Sunday, June 15, 2014

Hamouda and Harcourt on the History of Post-Keynesian Economics

Hamouda and Harcourt (1988; reprinted in Hamouda and Harcourt 2003) provide a review of the history of “broad tent” Post Keynesian economics and its various strands, and a response to the charge that Post Keynesian economics is not coherent.

Hamouda and Harcourt (1988: 1) note that in the late 1980s Walrasians like Frank H. Hahn and neoclassical synthesis economists like Robert Solow had a poor understanding of Post Keynesian economics and were not clear about what its theories involved.

They furthermore noted that “Post Keynesian economics” was itself an expression referring to heterogeneous groups in several strands (Hamouda and Harcourt 1988: 2).

Although not all Post Keynesians agree completely with their analysis, Hamouda and Harcourt (1988: 2) identify a number of “routes” or influences that led to the various Post Keynesian strands, as follows:
(1) Classical Political economy to Marshall and Keynes and to the American Post Keynesians
The first “route” runs from Classical economics to the British marginalist Alfred Marshall, and then to John Maynard Keynes. Keynes inherited his early economic thinking from Marshall, but emancipated himself from Marshallian neoclassical ideas in the General Theory and later work.

An important American Post Keynesian strand developed as inspired from the work of Keynes and included Sidney Weintraub, Paul Davidson, Jan Kregel and Hyman Minsky. Lorie Tarshis was also a North American Post Keynesian who independently developed a Keynesian macroeconomic theory that was developed from the work of Keynes, Richard Kahn, Joan Robinson and even Gardiner Means (Hamouda and Harcourt 1988: 6).

(2) Classical Political economy to Sraffa and later Sraffians
The second strand is the neo-Ricardian or Sraffian group. Piero Sraffa’s work is foundational for this strand, and that in turn was influenced by Classical political economy and Ricardo, or least Sraffa’s reinterpretation and reformulation of it.

Sraffa’s work was developed by later Sraffians/neo-Ricardians such as Pierangelo Garegnani, Krishna Bharadwaj, John Eatwell and Luigi Pasinetti, who introduced the Keynesian principle of effective demand into his theories.

(3) Classical Political economy to Marx to Kalecki and later Kaleckians
The third group runs from Classical economics, via Marx, to Michał Kalecki.

Kalecki was the important modern figure here, but, though influenced by Marx, was an unconventional Marxist and rejected the labour theory of value.

Kalecki developed a theory of effective demand, but using the ideas of mark-up pricing and social conflict as the determinant of wages (Hamouda and Harcourt 1988: 13).

Hamouda and Harcourt (1988: 14) see Joan Robinson and her followers as developers of this Kaleckian tradition in Post Keynesian economics.

Hamouda and Harcourt (1988: 18–19) also see Paolo Sylos Labini as having contributed to the Kaleckian strand of Post Keynesian theory.
Hamouda and Harcourt (1988: 3) also identify a number of “outstanding individual figures” who are not easily classified into one of the strands listed above: for example, Nicholas Kaldor, Luigi Pasinetti, Richard M. Goodwin (Hamouda and Harcourt 1988: 23), George L. S. Shackle, and Wynne Godley (Hamouda and Harcourt 1988: 23–24).

The final point that Hamouda and Harcourt (1988: 25) make is that it is within each strand that coherent approaches and macroeconomic theories have been developed.

They conclude:
“… within the various strands that we have discerned and described, there are coherent frameworks and approaches to be found, though obviously there remain within each unfinished business and unresolved puzzles. The real difficulty arises when attempts are made to synthesize the strands in order to see whether a coherent whole emerges. Our own view is that this is a misplaced exercise, that to attempt to do so is mainly to search for what Joan Robinson called ‘only another box of tricks’ to replace the ‘complete theory’ of mainstream economics which all strands reject. The important perspective to take away is, we believe, that there is no uniform way of tackling all issues in economics and that the various strands in post Keynesian economics differ from one another, not least because they are concerned with different issues and often different levels of abstraction of analysis.

An important implication of the above conclusion is that the policies which may be rationalized by post Keynesian analysis are very-much geared to concrete situations, the historical experiences and the sociological characteristics of the economies concerned. More generally, this approach which was that, for example, of Keynes, Kalecki, Joan Robinson and Arthur Okun, sometimes and most appropriately, has been dubbed the ‘horses for courses’ approach.” (Hamouda and Harcourt 1988: 25).
Of course, Hamouda and Harcourt wrote this article in 1988, and one could well argue that, since that time, there has been a convergence to some extent between the various strands, but also the emergence of new strands such as modern monetary theory (MMT).

Hamouda, O. F. and Geoffrey Colin Harcourt. 1988. “Post-Keynesianism: From Criticism to Coherence?,” Bulletin of Economic Research 40.1: 1–33.

Hamouda, O. F. and Geoffrey Colin Harcourt. 2003 [1988]. “Post-Keynesianism: From Criticism to Coherence?,” in Claudio Sardoni (ed.), On Political Economists and Modern Political Economy: Selected Essays of G. C. Harcourt. Routledge, London. 209–232.

1 comment:

  1. I very much so like that highlighted quote. It is very true indeed. There is a pluralistic tendency that you don't find in the mainstream. The mainstream is all "variations on a theme" while the PK approach is not. That is not to say that PK economics is a bunch of mutually contradictory boxes sealed off from one another -- contradiction is taken seriously -- but the idea of a Theory of Everything is pretty roundly dismissed. Thankfully.