Towards a Post-Keynesian consensus in macroeconomics: Reconciling the Cambridge and Wall Street Views (original) (raw)

2020, Post-Keynesian Monetary Theory

The current financial crisis, which started to unfold in August 2007, is a reminder that macroeconomics cannot ignore financial relations, otherwise financial crises cannot be explained. Several authors have underlined the apparent tensions that have existed between the so-called American Post Keynesians and the Cambridge Keynesians. The former, also known as the Fundamentalist post-Keynesians, are mainly concerned with money, debt, liquidity, interest rates, and cash flow issues that characterised an uncertain world dominated by financial markets. This also came to be known as Wall Street Keynesianism or Financial Keynesianism. By contrast the Cambridge Keynesians are associated with the Kaleckian and Kaldorian strands of post-Keynesianism, along with the neo-Ricardian (or Sraffian) Keynesians. The Cambridge Keynesians focussed on real issues, mainly through growth models, being concerned with technical choice, income distribution, rates of capacity utilisation, pricing, normal and realised profit rates. Several observers have pointed out that they could see little homogeneity in the economic views and methods of these two broad groups of heterodox Keynesians. The purpose of the present paper is to show that while these differences have certainly existed in the past, the potential for some reconciliation between these two main views of the economy has always existed, and that some large efforts have been made over the last two decades to