Re: GT and microfoundations

[Greg Nowell <GN842@xxxxxxxxxxxxxxxxx>]

This is my understanding as well.  If Keynes is "reduced" to "only being
relevant" in monopolistic/oligpolistic conditions, than his economics are the
economics of the allegedly "exceptional circumstance" which means that the
general theory is not general.   This is the importance of Davidson's repeated
assertions that Keynes' views apply to the general principles of economies,
whether oligpolistic or not.  -gn.

Mongiovi Gary wrote:

> John:
>
> I reviewed the Keppler book for The Manchester School (1995, pp.443-445).
>    Keppler argues that Keynes missed an opportunity to put the theory of
> effective demand on sound microfoundations:  "monopolistic competition,"
> Keppler contends, "is ultimately the only microeconomic theory fully
> compatible with Keynesian macroeconomics."  Not surprisingly, Keppler is
> highly sympathetic to New Keynesian theory.  This in fact is what I think
> is wrong with Keppler's view:  the theory of monopolistic competition leads
> to New Keynesian economics - which is not where I think Keynes wanted to
> go.
>
> Keppler tries to make the case that monopolistic competition was somehow a
> revolutionary break from Marshallian orthodoxy, when, on the contrary, it
> was a rather clumsy attempt to rescue Marshall from Sraffa's 1925-26
> critique.  Keynes's theory, though, IS revolutionary, that is,
> fundamentally incompatible with orthodoxy.  But you can't preserve the
> revolutionary character of the GT by trying to ground it in a a variation
> of the orthodox theory of value.  What you'll end up with is New
> Keynesianism, which is neither new nor Keynesian.
>
> That, anyway, was the gist of one part of my review. I'd look to Marx or
> Sraffa for Keynes's "microfoundations".
>
> Ciao.
>
> Gary M.
>
> -----Original Message-----
> From:   John M. Legge [SMTP:jlegge@xxxxxxxxxx]
> Sent:   Saturday, January 29, 2000 11:07 PM
> To:     POST-KEYNESIAN THOUGHT
> Subject:        GT and microfoundations
>
> I have just completed reading Keppler's Monopolistic Competition Theory in
> which the author traces the development of monopolistic competition theory
> from Sraffa's 1926 epitaph for perfect competition to Stigler's and
> Friedman's unchallenged rejection of monopolistic competition on
> essentially
> ideological grounds in the 1950s.
>
> Keppler makes the point that many of the Cambridge people behind the
> original developmnet of monopolistic competition theory were also
> associates
> of Keynes, and refocussed their efforts on macroeconomics after the
> pubklication of the GT, leaving Chamberlin to battle the University of
> Chicago on his own.
>
> On page 189 Keppler writes:
> ...although Keynesianism is still very much alive (albeit on the defense),
> it will continue to lack microfoundations as long as monopolistic
> compeittion is not taken into account.  Some research in this field is
> still
> active...
>
> Is this a fair statement of the position?
>
> JML

--
Gregory P. Nowell
Associate Professor
Department of Political Science, Milne 100
State University of New York
135 Western Ave.
Albany, New York 12222

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