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Paul Davidson, Post Keynesian Theory and Policy: A Realistic Analysis of the Market Oriented Capitalist Economy

Author

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  • Stefan VOSS

    (Public-Service Union ver.di, Bavaria, Germany.)

Abstract

In this book Davidson develops Post Keynesian strategies for full employment policies, targeting inflation and offers solutions for the problems of globalization. Davidson´s message is clear: Markets cannot regulate by itself. Mainstream theories are all based on wrong assumptions like the neutrality of money, the predictability of the future (ergodic-axiom), the efficiency of markets, rational expectations, Say´s Law and Walrasian Theory of equilibriums. In this book Davidson rejects all these assumptions and therefore offers Post-Keynesian solutions. From the viewpoint of Davidson these misleading assumptions of mainstream theories lead to a wrong economic policy resulting in high unemployment rates. He also criticizes Samuelson´s neoclassical synthesis embedded in a Neo-Walrasian model, which Keynes clearly rejected. In an article (Neglected Prophets) written by Holt, Rosser, Wray (1998), Davidson is described as an economist who would have lost the discussion in the short run, but will win it in the long run (Holt et al., 1998:505). That sounds promising, but Davidson would not agree to this conclusion in the sense he would be a prophet. For a prophet the future is already pre-determined by the past, but in a non-ergodic world the future is open and not pre-determined. The future remains to be as not predictable.

Suggested Citation

  • Stefan VOSS, 2016. "Paul Davidson, Post Keynesian Theory and Policy: A Realistic Analysis of the Market Oriented Capitalist Economy," Turkish Economic Review, KSP Journals, vol. 3(2), pages 373-381, June.
    • Handle: RePEc:ksp:journ2:v:3:y:2016:i:2:p:373-381
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    References listed on IDEAS

    as
    1. Richard P.F. Holt & J. Barkley Rosser, Jr. & L. Randall Wray, 1998. "Neglected Prophets: Paul Davidson: The Truest Keynesian?," Eastern Economic Journal, Eastern Economic Association, vol. 24(4), pages 495-506, Fall.
    2. Vasilev, Aleksandar & Maksumov, Rashid, 2010. "Critical analysis of Chapter 23 of Keynes’s Notes on Mercantilism in The General Theory of Employment, Interest and Money (1936)," EconStor Research Reports 155318, ZBW - Leibniz Information Centre for Economics.
    3. Paul Davidson, 2015. "Post Keynesian Theory and Policy," Books, Edward Elgar Publishing, number 16559.
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    More about this item

    Keywords

    Post Keynesian Theory; Unemployment; Economic policy.;
    All these keywords.

    JEL classification:

    • B50 - Schools of Economic Thought and Methodology - - Current Heterodox Approaches - - - General
    • F62 - International Economics - - Economic Impacts of Globalization - - - Macroeconomic Impacts
    • H63 - Public Economics - - National Budget, Deficit, and Debt - - - Debt; Debt Management; Sovereign Debt

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