Clower’s Volte-Face regarding the “Keynesian Revolution”

Abstract

Robert W. Clower’s article “The Keynesian Counter-Revolution: A Theoretical Appraisal” (1965) was central to the transformation of Keynesian macroeconomics since it contributed to the emergence of fixed-price models, in the 1970s. Despite this influence, no scholar has proposed to explain its origins. My paper aims to fill this gap. It is argued that Clower came to build his disequilibrium program of microfoundations after changing radically his views about the meaning and the nature of the ‘Keynesian Revolution’. During a first research phase (1949-1957), Clower considered that Keynesian macroeconomics was compatible with market clearing and with Walrasian microfoundations. But he eventually moved away from these equilibrium and synthesis perspectives. During a second research phase (1958-1962), he came to conclude that Keynesian macroeconomics had to be rooted in a disequilibrium framework and could not be based on Walrasian microfoundations. Hence the existence of a volte-face. This volte-face is explained by putting the invariants of Clower’s thought (i.e., his search for microfoundations adapted to Keynesian macroeconomics, and his concerns with unstable dynamics) in perspective with the contemporary developments in the disequilibrium macroeconomics of Don Patinkin, and in the non-tâtonnement economics of Frank Hahn and Takashi Negishi.