Post-Keynesian Institutionalism and the Failure of Neoliberalism: Returning Realism to Economics by Highlighting Economic Insecurity as the Flip Side of Financialization

Abstract

Post-Keynesian institutionalism (PKI) has always been about starting with the reality of human experience and working to fashion a better world rooted in broadly shared prosperity. In contrast, a decades-long pursuit of the neoliberal agenda has failed to deliver such prosperity and, in many ways, has actually moved the United States further from PKI’s conception of a better world. In an effort to bring economics back in touch with reality, this article describes the economic insecurity that has been a central problem confronting Americans for more than a generation. It then shows how PKI explains that insecurity as a consequence (in fact, the flip side) of a key aim of neoliberalism: financialization. PKI accounts for these trends with a theory of capitalist development that draws on the work of Hyman Minsky. Contributors to PKI also offer more than just theory and analyses: they also propose policy recommendations and institutional changes designed to bolster democratic decision-making, community vitality, economic opportunity, environmental sustainability, and individual wellbeing. The COVID-19 pandemic underscores the need for such changes.