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date: 25 November 2020

Abstract and Keywords

John Maynard Keynes was a student of Alfred Marshall. Accordingly, his “Principle of Effective Demand,” the basis of his General Theory of Employment, Interest and Money, involved the intersection of aggregate supply and demand functions constructed from Marshallian micro demand and supply functions. Unfortunately, the immediate post–World War II “Keynesians” such as Paul Samuelson failed to comprehend the aggregate supply implications for the causation of inflation and the importance of uncertainty as well as the importance of liquidity for understanding the basis of the propensity to consume in Keynes’s analysis of aggregate demand. Post-Keynesians, in contrast, beginning with Professor Sidney Weintraub’s writings in the 1950s, have rectified these omissions by creating a post-Keynesian macroeconomic analysis that is logically compatible with Keynes’s emphasis on Marshallian micro demand-and-supply analysis and the importance of uncertainty and liquidity in a money-using, market-oriented entrepreneurial economy. This chapter discusses Keynesian foundations of post-Keynesian economics, focusing on how uncertainty and liquidity revoke Say’s Law.

Keywords: John Maynard Keynes, supply and demand, post-Keynesian economics, uncertainty, liquidity, Say’s Law, Paul Samuelson, Alfred Marshall, Sidney Weintraub, money

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