Scramble for Keynes' Mantle
The scramble for Keynes’ mantle kalyani Deshpande shruti Aran sonia Singh
Shagun Anand
Padmakshi Karanjkar
Shaurya Talwar
About the research paper:
The author of the paper is Abba Lerner. This paper was prepared for the meeting of the American Economic Association, December 29, 1977. He was considered as one of the most influential post-Keynes economist.
His most famous works include: Marshall-Lerners’ condition, functional finance, economics of control, etc.
According to the author, the real meaning of the Keynesian Revolution lies in recognition of the necessity of taking feedback. It is alright to disregard individual feedbacks as in the case of microeconomics. But, while considering a large part of or the whole economy it cannot be ignored. It is not necessary that a fall in wages will control excess supply because a cut in wages will cause demand to fall so that excess supply still remains. The essence of this Revolution also lies in the fact that unemployment does not cause the wages to fall and that something else has to be done for that. According to Keynes, it is important to integrate money into the economic analysis before thinking about what else has to be done.
Even though the Classicals talked about money extensively, they chose not to include money so as to avoid any confusion with goods and services and regarded money only as a convenient intermediary. The price level in the economy is directly related to quantity of money. Thus, with more money the price level will be higher than at the equilibrium. But, in this process the mechanism that brings the economy to a new equilibrium is lost. Keynes showed that this mechanism depended on the fall in wages, costs and prices. This was because, all these factors will increase real spending on goods and services. Thus, it was concluded that, to bring up demand to equal supply so that there is no unemployment in the economy, the government would have to increase the spending in the economy if
Shagun Anand
Padmakshi Karanjkar
Shaurya Talwar
About the research paper:
The author of the paper is Abba Lerner. This paper was prepared for the meeting of the American Economic Association, December 29, 1977. He was considered as one of the most influential post-Keynes economist.
His most famous works include: Marshall-Lerners’ condition, functional finance, economics of control, etc.
According to the author, the real meaning of the Keynesian Revolution lies in recognition of the necessity of taking feedback. It is alright to disregard individual feedbacks as in the case of microeconomics. But, while considering a large part of or the whole economy it cannot be ignored. It is not necessary that a fall in wages will control excess supply because a cut in wages will cause demand to fall so that excess supply still remains. The essence of this Revolution also lies in the fact that unemployment does not cause the wages to fall and that something else has to be done for that. According to Keynes, it is important to integrate money into the economic analysis before thinking about what else has to be done.
Even though the Classicals talked about money extensively, they chose not to include money so as to avoid any confusion with goods and services and regarded money only as a convenient intermediary. The price level in the economy is directly related to quantity of money. Thus, with more money the price level will be higher than at the equilibrium. But, in this process the mechanism that brings the economy to a new equilibrium is lost. Keynes showed that this mechanism depended on the fall in wages, costs and prices. This was because, all these factors will increase real spending on goods and services. Thus, it was concluded that, to bring up demand to equal supply so that there is no unemployment in the economy, the government would have to increase the spending in the economy if