Philip Arestis and Malcolm Sawyer
Macroeconomic policies come from the “vision” of the ways in which an economy works. A “vision” of the economy where unemployment is a frequent occurrence gives rise to quite different policies from a “vision” of the economy in which there is little room for unemployment of labor, as, for example, in the New Classical macroeconomics. The macroeconomic vision that underlies the policy agenda of this chapter is described as Kaleckian-Keynesian, as it draws on the works and ideas of Michal Kalecki and John Maynard Keynes and others that approach the matter in a similar fashion. This chapter explores a modern Kaleckian-Keynesian framework for economic theory and policy. It first discusses fiscal policy, the main instrument of macroeconomic policy, before turning to monetary policy as well as financial policy, inflation, and policies that relate to product markets and labor markets.
Having emerged in the 1930s and 1940s as the German variety of neoliberalism, the ordoliberal perspective on economics provides an intriguing set of politicoeconomic problems and solutions. While its impact on postwar German economic policy is commonly recognized, more light needs to be shed on the role of ordoliberal ideas within scientific discourses. Embedded in the intellectual climate during the formative years, the essentials of Walter Eucken’s and Wilhelm Röpke’s paradigms regarding the theory of orders and order-based policy are presented in comparative perspective. Possible mutual gains from trade between Freiburg and Vienna are explored in two steps. Historically, the particular proximity of Friedrich Hayek’s early social philosophy to ordoliberal reasoning and to its notion of the competitive order deserves attention. Conceptually, clarity from widespread misinterpretations and higher awareness of existing and potential substantive commonalities can generate crucial impulses for a better understanding of liberty and its prerequisites.
A Personal View of Post-Keynesian Elements in the Development of Economic Complexity Theory and Its Application to Policy
Barclay Rosser Jr.
This chapter looks at three schools of post-Keynesian thought, dynamic/Kaleckian, Sraffian/neo-Ricardian, and uncertainty/Davidsonian, and two schools of economic complexity theory, dynamic and computational. It argues that while the origins of complexity theory in general are mathematical, with the earliest applications often in physics or biology, the earliest applications in economics for both the dynamic and computational complexity schools have come from post-Keynesian sources, with all three schools involved. Probably the deepest and most direct link between any of these is between the dynamic/Kaleckian and dynamic complexity schools. Dynamic complexity has been defined as endogenous trajectories that do not converge to a point, a limit cycle, or a simple expansion or implosion, in short some sort of more erratic pattern that may involve catastrophic discontinuities or aperiodic chaotic dynamics, among other possibilities. The Kaleckian branch of post-Keynesian economics arguably preceded even the publication of John Maynard Keynes’s General Theory of Employment, Interest and Money (1936), initiated by Michal Kalecki (1935) himself, with a “macrodynamic” model capable of generating endogenous cycles due to a nonlinear investment function.
The Post-Keynesian Critique of the Mainstream Theory of the State and the Post-Keynesian Approaches to Economic Policy
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.
Emily Chamlee-Wright and Virgil Henry Storr
Contemporary Austrian scholars have attempted to develop a research program in social economy (including a focus on mental models, generalized norms, social networks, and culture) to complement the school’s already well-developed research program in political economy. Rather than settling on a single approach or adopting a single perspective, however, they have pursued a number of different strategies. As a result, Austrian contributions to understanding how social factors affect economic action have yet to be systematized as part of a coherent social economy research program. The aim of this chapter is to fill that gap. Further, we will argue that although it is broadly interdisciplinary, a social economy research program is one in which Austrian economics has a particularly important role to play given the school’s emphasis on developing an economics of meaning and its focus on the discovery role that markets play in generating widespread social coordination.
This chapter discusses the theoretical substance and history of thought surrounding the theory of spontaneous orders. Whereas significant debate remains regarding the term’s particular origins and appropriate applications, this chapter provides a conceptual framework for categorizing orderly systems according to their agent types and the degree of complexity created by the presence of alternative interests. A substantial and meaningful difference is explained and argued for between the related concepts of emergent order and spontaneous order. While all spontaneous orders possess emergent qualities, the term spontaneous should be reserved to specifically complex human social orders as was originally intended by classical economists and the earliest developers of terminology. This framework is supported by textual references from the intellectual tradition of spontaneous order theorists.