This is a conference volume. The conference, which took place in Denmark in 2011, is presented by the editors as a special conference for the seventy-fifth anniversary of the publication of The General Theory—which coincided with the ongoing Euro crisis. In fact, this was the fifth post-Keynesian biannual conference, which used to be held at Dijon, France, until 2009. This fact is revealed to readers only in endnotes on pages 28 and 37. The conference returned to Dijon in 2012, according to the Internet.
The papers vary considerably in their approach to the twin topics—Keynes and the Euro crisis—and were presumably presented in fairly coherent and focused sessions during the conference. As a conference volume, such focus is replaced by an informative display of the variety of research that occupies post-Keynesians and related heterodox economists, and some historians of economic thought, as of 2011. In the Introduction, the editors classify the papers according to four groups: relevance of John Maynard Keynes for today (chapters 1–3), relevance for macro methodology (chapters 4–6), relevance for macro theory (chapters 7–10), and relevance for macro politics (chapters 11–12). I would classify it differently: a further exploration of The General Theory (chapters 8, 9), Keynes's other writings (chapters 5, 6, 10), the story of macroeconomics from 1936 to 2011 (chapters 1–4), and the subprime and Euro crises (chapters 7, 11, 12). Typically, each paper tried to cover most or all of these themes, and so my suggested classification is based on what seemed to me the dominant theme in each paper.
For historians of economic thought, this book can be a useful window to the post-Keynesian school, but it would not be a good introduction for those yet unfamiliar with this school (conference volumes rarely are). It also contains valuable information on the history of Keynes, his influences, and his works (including his presumed cultural relations to Greek ethics and Einstein).
I suspect that the book will be even more useful for future historians of economic thought. This book will illustrate to them, I dare guess, why post-Keynesians remained at the margin of the economics profession even after 2008. At what could have been not just a “Minsky moment” but a moment of intellectual revolution in economics, the subprime-Euro crisis might be a non-event in the history of economic thought. Or at least it would be a non-event for the position of post-Keynesians in economics. A major reason is the reluctance to formalize Keynes's arguments in the language of mathematics. Some chapters in this book emphasize and still support this view. They ignore, at their peril, three facts. First, there is a mathematization trend in other social sciences, including political science and even law ('economic analysis of law').
Second, there is an understandable desire of politicians—who usually get re-elected or fired based on the state of the economy—to get clear answers from their economic advisers. President Truman is said to have asked for a one-armed economist, as he despaired of his advisers describing to him in words the trade-offs in every economic choice he would make ('on the one hand ... but on the other hand ...'). Nothing seems to give a clearer answer than taking a derivative of some function to find whatever maximizes something good. Economists and their client politicians will not give it up any time soon.
Third, contrary to what some other authors in the volume think, the main disagreement that mainstream economists have with them is not about Keynes's ideas, but purely about methodology. The reason is that there aren't that many true economists in mainstream economics departments anymore. There is hardly anyone who knows what Keynes said, so how could they object to it? There are countless mathematicians and statisticians, doing mostly theoretical work, which they sometime apply to economics (and very often apply it to completely unrelated areas, such as witchcraft and terrorism—see the leading mainstream economics journals these days). As someone who survived Real Business Cycles indoctrination at the University of Rochester, I can attest that the best students there were those who had no BA in economics but came from sciences. They received their PhD with only this piece of knowledge about Keynes: 'His theory had no micro-foundations (i.e., it wasn't mathematical enough) and so it was wrong.' What Keynes actually said, or what even his Keynesian followers(?) said, remained unknown to these students until they graduated and were asked to teach undergraduate macroeconomics as young assistant professors elsewhere. The opposition, therefore, is not to Keynes's ideas, or to post-Keynesian ideas, but to the non-mathematical methodology, which is argued by some authors in this book to be Keynes's main contribution.
Economists and others have made great progress in formalizing almost everything in social sciences, even things like altruism. Perhaps post-Keynesians should think again if Keynes's uncertainty really cannot be formalized at all. Instead of a normal distribution of a firm's future stock price (a ridiculous assumption, clearly), there may be a need for non-continuous functions that can describe what people can truly think about the future (perhaps in discrete categories: excellent, good, bad, terrible). It is not a hopeless task. The chartalism Keynes supported has been formalized in mathematical models by Ross Starr in Kenneth Arrow's general equilibrium, and by myself in a search model. Both were published in a mainstream economic journal (Economic Theory) that is completely indifferent to ideology but is dedicated to promoting mathematical methodology. Once published there, it becomes part of the mainstream economic discourse, even though Keynes supported it.
Complete avoidance of mathematics by post-Keynesians, while mathematicians are taking over economics departments, might create an even bigger split among economists. There could be a future in which post-Keynesians, historians of economic thought, and some economic historians will sit together as prose-writing outcasts in economics departments of liberal arts colleges, next to philosophers and theater scholars, while the other economists will be in mathematical economics departments of science colleges and business schools.
While reading the book, on a few occasions I wondered whether post-Keynesians understand mainstream economics as much as they should, or if they speak the same language. One author states that for “the re-unification of political economy ... Neo-classicals would need to accept, for example, that competitive equilibrium theory has no place in the theory of growth over time” (p. 16). What? Why? What's so obviously wrong with, say, the Solow growth model (if that's what he meant)? Perhaps the post-Keynesians in the conference understood, but it is not obvious for the general reader of the conference volume. Another author writes: “to assume that agents have full knowledge about the future—so-called 'rational expectations'” (p. 138). Rational expectations only mean a use of all available information, including the model's own equations. When these equations incorporate random events, rational expectations are clearly not prophecy.
On the technical side, the book is generally convenient to read, except for minor things. First, it is sometimes recognizable that most authors are not native speakers of English (are you opposed to the “School of Chicago?”), but overall the level of English is tolerable, not too different from that of this review. Second, references are often made to The Collected Writings of Keynes, and it is not always clear if the source cited is in The General Theory, and, if not, when the line quoted was written. It would have been better to standardize all the Keynes references across chapters, or at least those to The General Theory. Third, the section titles are ANNOYING IN LARGE ALL CAPS. In the Introduction, by the way, this is not done consistently, and the wishes of the author of chapter 9 to have her sections numbered were not fulfilled.
I will end with an analogy that came to my mind over and over while reading the book. Post-Keynesians remind me of my fellow Jews. A tiny, persecuted minority claims to be the one most faithful to the original teachings of Abraham and Moses. This group looks amazed at others who added things to their Bible, mixed it with older, foreign elements to create what could be called a neo-pagan synthesis (e.g., Yule turned Christmas), and proceeded to rule the world while claiming to be Keynesian, I mean Abrahamic. The world would be a poorer place without Jews, and economics would be a poorer place without post-Keynesians. Edward Elgar should be commended for continuing to give voice to an important but often neglected school of economics, especially at these interesting times.
