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Keynesian economics in the twenty‐first century 1
Author(s) -
Marris Robin
Publication year - 1999
Publication title -
economic affairs
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.24
H-Index - 18
eISSN - 1468-0270
pISSN - 0265-0665
DOI - 10.1111/1468-0270.00138
Subject(s) - economics , keynesian economics , imperfect competition , oligopoly , post keynesian economics , competition (biology) , neoclassical economics , recession , perfect competition , great recession , new keynesian economics , microeconomics , monetary policy , cournot competition , ecology , biology
The Keynesian theory as set out by Keynes embodied an Achilles heel which he himself half understood but chose to ignore. It is also ignored by “post‐Keynesians” and “New Keynesians”. The trouble is not in the labour market but in the goods market, where The General Theory , at least up to Chapter 19, definitely assumes perfect competition. But on that assumption the possibility of a Keynesian recession requires that employers behave with highly inconsistent expectations. Once, however, the assumption of perfect competition in the goods market is replaced by imperfect competition or oligopoly, the Keynesian theory re‐emerges not only as robust, but also totally relevant to the 21st century.