Varieties of Keynesianism

March 9, 2014

Recent claims from Paul Krugman on the superiority of the IS-LM version of Keynesian economics call for a re-thinking of Keynesian economics.

The New Classical counter-revolution in the economic theory movement stemmed from the unravelling of the "capital-labor accord" in WWII. Good, old-fashioned, Keynesian economics (GOKE) substitutes the general and unmotivated assumption of downward money wage rigidity for the detailed examination of the varied social coordination problems that characterize modern capitalist economies. The importance of this counter culture movement is that it underrates Keynes' role as a precursor of modern information economics and risks losing significant policy insights.

Authors: Duncan Foley
Download PDF