John McCombie is one of my favourite economists. He is the co-author of the book Economic Growth And The Balance-Of-Payments Constraint, one of the most supremely insightful books.

McCombie has written a review of Marc Lavoie’s book Post-Keynesian Economics: New Foundations, which is the second edition of his book titled Foundations of Post-Keynesian Economic Analysis.

He says:

… the greatest significance of this work is that it clearly demonstrates that there is a coherent and interrelated body of economic theory that stands in marked contrast to the neoclassical framework. Indeed, with the deficiencies of the prevailing orthodoxy exposed by the subprime crisis the publication of this book could not have come at a more propitious time. Some post-Keynesians have concentrated on attacking the foundations of the neoclassical paradigm … to such an extent that it could (and has been) unfairly accused of nihilism.

But as Kuhn has pointed out, a paradigm can only be overthrown by the development of a  new paradigm and Marc‘s book shows that there is a substantial corpus of Post Keynesian that meets this criterion. Criticisms of a paradigm is not enough to cause a change in the world view of the practioners …

… It is worth re-emphasizing that one of the great successes of this book is that it takes many important contributions of the Post Keynesians which may otherwise have been lost buried in the journals and integrates them into a coherent story; in a very real sense the sum of this work is greater than the parts.

Marc Lavoie - Post-Keynesian Economics - New Foundations

Read the full review here.

Leave A Comment

by Thomas Palley

Inspired by the work of Doctors Without Borders (Médecins Sans Frontières), I have recently started a project called Economists Without Borders (Economistes Sans Frontières). Its purpose is to inoculate the global economy against the virus of neoliberalism. Last week, I had two difficult “missions” to Vienna and Warsaw.

In Vienna, I confronted an outbreak of the neoliberal globalization – free trade strain of the virus. Without doubt, this is the most virulent and dangerous of all strains. People who get infected become blind to all evidence, deaf to all argument and prone to intellectual condescension. Massachusetts Avenue in Washington DC is a hot zone of infection. The bad news is that if you are over forty and infected it is doubtful you can be cured. However, younger patients have a chance of recovery. Here is the anti-viral I prescribed titled “The Theory of Global Imbalances: Mainstream Economics vs. Structural Keynesianism”.

In Warsaw, I confronted an outbreak of Milton Friedmanism which is one of the oldest strains of neoliberal virus. Friedmanism is a gateway virus that weakens defenses against other neoliberal strains and younger minds are particularly susceptible to it. The good news is that if diagnosed early there is a good chance of recovery. However, if treatment is delayed, intellectual ossification and closed-mindedness sets in. This ossification is almost always associated with inflation obsessive compulsive disorder and austerity fever. Here is the treatment I recommend titled “Milton Friedman’s Economics and Political Economy: An Old Keynesian Critique”.

This post originally appeared here on Thomas Palley’s blog here

Leave A Comment

Strong Assertions: Reply To A Comment [Update 2]

18 November 2014

I don’t generally publish comments and reply offline via email but this one needed one on the blog. Winterspeak commented on my previous post Strong Assertions: Deliberate obtuseness ramanan? A 15% interest rate will certainly reduce borrowing as a first order effect, but it will also have another first order effect which will move AD […]


Strong Assertions

14 November 2014

In a recent article (from last month), Warren Mosler makes strong claims. He says: I reject the belief that economy is strong and operating anywhere near full employment. I also reject the belief that a zero-rate policy is inflationary, supports aggregate demand, or weakens the currency, or that higher rates slow the economy and reduce […]


Thomas Palley — Rethinking Wage Vs. Profit-led Growth Theory With Implications For Policy Analysis

13 November 2014

Thomas Palley has a new paper titled Rethinking Wage Vs. Profit-led Growth Theory With Implications For Policy Analysis. Abstract: The distinction between wage-led and profit-led growth is a major feature of Post-Keynesian economics and it has triggered an extensive econometric literature aimed at identifying whether economies are wage or profit-led. That literature treats the economy’s character […]


IMF’s World Economic Outlook On Global Imbalances

30 September 2014

The IMF has released a couple of chapters from its upcoming World Economic Outlook. There is one chapter Are Global Imbalances At A Turning Point, which talks of not just “flow imbalances” (current account deficits/surpluses) but also “stock imbalances” (international investment positions). There is a nice table with a lot of information (although it is interested […]


Credit And Economic Growth

17 September 2014

In a new column for Bloomberg, Noah Smith questions the intuition that credit fuels economic growth. He says: It seems like the only people who don’t instinctively believe in credit-fueled growth are academic economists. The academics have good reason for being skeptical. His reason (in short) is the following: It’s pretty obvious how credit drives […]


Thomas Palley — The Theory Of Global Imbalances: Mainstream Economics Vs. Structural Keynesianism

26 August 2014

Thomas Palley has a new paper on global imbalances. It tells the story of how “the economics profession has been a gung-ho supporter of neoliberal globalization, using the rhetoric of free trade.” and how its narrative has changed over the years to keep the rhetoric intact. From the abstract: Prior to the 2008 financial crisis there was […]


Thomas Palley — New Keynesianism As A Club

28 July 2014

Thomas Palley has a new blog post detailing how much recent new Keynesian theory is a rediscovery of ideas developed by old Keynesians and Post Keynesians over the past thirty years and that new Keynesians persistently fail to acknowledge that precedence. New Keynesianism as a Club Club, noun. 1. An association or organization dedicated to a particular […]


ROKE Issue On Steve Keen’s Notion Of Aggregate Demand

22 July 2014

The new issue of ROKE (Review of Keynesian Economics) is online with a few articles available free for some time. Marc Lavoie, Thomas Palley and Brett Fiebiger comment on Keen’s notion of aggregate demand. Marc Lavoie’s article A comment on ‘Endogenous money and effective demand’: a revolution or a step backwards? is available here. Steve Keen’s […]