What is the Real “Keynesianism”?: Morning Comment

Thomas Palley: Milton Friedman’s Economics and Political Economy: An Old Keynesian Critique: “Milton Friedman’s influence on the economics profession has been enormous…

…In part, his success was due to political forces that have made neoliberalism the dominant global ideology, but Friedman also rode those forces and contributed to them. Friedman’s professional triumph is testament to the weak intellectual foundations of the economics profession which accepted ideas that are conceptually and empirically flawed. His success has taken economics back in a pre-Keynesian direction and squeezed Keynesianism out of the academy. Friedman’s thinking also frames so-called new Keynesian economics which is simply new classical macroeconomics with the addition of imperfect competition and nominal rigidities. By enabling the claim that macroeconomics is fully characterized by a divide between new Keynesian and new classical macroeconomics, new Keynesianism closes the pincer that excludes old Keynesianism. As long as that pincer holds, economics will remain under Friedman’s shadow…

As I repeatedly say, most notably here, Thomas probably is 100% correct in saying that new Keynesianism is more directly an intellectual descendent of Milton Friedman’s than of John Maynard Keynes’s.

But, as I also repeatedly say, there is very little warrant for believing that John Maynard Keynes would have disapproved. In at least some of his moods, he was as much a “bastard Keynesianism” as Keynes himself: vide A Few Scattered and Preliminary Notes on Comparative Economic Theology…