address for correspondence: dario.togati@unito.itThe Great Recession (GR) creates a stalemate in macroeconomics. On the one hand, standard approaches fail to account for its persistence in a credible way (mainly stress government failures as its deep causes, for example) due to their implicit assumption that the economy is internally stable. On the other, heterodox approaches fail to regain consensus. While often correctly stressing that the roots of the GR lie not only in developments within the financial sector but also in a lack of aggregate demand, they fail to devise an alternative method for showing why this problem has arisen in a systematic way. This paper fills the gap by proposing a new framework called the Balanced Stability Approach. Unlike standard macro, which takes stability for granted, it provides a balanced assessment of stability, considering both positive and problematic aspects of the so-called New Economy (NE), in a broad interdisciplinary perspective. On these grounds, the paper draws the conclusion that the low level of aggregate demand underlying the GR is rooted in a number of wider structural changes generated by the NE.2
In this paper, I tackle the key issue raised by Pasinetti, namely why Keynes failed to accomplish his revolution and build a unifying ‘monetary theory of production’ framework. I argue that this occurred because, following his Marshallian background, he adopted an oversimplified view of the structure of theories, a problem which, following Leontief, might be labelled as ‘implicit theorising’ (IT). By making a comparison between the General Theory and standard macroeconomics based on Lakatos’s ‘research programme’ notion, this paper explores IT in a systematic fashion and stresses two key points. First, Keynes did not attack the ‘true’ orthodox postulates but only the conclusions deriving from them. Secondly, he failed to articulate his own research programme effectively. Based on these points, the paper concludes that filling such gaps in Keynes’s theory is the precondition for restoring his generality claim.
This paper addresses the issues of general theorizing and historical specificity in the 'Keynes versus the Classics' dispute and puts forward two main arguments. First, the current macroeconomic orthodoxy wins the 'relative' generality contest because it implies that institutions influence outcomes, such as the natural rate of unemployment, in contrast with Keynes's 'internalist' approach, which neglects historical specificity. Secondly, mainstream macro is not truly general in an 'absolute' sense since it only makes sense under very special real-world institutional conditions.
The crisis in macro and the limitations of the economics of Keynes. Or why the Master will not return unless his General Theory is dressed up in neo-modern clothes In J. Jespersen and M. Madsen (a cura di) Keynes's General Theory for Today, Elgar, 2012 pp. 40-59
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