Friday, October 7, 2011

Axel Leijonhufvud on the Reform of the Financial Sector

A nice talk by the coordination Keynesian/Post Walrasian Axel Leijonhufvud on the financial crisis, and reforms that should be implemented on the financial sector.

There is a nice convergence between heterodox economists, such as Post Walrasians (like Leijonhufvud), those in the tradition of Old American Institutionalism (like James Galbraith), Post Keynesians (like Steve Keen), and other independent heterodox thinkers like Richard Koo, in diagnosing the cause of the financial crisis and current malaise: common to all analysis is debt deflation theory and Hyman Minsky’s financial instability hypothesis. Even some New Keynesians like Paul Krugman are catching on.


  1. Does anybody else suspect that Krugman has long since figured out that the neoclassical system is crap, and just doesn't say as much because he knows what side his bread is buttered on? I like to think so.

  2. Nerdy,

    Yes. I think Stiglitz is sort of similar, though he's trying to escape more than Krugman. DeLong has expressed some sympathy towards anti-economists, too.

  3. @Nerdy McGee and Cahal:

    Keynes himself said that "the Classics" are correct, but only as a "special case". The point of the Revolution was to demonstrate that neoclassical economic theory is limited for a more "General Theory".

    Krugman himself has stated that he finds *some* contributions by Post Keynesian economics to be interesting, but he's still pretty much a mainstream Keynesian. I don't think Stiglitz is committed to Subjective Expected Utility (which is what neoclassical economics today is based upon) given his research on assymetric information.

  4. Does anybody else suspect that Krugman etc....

    Krugman is peculiar:

  5. Out of curiosity LK, have you ever commented on the research of the military risk analyst-turned-anti-war campaigner Daniel Ellserg? His doctoral dissertation was published ten years ago in 2001, long after it was completed in the 1960ies.

  6. "Out of curiosity LK, have you ever commented on the research of the military risk analyst-turned-anti-war campaigner Daniel Ellserg?"

    No, I haven't! But I will be interested to see what he says about uncertainty.

    1. Jan said: There is an nice article by Keynesian/Post Walrasian
      "Axel Leijonhufvud, The Wicksell Connection:Variations on a theme"
      about Knut Wicksell´s impact on later work by Post Keynsian as well as the american Neo-Classical-Keynsian etc. Well worth reading i think.His view on American-Neo-Keynsian etc,as not more Keynsian,then the Chicago Monetarists i find interesting.

  7. Post Keynesian economists ought to read more of Daniel Ellsberg. The behavioural economists like George Akerlof and Daniel Kahneman, I believe, are quite familiar with his doctoral dissertation on uncertainty. Here's a review by Michael Emmett Brady of Daniel Ellsberg's 2001 publication.