The Structure of Post-Keynesian Economics: The Core Contributions of the Pioneers

Abstract

This paper summarises the key elements of Geoffrey Harcourt's (2006) book of the same title. Special emphasis is given to the contribution of the Cambridge pioneers, such as John Maynard Keynes, Richard Kahn, Joan Robinson, Nicholas Kaldor, Michal Kalecki, Richard Goodwin, Piero Sraffa, Luigi Pasinetti, and Dennis Robertson. The objective of their approaches is to comprehend the dynamics of an advanced capitalist economy, particularly in the context of a monetary system of production. Here, investment leads and saving follows, while the marginal propensity to save of capitalists is greater than that of workers. The economic surplus is produced in the consumption goods sector, and utilised in the capital goods sector. Mark-up pricing is important for the determination of the surplus, as is the trade off between profit-margins and sales. Kalecki's principle of increasing risk plays a role in the cyclical dynamics, as does the two-sided relationship between profitability and accumulation. The prevailing business climate is important in determining future expectations, while endogenous money and credit help to finance investment. Growth is thus endogenous in these models of finance, accumulation and profit, while potential conflict plays a role in the pricing and investment decisions and in the process of inflation. A general policy vision emanates from these foundations.