Customer Reviews

An Encyclopedia of Keynesian Economics

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This book contains about 135 short essays on topics that would be of interest to someone doing basic research on John Maynard Keynes and/or Keynesian economics.Some basic topics covered are Keynes and Probability,What Remains of Keynes?,Liquidity Trap,Marshall and Keynes,Microfoundations of Macroeconomics,The Influence of Burke and Moore on Keynes.etc.The problem is that too many of the brief essays attempt to cover far too much in far too few pages.The result is that many errors of omission and commission occur.A book selling for $300.00 should do a much better job.I selected the essays"Keynes and Probability" and "What Remains of Keynes?" to review.Each of these essays does an extremely poor job.The author of the first essay bases his review on second hand literature written by B.Bateman.The following claim is made:"In response to Ramsey's...critical review of A Treatise on Probability(TP),Keynes began a long journey to escape from his early beliefs.By the time of the General Theory,Keynes had developed a subjective theory of probability,dropped the notion of an objective good and concluded that individuals were irrational...held subjective degrees of belief..."etc.(Cate,1997,p.284).There is simply no support for these musings once it is realized that Ramsey's reviews are based on a very poor reading of basically one chapter of the TP,chapter III, that was taken out of context and badly misinterpreted.Ramsey came to the queer conclusion that, by the terms nonnumerical and nonmeasurable,Keynes was arguing that numbers could not be used to estimate or calculate probabilities.Ramsey then started talking about Keynes's "nonnumerical degrees of belief","mysterious logical relations",etc.Of course,Keynes,in chapter 15 of the TP on page 160("...between numerical limits";the same definition appears on p. 32.Keynes even puts the word "between" in italics to emphasize it.Ramsey had no idea of what Keynes was doing)had defined a nonnumerical probability to be an approximation that had an upper bound and a lower bound .Keynes is the founder of the interval valued estimation approach to probability.The second essay is extremely poor.The author has absolutely no understanding of the technical apparatus used by Keynes in the GT nor of what it was that Keynes accomplished.A mathematically literate reader can derive the following optimality condition from chapters 20 and 21 of the GT:w/p=mpl/(mpc+mpi),where w/p is the real (expected=realized)wage,mpl is the macroscopic marginal product of labor derived from an aggregated neoclassical production function,mpc is the marginal propensity to spend on consumption goods,and mpi is the marginal propensity to spend on investment goods.Involuntary unemployment,represented by multiple equilibria in the output market,exists if mpc+mpi<1.Only in the very special case where mpc+mpi=1 will the classical and neoclassical result,specified by Say's Law,occur.It is mathematically impossible for labor,in the aggregate,to cut their money wages in order to eliminate involuntary unemployment.In fact,the money wage must rise if mpc+mpi<1."What remains of Keynes?"the author asks.The answer can be found on p.261 of the GT and in chapters 20 and 21.The potential book buyer is advised to pass on this book and purchase a copy of Keynes's 1936 book,The General Theory of Employment,Interest and Money.