Keynes and competition

["Kazuhiro Kurose" <kurose@xxxxxxxxxxxxxxxxxxxxxx>]

Davidson has been insisting that the existence of involuntary unemployment
has nothing to do with the assumption whether the economy is the perfect
competition or the imperfect one. This means that the principle of effective
demand is still valid even if we are in the perfect competition world.
However, those, whom I should call the new Keyensian such as Clower or T.
Negishi, emphasized the importance of the imperfect competition. According
to them, the perfect competition means that the individual (not aggregate)
demand curve is flat, and then the capitalists expect that they could sell
the goods whatever they want. But there are no demand constraints in this
circumstance. Therefore, they thought that there is disequilibrium in the
goods market at Keynes' system, and it is plausible for them to assume the
imperfect competition.

What would you think about the new Keynesian thought like this?
I think that the judgment on whether Keynes' system is perfect competition
or imperfect one depends upon the judgment on whether there is
disequilibrium in goods market or not. It is obvious that the new Keynesian
thought that there is disequilibrium in goods market. What do you think
about this opinion?

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  Kazuhiro Kurose
  Graduate School of Economics and Business
  Administration, Hokkaido University
  Kita 9 Nishi 7, Kita-Ku, Sapporo, Japan
  060-0809
    TEL: +81-11-716-2111 ex:2786
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