Keynes and Macroeconomics

In 1936 John Maynard Keynes published a book that he believed would revolutionize the way the world thinks about economic problems: The General Theory of Employment, Interest, and Money. Although the book became the foundation of a particular approach to economic theorizing—later termed macroeconomics, in contrast to the microeconomics of the neoclassical school, which had just begun to dominate the discipline in the early decades of the 20th century—it can be argued that Keynes never achieved what Thomas Kuhn described as a scientific revolution: a true paradigm shift.

This book not only revisits the debate on the ‘revolution that never was’ within a philosophy of science framework—one that clearly distinguishes between paradigmatic variations and paradigmatic alternatives, thus differentiating between economic orthodoxy and heterodoxy—but also argues that the ‘Keynesian revolution’ of the 1940s and 1950s was merely the orthodox response to ward off a genuine paradigm shift. This was made possible by the epistemological flexibility of the orthodox tradition on the one hand and, also, by the shortcomings in Keynes’s theorizing and methodological exposition. An alternative is presented that attempts to extend and supplement what Keynes called a ‘Monetary Theory of Production’ – offering links to modern discussions about financialisation and sustainability.

The book will be of interest to all readers seeking alternatives to mainstream economics, advocating for a pluralistic approach to the discipline, and looking for a key to understanding the different strands of Post-Keynesianism.

Arne Heise is Professor of Economics at the Department of Socioeconomics at Hamburg University and Director of the Center for Economic and Sociological Studies (CESS) at Hamburg University.