Post Keynesian Macroeconomic Theory: A Foundation for Successful Economic Policies for the Twenty-first Century [Paperback]

This textbook-style book by Davidson on Post Keynesian Macroeconomics is "okay." The Z-D model is just briefly mentioned in chapters 2 and 10. More space is given to explicating "Keynesian" theories than to this imporant model. Davidson does a good job, however, in covering Post Keynesian monetary theory and Keynes' four motives for the liquidity preference theory of interest: transactions, precautionary, speculative and finance. Davidson argues that Keynesian scholars have erred in developing the transactions motive within an equilibrium model that ignores Keynes' more important finance motive. Chapter 11 on Labor is really good as well. The remaining chapters (the last 100 pages of the 300 page book) apply these concepts to the international market.

All in all, I thought this book could have been better. Post Keynesians have a different take on unemployment. Uncertainty of the future and the consequent desire for liquidity are the reasons for unemployment according to Post Keynesians. While this is all covered in Davidson's book, I wish he would have gone into more detail about it. However, this book is intended for undergraduates and students new to Post Keynesians who have spent their college years learning mainstream economics. Davidson does a good job in connecting Post Keynesian economics to mainstream theory and showing why the latter is flawed. Those who want a detailed study of Post Keynesian economics, however, should look elsewhere. I would recommend Victoria Chick's "Macroeconomics after Keynes" or even Davidson's earlier book "Money and the Real World."

In mid 1935,Keynes wrote an extensive reply to Dennis Robertson's mathematically illiterate critique of Keynes's theory of effective demand.After correcting the many errors in Robertson's extensive letter,Keynes told Robertson that the development of his theory of effective demand ,based on the Employment Function,was not contained in chapter 3 of the General Theory(GT;Keynes had sent Robertson a draft copy of what turned out to be the first 17 chapters of the GT)but in a later chapter.It is obvious from the title of chapter 20 of the GT ," The Employment Function ",that chapter 20 of the GT is the chapter Keynes was referring to in his letter to Robertson.Some 20 years later,in a series of articles published in the Economic Journal between 1954 and 1956,purporting to deal with the Keynes's theory of effective demand,Robertson simply repeated all of the previous errors contained in that letter of 20 years ago.Robertson also enlisted the aid of Harry Johnson to write a mathematical appendix of " What Keynes could have Meant",based only on pp.24-30 of the GT.Robertson even mentioned the 1935 exchange of letters between himself and Keynes but,in a deliberately dishonest manner,never made any mention of the point by point rebuttal made by Keynes,especially Keynes's point that chapter 3(which contains pp.24-30)did not contain Keynes's worked out analysis.Unfortunately,Paul Davidson,following in the footsteps of his mentor,Sydney Weintraub,fell for Robertson's intellectual fraud hook,line,and sinker.All of Paul Davidson's work on Keynes's theory of effective demand follows precisely from the articles published in 1954-1956.Davidson,like S.Weintraub,who passed all of the mathematical errors in Robertson's articles down to his son,E Roy Weintraub,has passed all of the Robertson-Johnson errors down to a host of Post Keynesians over a nearly 50 year period.The heart of this book is an interpretation of pp.24-30 of chapter 3 of the GT in which Davidson repeats the many confusions and errors that Robertson published in 1954-1956.The exact same errors appear,for just one example, in Davidson's bungling of the clear differences between the D-Z model of chapters 3,20,and 21 of the GT and the Y- multiplier model of chapter 10.Keynes spent an entire page explaining the differences to Robertson.However,Robertson,who could not pass a pre algebra course,knew that he could never understand.(For Davidson's error filled analysis,see Davidson,1994,pp.19-31,pp.164-174.Not a single shred of this analysis appears in chapter 20 of the GT).The only reason for buying this book is to compare the errors of Davidson in 1994,who uses a different notation,with the errors of Robertson-Johnson,committed in 1954-1956(and by Robertson initially in 1935).Davidson's claim ,that Post Keynesian economics represents a logical counterweight to neoclassical economics ,is simply a bad joke,since Davidson's many errors have been discovered by mathematically trained neoclassical economists.