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date: 12 August 2020

Abstract and Keywords

One very important area where post-Keynesian economics differs from neoclassical economics is in public policy. Neoclassical economists believe in the efficacy of markets in most situations. As a result, they tend to oppose government interference in market economies. On the other hand, from a post-Keynesian perspective, it is not unusual for markets to fail. In such instances, government actions are necessary to improve economic performance and social welfare. Economic development and public policy should be based on improving the overall standard of living and should reflect the values and goals of equity and social justice as well as efficiency. This article provides a critique of the mainstream theory of the state by looking at the post-Keynesian responses to neoclassical economics and their approaches to public policy starting with the Great Depression. In mainstream economics, the state plays a minimal role. In contrast, post-Keynesians look at the state as playing an integral and vital role for the development and stability of markets and achieving sustainable economic growth.

Keywords: post-Keynesian economics, neoclassical economics, public policy, markets, state, economic development, Great Depression, social welfare, government interference

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