883
(iv) Documentaries about and discussions of Karl Marx and Marxism.
(v) Against the labour theory of value.
(vi) On the alleged tendency of the rate of profit to fall.
(vii) On Marx’s “Critique of the Gotha Program.”
(viii) Discussions of David Harvey’s lectures on Reading Marx’s Capital Volume 1.
(ix) Steve Keen on Marxism.
(x) On Marx’s views on phrenology and race.
(xi) On Marx’s views on slavery.
(xii) Marxism, authoritarianism and imperialism.
(xiii) Against Marx’s Communist Manifesto.
(xiv) Against Sraffian and Marxist long-run equilibrium.
(xv) Chomsky and Marxism.
(xvi) Against Temporal Single System Marxism (TSSI)
(xvii) Marx’s Monetary Theory
(xviii) Marx versus Keynes
(xix) Critical Summaries of Volume 1 of Capital
(xx) Marx’s Theory of Wage Determination in Capitalism
(xxi) Useful Insights in Capital
(xxii) Marx’s Views on Capitalism and Imperialism and Colonialism
(xxiii) Historical Development of Marxism
(xxiv) Responses to Marxists
(xxv) Failed Predictions of Marx and Engels
(xxvi) Marxism and Poststructuralism
(xxvii) Marx and Immigration
(xxviii) Engels’ Pause and Marx’s Hasty Generalisations about Capitalism
(xxix) Marx and Increasing Intensity of Labour in Capitalism
(xxx) Marx and Technological Unemployment.
I also recommend my series of posts that are critical chapter by chapter summaries of volume 1 of Capital in section xix below (or listed in a separate post here).

The posts are as follows:

Debunking Marxism 101
(i) Bibliographical Posts:
(1) “Study Guides to and Overviews of Marx’s Capital,” June 10, 2015.

(2) “Bibliography on Marx’s Monetary Theory,” June 16, 2015.

(3)“Early Reviews and Critiques of Marx: A List,” March 16, 2016.
(ii) Marx and Engels’ Works Online:
(1) “Some Early Editions of Marx’s Capital Online,” May 10, 2015.

(2) “Engels’ Later Works Online,” May 13, 2015.
(iii) Karl Marx’s Life 1818–1883:
(1) “Karl Marx’s Life 1818–1841,” April 20, 2015.

(2) “Karl Marx’s Life 1842–1844,” April 21, 2015.

(3) “Karl Marx’s Life 1845–1849,” April 24, 2015.

(4) “Karl Marx’s Life 1850–1860,” April 25, 2015.

(5) “Karl Marx’s Life 1861–1870,” April 28, 2015.

(6) “Karl Marx’s Life 1871–1883,” May 1, 2015.

(7) “Karl Marx’s Night Out on London Town,” September 5, 2015.

(8) “Karl Marx the Conspiracy Theorist,” December 11, 2015.

(9) “A Chronology of Karl Marx’s Life,” April 24, 2016.

(10) “Marx’s Dishonesty in his Quotation of Gladstone,” May 1, 2016.

(11) “Christopher Hitchens on an Anecdote about Karl Marx,” May 4, 2016.

(12) “Paul Johnson on Karl Marx,” May 18, 2016.
(iv) Documentaries about and discussions of Karl Marx and Marxism:
(1) “A BBC Discussion of Karl Marx,” April 4, 2015.

(2) “Karl Marx in London,” April 26, 2015.

(3) “BBC Radio 4 Discussion on the 1848 Revolutions,” April 22, 2015.

(4) “Jonathan Sperber on Karl Marx,” April 23, 2015.

(5) “Bryan Magee interviews Peter Singer on Hegel and Marx,” April 8, 2015.

(6) “Stefan Molyneux versus Karl Marx,” May 2, 2016.
(v) Against the labour theory of value
(1) “Mysticism and the Labour Theory of Value,” May 7, 2014.

(2) “Did Kalecki Accept the Labour Theory of Value?,” April 18, 2014.

(3) “Adam Smith on the Labour Theory of Value,” April 20, 2014.

(4) “Progress in Marxism on the Labour Theory of Value?,” March 18, 2015.

(5) “Marx’s ‘Socially Necessary Labour Time’: A Quick Overview and Critique,” March 26, 2015.

(6) “Marx on the Labour Theory of Value in Volume 1 of Capital,” March 27, 2015.

(7) “Marx’s Labour Theory of Value and Rothbard’s Homesteading Property-Rights Theory: Peas in a Pod,” March 28, 2015.

(8) “The Foundation of Marx’s Labour Theory of Value in Ricardo,” March 29, 2015.

(9) “More Mystical Labour Theory of Value Nonsense,” March 29, 2015.

(10) “The Two Epistemological Ways to Interpret the Labour Theory of Value,” March 30, 2015.

(11) “Piero Sraffa’s Damning Verdict on the Labour Theory of Value,” March 30, 2015.

(12) “Kliman’s Explanation of Marx’s Labour Theory of Value,” March 31, 2015.

(13) “Philip Pilkington on the Labour Theory of Value,” April 1, 2015.

(14) “The Labour Theory of Value and Animal Labour,” April 1, 2015.

(15) “Achille Loria and Alexander Gray on Marx’s Labour Theory of Value,” April 2, 2015.

(16) “Matias Vernengo on Marx’s Labour Theory of Value,” April 3, 2015.

(17) “My ‘Sun Theory of Value’: Why it’s better than the Marxist Labour Theory of Value,” April 5, 2015.

(18) “Achille Loria on the Contradiction in Marx’s Labour Theory of Value,” April 7, 2015.

(19) “Marx’s Wage-Labour and Capital,” April 9, 2015.

(20) “Dühring’s Review of Capital and Marx’s Letter to Engels of 8 January, 1868 on the Labour Theory of Value,” May 12, 2015.

(21) “Marx’s Abstract Socially-Necessary Labour Time in A Contribution to the Critique of Political Economy and Capital,”

(22) “Marx on Labour Value and Cost Price in the Grundrisse,” May 7, 2015.

(23) “Engels’ Letter to Werner Sombart on the Labour Theory of Value in 1895,” May 14, 2015.

(24) “What the Labour Theory of Value does not Explain,” May 15, 2015.

(25) “What Conditions are Necessary for Commodity Prices to Equal Marx’s Labour Value?,” May 17, 2015.

(26) “A Devastating Contradiction in Marx’s Argument for the Labour Theory of Value,” May 19, 2015.

(27) “Wicksteed on the Contradiction in Chapter 1 of Volume 1 of Capital on the Labour Theory of Value,” May 21, 2015.

(28) “Karl Popper on the Labour Theory of Value,” May 30, 2015.

(29) “Fiat Money Destroys the Labour Theory of Value,” June 6, 2015.

(30) “Why Marx’s Labour Theory of Value is Wrong in a Nutshell,” June 28, 2015.

(31) “Eugen von Böhm-Bawerk’s Critique of Marx: A Quick Summary,” August 6, 2015.

(32) “Two Important Instances in Volume 1 of Marx’s Capital where Labour Values determine individual Commodity Prices,” August 7, 2015.

(33) “Two Instances where Marx’s Theory of Value in Volume 3 Intrudes into Volume 1 of Capital,” August 8, 2015.

(34) “Joan Robinson on Marx’s Labour Theory of Value: A Few Points,” August 11, 2015.

(35) “Engels’ View of the Theory of Value in Volume 1 of Capital in the 1890s,” August 12, 2015.

(36) “Marx’s Letter to Engels of 2 August, 1862 on Prices of Production,” January 19, 2016.

(37) “Engels’ Understanding of the ‘Law of Value’ in the Anti-Dühring” January 29, 2016.

(38) “Robert Wilbrandt’s Interpretation of Marx’s Law of Value in Volume 1 of Capital,” January 30, 2016.

(39) “The Historical Development of Marxist Interpretations of the Law of Value,” January 31, 2016.

(40) “Rudolf Hilferding on the Law of Value in Volume 1 of Capital,” February 1, 2016.

(41) “‘Socially Necessary Labour Time is the only Source of Value’: What Does this even Mean?,” February 2, 2016.

(42) “Marx’s ‘Law of Value’ in Volume 1 of Capital,” February 4, 2016.

(43) “Alexander Gray on the Two Contradictions in Marx’s Theory of Surplus Value in Volume 1 of Capital,” February 8, 2016.

(44) “Louis Boudin on the Contradiction between Volumes 1 and 3 of Marx’s Capital,” February 10, 2016.

(45) “A Marxist agrees with me on the Labour Theory of Value and Fiat Money!,” February 12, 2016.

(46) “Debunking Marx’s Concept of Exploitation based on Surplus Labour Value,” February 13, 2016.

(47) “Would Capitalism necessarily be destroyed if Human Labour fell towards Zero?,” February 12, 2016.

(48) “The Long-Run Tendency of Capitalism is to Decrease the Rate of Exploitation,” February 14, 2016.

(49) “Eduard Bernstein on Engels’ Historical Defence of the Law of Value in Volume 1 of Capital,” April 12, 2016.

(50) “Marx and Engels’ Attempt to Salvage the Law of Value in Volume 1 of Capital,” November 29, 2015.

(51) “The Important Points about Marx’s Labour Theory of Value,” December 1, 2015.

(52) “The Absurdity of the Transformation Problem,” December 6, 2015.

(53) “More on Engels’ Supplement to Volume 3 of Capital,” December 8, 2015.

(54) “‘Imaginary’ Prices and Marx’s Labour Theory of Value,” December 11, 2015.

(55) “Engels’ Famous Challenge in the Preface to Volume 2 of Capital on the Transformation Problem,” December 22, 2015.

(56) “Empirical Studies showing that Prices are Correlated with Labour Costs do not Prove the Classical Marxist Labour Theory of Value,” December 23, 2015.

(57)“Böhm-Bawerk on Marx’s Problem of Aggregating Heterogeneous Human Labour,” March 7, 2016.
(vi) On the alleged tendency of the rate of profit to fall:
(1) “Michael Heinrich on the Tendency of the Profit Rate to Fall and Engels’ Dubious Editing of Marx,” April 4, 2015.

(2) “Marx’s Tendency of the Rate of Profit to Fall: Analytically and Empirically Unproven,” February 22, 2016.

(3) “The US Profit Rate was Abnormally High in WWII and Immediately Afterwards,” March 4, 2016.
(vii) On Marx’s “Critique of the Gotha Program”:
(1) “Marx’s ‘Critique of the Gotha Program’: Four Points,” April 29, 2015
(viii) Discussions of David Harvey’s lectures on Reading Marx’s Capital Volume 1:
(1) “David Harvey on Reading Marx’s Capital Volume 1, Class 01,” April 8, 2015.

(2) “David Harvey on Reading Marx’s Capital, Volume 1, Class 02 (Updated),” June 30, 2015.

(3) “David Harvey on Reading Marx’s Capital Volume 1, Class 03,” July 3, 2015.

(4) “David Harvey on Reading Marx’s Capital, Volume 1, Class 04,” July 19, 2015.

(5) “David Harvey on Reading Marx’s Capital, Volume 1, Class 05,” September 25, 2015.
(ix) Steve Keen on Marxism:
(1) “Steve Keen’s ‘A Marx for Post Keynesians,’” April 6, 2015.
(x) On Marx’s views on phrenology and race:
(1) “Marx’s Phrenology and Racial Views,” April 26, 2015.
(xi) On Marx’s views on slavery:
(1) “Marx on Slavery in his 1846 Letter to Annenkov,” April 27, 2015.

(2) “Marx on Slaves as Fixed Capital,” July 16, 2015.

(3) “Marx on Slave-based Plantation Systems,” July 18, 2015.
(xii) Marxism and authoritarianism:
(1) “Engels on Authoritarianism and Revolution,” April 30, 2015.

(2) “Communist Imperialism,” February 14, 2016.

(3) “‘Marx was not responsible for the Horrors of Communism’ is Nonsense,” November 5, 2015.
(xiii) Against Marx’s Communist Manifesto:
(1) “What Economic System did Marx and Engels Advocate?,” July 24, 2012.
(xiv) Against Sraffian and Marxist long-run equilibrium:
(1) “Sraffians versus Kaleckians versus Fundamentalist Post Keynesians,” June 17, 2014.

(2) “Matias Vernengo on Marx’s Labour Theory of Value,” April 3, 2015.

(3) “Sraffian Long-Run Equilibrium Prices of Production and Post Keynesianism,” April 11, 2015.
(xv) Chomsky on Marxism:
(1) “Chomsky on Marxism,” July 12, 2015.
(xvi) Against Temporal Single System Marxism (TSSI):
(1) “Mongiovi on Temporal Single System Marxism,” May 16, 2015.

(2) “Nitzan and Bichler on the Temporal Single System Interpretation (TSSI),” June 3, 2015.
(xvii) Marx’s Monetary Theory:
(1) “Marx on the Necessity of Money being a Commodity,” June 8, 2015.

(2) “Marx rejected Fiat Money,” February 16, 2016.

(3) “Marx on the Origin of Money in the Critique of Political Economy (1859),” April 5, 2016.
(xviii) Marx versus Keynes:
(1) “Keynes versus Engels on ‘Socialism,’” May 5, 2015.

(2) “Keynes on Communism,” April 27, 2016.
(xix) Critical Summaries of Volume 1 of Capital:
(1) “Prolegomena to the Study of Marx’s Capital (Updated),” June 2, 2015.

(2) “Marx’s Capital, Volume 1, Chapter 1: A Critical Summary, Part 1 (Updated),” June 21, 2015.

(3) “Marx’s Capital, Volume 1, Chapter 1: A Critical Summary, Part 2,” June 26, 2015.

(4) “Marx’s Capital, Volume 1, Chapter 2: A Critical Summary,” June 4, 2015.

(5) “Marx’s Capital, Volume 1, Chapter 3: A Critical Summary,” June 12, 2015.

(6) “Marx’s Capital, Volume 1, Chapter 4: A Critical Summary,” July 4, 2015.

(7) “Marx’s Capital, Volume 1, Chapter 5: A Critical Summary,” July 6, 2015.

(8) “Marx’s Capital, Volume 1, Chapter 6: A Critical Summary,” July 13, 2015.

(9) “Marx’s Capital, Volume 1, Chapter 7: A Critical Summary,” July 31, 2015.

(10) “Marx’s Capital, Volume 1, Chapter 8: A Critical Summary,” August 2, 2015.

(11) “Marx’s Capital, Volume 1, Chapter 9: A Critical Summary,” December 19, 2015.

(12) “Marx’s Capital, Volume 1, Chapter 10: A Critical Summary,” February 3, 2016.

(13) “Marx’s Capital, Volume 1, Chapter 11: A Critical Summary,” February 7, 2016.

(14) “Marx’s Capital, Volume 1, Chapter 12: A Critical Summary,” February 11, 2016.

(15) “Marx’s Capital, Volume 1, Chapter 13: A Critical Summary,” February 12, 2016.

(16) “Marx’s Capital, Volume 1, Chapter 14: A Critical Summary,” March 9, 2016.

(17) “Marx’s Capital, Volume 1, Chapter 15: A Critical Summary, Part 1,” March 17, 2016.

(18) “Marx’s Capital, Volume 1, Chapter 15: A Critical Summary, Part 2,” March 18, 2016.

(19) “Marx’s Capital, Volume 1, Chapter 16: A Critical Summary,” March 20, 2016.

(20) “Marx’s Capital, Volume 1, Chapter 17: A Critical Summary,” March 21, 2016.

(21) “Marx’s Capital, Volume 1, Chapter 18: A Critical Summary,” March 23, 2016.

(22) “Marx’s Capital, Volume 1, Chapter 19: A Critical Summary,” March 24, 2016.

(23) “Marx’s Capital, Volume 1, Chapter 20: A Critical Summary,” March 26, 2016.

(24) “Marx’s Capital, Volume 1, Chapter 21: A Critical Summary,” March 28, 2016.

(25) “Marx’s Capital, Volume 1, Chapter 22: A Critical Summary,” April 4, 2016.

(26) “Marx’s Capital, Volume 1, Chapter 23: A Critical Summary,” April 10, 2016.

(27) “Marx’s Capital, Volume 1, Chapter 24: A Critical Summary,” April 14, 2016.

(28) “Marx’s Capital, Volume 1, Chapter 25: A Critical Summary,” April 16, 2016.

(29) “Marx’s Capital, Volume 1, Chapter 26: A Critical Summary,” April 17, 2016.

(30) “Marx’s Capital, Volume 1, Chapter 27: A Critical Summary,” April 18, 2016.

(31) “Marx’s Capital, Volume 1, Chapter 28: A Critical Summary,” April 19, 2016.

(32) “Marx’s Capital, Volume 1, Chapter 29: A Critical Summary,” April 20, 2016.

(33) “Marx’s Capital, Volume 1, Chapter 30: A Critical Summary,” April 20, 2016.

(34) “Marx’s Capital, Volume 1, Chapter 31: A Critical Summary,” April 20, 2016.

(35) “Marx’s Capital, Volume 1, Chapter 32: A Critical Summary,” April 21, 2016.

(36) “Marx’s Capital, Volume 1, Chapter 33: A Critical Summary,” April 22, 2016.
(xx) Marx’s Theory of Wage Determination in Capitalism
(1) “The Debate on Marx’s View of Wages in Capitalism,” January 12, 2016.

(2) “A Simple Challenge to Marxists on the Theory of Wage Determination in Volume 1 of Capital,” March 7, 2016.

(3) “Marx on Wage Determination and the Classical Economists,” March 27, 2016.

(4) “Marx and the ‘Iron Law of Wages,’” December 29, 2015.

(5) “Marx on Wages in Value, Price and Profit (1865),” December 30, 2015.

(6) “Engels on Subsistence Wages,” December 21, 2015.

(7) “Marx’s Views on the Effectiveness of Trade Unions,” March 15, 2016.

(8) “How Eleanor Marx understood her Father’s Wage Determination Theory,” May 5, 2016.
(xxi) Useful Insights in Capital
(1) “What are the Useful Insights in Marx’s Capital?,” January 27, 2016.
(xxii) Marx’s Views on Capitalism and Imperialism and Colonialism
(1) “Capitalists and Imperialism,” January 3, 2016.

(2) “Paul Bairoch on the Industrial Revolution, Imperialism and Capitalism,” February 19, 2016.

(3) “Paul Bairoch on the Industrial Revolution, the Third World and Imperialism in World History,” February 20, 2016.

(4) “Who said this about British Rule in India?,” December 28, 2015.
(xxiii) Historical Development of Marxism
(1) “The Critical Responses to Volume 3 of Marx’s Capital and the Early Development of Marxism,” February 9, 2016.

(2) “Some Early Critical Reviews of Volume 3 of Marx’s Capital,” December 18, 2015.

(3) “The Historical Development of Marxist Interpretations of the Law of Value,” January 31, 2016.

(4) “More Early Criticism and Commentary on Marx’s Capital,” May 21, 2016.
(xxiv) Responses to Marxists
(1) “Response to Jehu on ‘Four Questions for LK on Money,’” April 8, 2016.
(xxv) Failed Predictions of Marx and Engels
(1) “Marx and Predictions of Capitalist Crisis,” September 17, 2015.

(2) “Engels’ Failed Prediction of Revolution in the UK,” December 20, 2015.

(3) “The Failed End of Capitalism Prediction by Marx,” December 4, 2015.

(4) “Engels on the Historical Evolution of Capitalism in Marxism: A Critique,” October 19, 2016.
(xxvi) Marxism and Poststructuralism
(1) “The Poststructuralists as Frustrated Marxists-Communists,” October 20, 2015.
(xxvii) Marx and Immigration
(1) “Marx on Mass Immigration and Capitalism,” November 13, 2015.

(2) “The Hypocrisy of Marxists and Left Libertarians on Mass Immigration,” March 13, 2016.

(3) “Lenin on Open Borders,” October 20, 2016.
(xxviii) Engels’ Pause and Marx’s Hasty Generalisations about Capitalism
(1) “Engels’ Pause: A Cause of Marx and Engels’ Hasty and False Generalisations about Capitalism,” February 6, 2016..
(xxix) Marx and Increasing Intensity of Labour in Capitalism
(1) “Marx on the Increasing Intensity of Labour in Industrial Capitalism: I Refute Him Thus,” March 18, 2016.
(xxx) Marx and Technological Unemployment
(1) “Marx on Technological Unemployment in the Grundrisse,” April 9, 2016.
BIBLIOGRAPHY
Brus, Włodzimierz. 1977. “Kalecki’s Economics of Socialism,” Oxford Bulletin of Economics and Statistics 39.1 (February): 57–67.

Kurz, Heinz D. and Neri Salvadori. 2010. “Sraffa and the Labour Theory of Value: A Few Observations,” in John Vint et al. (eds.), Economic Theory and Economic Thought: Essays in Honour of Ian Steedman. Routledge, London and New York. 189–215.

Robinson, Joan. 1964. Economic Philosophy. Penguin, Harmondsworth.

Skidelsky, R. J. A. 1992. John Maynard Keynes: The Economist as Saviour, 1920–1937 (vol. 2), Macmillan, London.

Sunday, January 22, 2017

Steve Keen on How the Left Converted to Neoliberalism

An interesting audio discussion here:
John Harrison, “Why Did the Left Get into Bed With Neoliberalism?,” Brave New World, 20 January, 2017.
This is actually a pretty general discussion here, with an interesting overview of Keynesian economics and a brief discussion of mass immigration at the end.

First of all, Steve Keen seems to take the line that only the economic hardships caused by neoliberalism lead to popular opposition to mass immigration. This is untrue. The Old Left before the 1960s was, generally speaking, strongly opposed to Third World mass immigration. Open borders and mass immigration are very much part of free market capitalism, and, if anything, the “authentic” (if there is such a thing) non-Marxist socialist or Social Democratic attitude to open borders and unchecked mass immigration should be opposition to it, not support for it.

Secondly, there are three types of Keynesianism as follows:
(1) The post-WWII Neoclassical Synthesis Keynesians;

(2) New Keynesians;

(3) Post Keynesians.
It is very important to note that the seeds of Neoliberalism were there from the beginning when Neoclassical Synthesis Keynesianism became dominant after the Second World War. If economics had been truly reformed at that time, marginalism and neoclassical economics would have been completely ejected from mainstream economics. Alas, Neoclassical Synthesis Keynesianism was what won the day.

A more detailed overview of each of these groups is below.

(1) The post-WWII Neoclassical Synthesis Keynesians (= Neo-Keynesians / hydraulic Keynesians / bastard Keynesians / Hicksian Keynesians).
In the aftermath of the Second World War, American economics was reformed by number of economists who were influenced by Keynes. However, partly in the environment of McCarthyism and partly through their own re-interpretation of Keynes (as well as the role of the Canadian economist Robert Bryce in spreading a flawed understanding of Keynes’ theories in the US), Paul Samuelson and Robert M. Solow diluted Keynes’s work by joining it with neoclassical economics (Davidson 2010: 247). Lorie Tarshis, the Canadian student of Keynes, had written a fairly good textbook summary of Keynes’s General Theory for American universities in the 1940s, but the book was attacked by conservatives who regarded it as inspired by communism, and in particular William F. Buckley denounced the book in his God and Man at Yale (1951). Consequently, a version of Keynesianism that used neoclassical microeconomics to justify general Keynesian macroeconomic policies was adopted as the orthodoxy in America, principally through the work of Paul Samuelson and Robert M. Solow, as well as the IS/LM model of the British neoclassical John Hicks (who worked at Oxford university). Hicks, Solow and Samuelson were influenced by neoclassical Walrasian general equilibrium theory.

Paul Samuelson coined the expression “neoclassical synthesis” to refer to the new theory that blended Keynesianism with neoclassical microeconomics. The “neoclassical synthesis Keynesians” assumed that involuntary unemployment was only due to inflexible wages and prices, and accepted the three neoclassical axioms of (1) neutral money, (2) gross substitution and (3) the ergodicity of the future, contrary to Keynes’s General Theory. Because of its departure from Keynes’s ideas, Joan Robinson labelled the neoclassical synthesis as “bastard Keynesianism” (Lodewijks 2003: 25; for the history of Keynesian policy in the US, see Turgeon 1996). This largely American version of Keynesianism was therefore open to theoretical attacks by monetarists and New Classicals in the 1970s, and today there are not many neoclassical synthesis Keynesians left.

Owing to their flawed neoclassical theory, the neoclassical synthesis Keynesians had difficulties explaining and dealing with stagflation, and were discredited in the 1970s. Many morphed into “New Keynesians,” and those who did not (e.g., James Tobin) came to be called “Old Keynesians.” Some well known neoclassical synthesis Keynesians were John R. Hicks (1904–1989), Frank Hahn, Abba P. Lerner, William J. Baumol, Franco Modigliani, Paul A. Samuelson, Robert Eisner, Walter W. Heller and Robert M. Solow. Notably, John R. Hicks actually renounced the IS-LM model (and the neoclassical synthesis) in the early 1980s and came to associate himself with the Post Keynesian school (Hicks 1980–1981).

(2) New Keynesians.
The New Keynesians emerged in the 1980s and are even further from Keynes’ theory than the neoclassical synthesis Keynesians. New Keynesians are one of the two main schools of mainstream macroeconomics today. The “new macroeconomic consensus” is essentially a mix of New Classical and New Keynesian theory, but the “Keynesianism” of the latter is so watered down that it hardly even deserves that name. In the wake of the monetarist and New Classical assault on neoclassical synthesis Keynesianism, New Keynesianism emerged by providing a more consistent neoclassical microeconomic foundation for Keynesian macroeconomics. New Keynesians are essentially neoclassicals who believe that monetary intervention is the main instrument of economic policy, although there are different strands of opinion within New Keynesian analysis, most notably that of Joseph Stiglitz (King 2002: 239). Some have recognised the usefulness of fiscal policy, but others are actually sceptical about fiscal intervention (Snowdon and Vane 2005: 364). For example, in some modern “New Keynesian” textbooks, one finds a loanable funds theory, Say’s law, opposition to budget deficits (on the grounds that they crowd out private investment and produce higher interest rates), the quantity theory of money, monetarist inflation targeting, and no discussion of aggregate demand – a complete and utter travesty of Keynes’s thinking (Lodewijks 2003: 29).

New Keynesians use rational expectations and assume that the cause of involuntary unemployment is sticky prices and wages, but also assume neutral money in the long run and Say’s law as well (King 2002: 233–239). Prominent New Keynesian include Joseph E. Stiglitz, Olivier Blanchard, John B. Taylor, David H. Romer, Christina D. Romer, Bradford DeLong, and N. Gregory Mankiw. Paul Krugman is a New Keynesian, but the question of how far Krugman has deviated from New Keynesianism or Neoclassical Synthesis Keynesianism is controversial.

(3) Post Keynesians.
Post Keynesians are the true heirs to Keynes and have built upon his work. The forebears of the Post Keynesian school were the Cambridge associates and students of Keynes who rejected the neoclassical synthesis. These were Joan Robinson (1903–1983), Richard F. Kahn (1905–1989), E. Austin G. Robinson (1897-1993), and Nicholas Kaldor (1908–1986). After WWII, Cambridge Keynesianism and Post Keynesianism were influential in the UK, Canada, continental Europe, and Australia (King 2002: 141–159), but went into decline after 1980, as neoclassical economics once again became mainstream economic theory. It should be noted that the Sraffians (or Neo-Ricardians) emerged as an economic school strongly associated with Post Keynesianism after 1945, but today is usually excluded from the school, and certainly from the “narrow tent” definition of Post Keynesianism as advocated by Paul Davidson (Davidson 2003–2004: 247–248; see here and ).

Paul Davidson (2003-2004: 251) dates the emergence of Post Keynesianism as a distinct school to the publication of Sidney Weintraub’s book An Approach to the Theory of Income Distribution (1958). Post Keynesians emphasise Keynes’ principle of effective demand and the fundamental role that liquidity preference plays in market economies. Post Keynesians also reject the three axioms of neoclassical economics, which are as follows:
(1) the gross substitution axiom;

(2) the neutrality of money axiom, and

(3) the axiom of an ergodic economic world.
None of these axioms is correct. They are simply not an accurate description of the real world characteristics of modern capitalist economies. In reality, money is never neutral, non-reproducible financial assets are not gross substitutes for commodities, and we face a fundamentally non-ergodic future.

Post Keynesians also emphasise liquidity preference theory and its role in causing involuntary unemployment. The essence of this is that increasing demand for liquid assets (money and financial assets) will not lead to demand for goods and services. Shifts in liquidity preference can cause long-run involuntary unemployment, since, in the face of fundamental uncertainty about the future, investment in commodity production can become unstable (Barkley Rosser 2001: 560).

For more on Post Keynesian economics, see my links here.

BIBLIOGRAPHY
Barkley Rosser, J. 2001. “Alternative Keynesian and Post Keynesian Perspectives on Uncertainty and Expectations,” Journal of Post Keynesian Economics 23.4: 545–566.

Davidson, P. 2002, Financial Markets, Money, and the Real World, Edward Elgar, Cheltenham, UK.

Davidson, P. 2003–2004. “Setting the Record Straight on ‘A History of Post Keynesian Economics,’” Journal of Post Keynesian Economics 26.2 245–272.

Davidson, P. 2005. “Responses to Lavoie, King, and Dow on what Post Keynesianism is and who is a Post Keynesian,” Journal of Post Keynesian Economics 27.3: 393–408.

Davidson, P. 2010. “Keynes’s Revolutionary and ‘Serious’ Monetary Theory,” in R. W. Dimand, R. A. Mundell and A. Vercelli (eds), Keynes’s General Theory after Seventy Years, Palgrave Macmillan, Basingstoke, Hampshire, UK.

Hicks, J. R. 1980–1981. “IS-LM: An Explanation”, Journal of Post Keynesian Economics 3.2: 139–154.

King, J. E. 2002. A History of Post-Keynesian Economics since 1936, Edward Elgar, Chelten

Lodewijks, J. 2003. “Bastard Keynesianism,” in J. E. King (ed.), The Elgar Companion to Post Keynesian Economics, Edward Elgar Publishing, Cheltenham, UK. 24–29.

Snowdon, B. and Vane, H. R. 2005. Modern Macroeconomics: Its Origins, Development and Current State, Edward Elgar, Cheltenham.

Turgeon, L. 1996. Bastard Keynesianism: The Evolution of Economic Thinking and Policymaking since World War II, Greenwood Press, Westport, Conn.

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