The heterodoxs fight back!
Post-Keynesian Economics - Provisional program 2016-17 (in English)
Module Prof. Ernesto Screpanti
The course begins with a
presentation of classical and Marxian economics, focusing on the theory of
prices as determined by production condition, on Marx’s critique of Say’s law, and
on the theories of crisis and business cycle.
Then
Keynes’ and Kalecki’s approaches to effective demand are presented. The notion
of underemployment equilibrium is illustrated. It is argued that the level of
activity is determined by the autonomous components of aggregate demand, and
that these are widely conditioned by the animal spirits of investors and the
uncertainty of expectations. Prices are fixed by firms, on the ground of a
markup rule, and are determined by production conditions. Income distribution
plays a fundamental role in determining the magnitude of the income multiplier.
Finally,
by means of the Aggregate Supply - Aggregate Demand model, a comparison is
proposed between the monetarist, neo-Keynesian, and Post-Keynesian models.
Module Prof. Fabio Petri
This module tries to explain
why the advances in capital theory due to Sraffa and others have persuaded many
economists that the marginalist/neoclassical approach is irremediably flawed
and therefore a turn to another approach appears inevitable. The module
presents the basic structure of the neoclassical approach, the roots of its
differences from the classical/Marxian approach, and the difficulties it
encounters in dealing with capital goods both in its traditional versions and
in its recent neo-Walrasian versions.
Module Prof. Sergio Cesaratto
This module takes stock of
prof. Screpanti’s introduction to the Classical economists and Marx and of
prof. Petri’s illustration of the marginalist value and distribution theory to
show the relevance of the capital theory critique to rescue the Keynesian
theory of effective demand from the reabsorption in neoclassical theory.
Garegnani
(1978-79) firstly pointed out this relevance. In
his contribution, he moved from the Wicksellian macroeconomic long-period
equilibrium (that is, still the current reference for modern macroeconomics)
and its weakness vis-à-vis the capital critique. He then exposes the most
revolutionary aspects of Keynes’ General
Theory, in particular the overturning of neoclassical saving-investment
nexus. Unfortunately, Keynes also accepted some fundamental conclusions of the
dominant theory and this opened the way to its reabsorption by that theory.
Keynes’
most original results were expressed in a short-run framework, with a given
productive capacity. The challenge for heterodox economists is, therefore, to
extend those results to a long period context, when capacity is allowed to
vary. In this regard we shall consider two alternative demand-led growth
models, the Sraffian supermultiplier model (Cesaratto et al. 2003) and the
Neo-Kaleckian model (Lavoie 2006), and compare them (Cesaratto 2015, 2016).
The
supermultiplier approach will be linked to another heterodox strong point, endogenous money theory. Nowadays, also
many conventional economists and most central bankers increasingly provide open
support this view.
Basic Textbooks
Garegnani, P.
(1978-79) ‘Notes on consumption, investment and effective demand, Parts I &
II’, Cambridge
Journal of Economics, 1978, pp. 335-353, and 1979, pp. 63-82.
Garegnani, P.
(1990), ‘Quantity of capital’ in J. Eatwell, M. Milgate, P. Newman (a cura di),
The New Palgrave: Capital Theory, pp.
1-75.
Petri, F.
(2016), “What capital theory can teach us”, forthcoming in volume collecting
the 2014-15 Pisa lectures on heterodox ecnomic theory.
Screpanti E., Zamagni S.
(2005) An outline of the history of
economic thought, second edition, Oxford:
Oxford University Press. Sections: 2.2, 3.1, 4.3, 7.1, 7.2, 7.3, 9.5, 9.6
Lavoie, M. (2006) Introduction to Post-Keynesian Economics,
Basingstoke: Palgrave Macmillan.
Suggestions for further readings
Cesaratto S. (2016) The modern
revival of the Classical surplus approach: implications for the analysis of
growth and crises, <Quaderni del
Dipartimento di Economia politica e statistica>, Università di Siena, n.
735/2016.
Cesaratto, S. (2016)
“Initial and final finance in the monetary circuit and the theory of Effective
Demand.” Metroeconomica
(forthcoming).
Cesaratto, S.
(2015) “Neo-Kaleckian and Sraffian controversies on the theory of
accumulation.” Review of Political
Economy, 2015, 27 (2): 154-182.
Cesaratto, S., Stirati,
A. & Serrano, F. (2003) Technical change, effective demand and employment. Review of Political Economy, 15, pp.
33-52.
Jakab, Z., Kumhof, M. (2015) ‘Banks
are not intermediaries of loanable funds - and why this matters’, Bank
of England, Working Paper No. 529. pp. 1-14 only
Lavoie
L. (2013) ‘The monetary and fiscal nexus of neo-Chartalism: A friendly critical
look’, Journal of Economic Issues,
47(1), pp. 1-32.
Lavoie
M. (2005) ‘A primer in endogenous credit-money’, in: Rochon, L.P., Rossi S. (eds.), Modern Theories of Money. The Nature and
Role of Money in Capitalist Economies, Edward Elgar, Cheltenham (UK).
McLeay
M., Amar, R. Ryland, T. (2014) Money creation in the modern
economy, Bank of England, Quarterly Bulletin, No. 1
McLeay
M., Amar, R. Ryland, T. (2014) Money in the modern economy: an introduction, Bank of England, Quarterly Bulletin, No. 1
Petri, F. (2016) ‘Capital
Theory’, in G. Faccarello, H. D. Kurz, eds., Handbook of the History of Economic Analysis vol. III.
Petri, F. (2015) Review of M.
Lavoie, Post-Keynesian Economics: New Foundations, in Review of Political Economy, 2015 (4).
Screpanti, E.
(1997) “Banks, increasing risk, and the endogenous money supply”, Economic Notes, 26(3), 567-88.
