Dear Plamen,

You ask a significant question. On the one hand practitioners see Keynes contribution to economics as "revolutionary." One the other hand, some argue that his model is a "special case" of the classical system. Keynes himself thought that "the postulates of the classical theory are applicable to a special case only and not to the general case". 

A third view is that Keynes model is specialized to crises management only. Keynes himself argued that when the economy is brought out of crises, then one should start relying more on the market mechanism.

Hope this help.

Dear Plamen,

It is great you are writing a textbook on economic theories. I believe your students will be happy to learn there are different approaches to study  economic theories, incl. of Keynes.

In  this respect here I suggest a text from OECD Observer on the work of Marianna Mazuccato "Entrepreneurial state " you may find interesting:

"We have not really thought of the public sector’s role as an engine of growth. Nor have we thought about how to organise public sector institutions and how to go beyond the usual discussion of how the public sector is not only de-risking the private sector, but actually taking on the big vision risk and missions and should therefore participate in the rewards which are a result of this investment.

Keynes captured this message by stating: "Practical men, who believe themselves to be quite exempt from any intellectual influence, are usually the slaves of some defunct economist. …I am sure that the power of vested interests is vastly exaggerated compared with the gradual encroachment of ideas." (The General Theory of Employment Interest and Money, 1936). He was of course referring to the fact that behind every practical man or woman there was a defunct economist. He talks about the encroachment of ideas in policymakers’ minds and in terms of narrow economic thinking driving policy. What I want to focus on is the very narrow, encroached and captured way in which we talk about the role of the state in the economy. I will be focusing on the role of the state in what we – and you here in the OECD – call "smart growth", innovation-led growth."

http://www.oecdobserver.org/news/fullstory.php/aid/4729/Mariana_Mazzucato:__The_Entrepreneurial_State:_debunking_public_vs._private_sector_myths_.html

- See more at: http://www.oecdobserver.org/news/fullstory.php/aid/4729/Mariana_Mazzucato:__The_Entrepreneurial_State:_debunking_public_vs._private_sector_myths_.html#sthash.uMlmgNGl.dpuf

Dear Lall, 

Well, I agree that more scholars tend to see his approach as a special case (no matter how we call it - "crises" one or else), of a "larger" theoretical flow and that this is directly opposing Keynes's opinion that his model is the "general" one. (The issue is further complicated since he refers to the "classical" scholars pointing Ricardo (with his labor value theory), but also Pigou (based on the marginal utility), thus eliminating the difference between classical and neoclassical economics). To me the real obstacle is that he actually relies heavily on the government, fiscal policy etc and rejects the "laissez-faire" principle of keeping out the state, thus getting closer to the "regulativist" schools. Simply said - may we take the "regulativist" approach as a strong enough criterion to differentiate his model as a specific one?

Dea Plamen,

I can offer you the following indications which could be of some help:

https://www.ukessays.com/essays/economics/the-differences-between-keynesian-and-neoclassical.php

http://www.econlib.org/library/Enc1/NeoclassicalEconomics.html

http://www.econlib.org/library/Enc/bios/Keynes.html

All my best,

Andrea

Dear Plamen D. Tchipev,

It would be useful to re-organize different economics thoughts by the models economists used instead of schools.

A school generally contains many contradictory ideas. To train students in thinking deeply and theoretically, we have focus on logic of a theory. Schools are sometimes interpreted as a group of similar policy thinkers. I have to emphasize that a policy is supported by very different reasons. Policy groups are not a good classification of economics, because economics is or must be a system of concepts and theories through which we re-organize the complex economic world.

From the same theory framework, it is possible to deduce opposite and contradictory policies. Oppositely, the same policy may follow from very different theory frameworks.

However, I do not think that similarity of models is a good criterion for classifying theories and strands of theories. Similar to the connections between theories and policies, difference of models is not a good classification of theories or economic thinking. Of course, it depends much on what you are thinking of in the name of models.

As for Keynes himself, he used mainly neoclassical framework of analysis. It helped to disseminate his ideas rapidly, but caused many problems: ambiguous definition of concepts, internal contradiction, and failure to introduce new theoretical frameworks which is suitable for new ideas.

In my opinion, Keynes's idea of effective demand cannot be defined by any macroeconomic models. It requires a reformulation of the whole economic theory. In this view, Keynes's theory of effective demand is better defined and analyzed in the framework of classical theory of value. See for example, my paper below

Keynes made quite dispersed observations and some of them inspire us deeply but, generally speaking, he was a man of contradiction and is difficult to classify by any criteria.

Conference Paper The Revival of Classical Theory of Values

If I may add some points, to speak of "Keynes" is by definition imprecise. There are many Keynes-es due to the fact that different works bear different messages - his "A Tract on Monetary Reform", "A Treatise on Money", and "The General Theory..." (to take a few) construct different theories which are in some aspects irreconcilable among themselves. Broadly speaking, Keynes changed his opinion on the mechanism of the economy many times throughout his works, and this is a fact that cannot be neglected. Also, some of the links provided above lead to useful information but they also carry the message that Keynesians and Keynes are one and the same thing. And they are definitely not.

I am personally not in favour of  the idea that the General Theory is a special case of anything else because in the neo-classical world of his time the equilibrium state was well defined and unique. In other words, saying this theory is a special case brings forward the question "Exactly how this is so?".

J.M.Keynes is neither classical nor neo-classical but a modern thinker and whose theory of income and employment and principle of Deficit Financing are general in application to all systems of government and economy, at all time. In present context most of the countries irrespective of form/system and ideologies practising Keynes'principles directly or indirectly.

Dear Dr. Arjun Yallappa Pangannavar,

it is not a good custom to identify Keynes's policy recommendation and his theories. I argued this point in the above post, and emphasized it in two of my question pages repeatedly.

https://www.researchgate.net/post/Return_to_Keynes_is_it_sufficient_2

https://www.researchgate.net/post/Return_to_Keynes_is_it_sufficient

We can cite another example. Ricardo preached free trade, but his theory or its developed form can analyse the unemployment caused by the trade liberalization. If we take this point into account , free trade policy should be adjusted in order to reduce the pains caused by liberalization. This is a today's actual and urgent problem.  

For this point, see my paper:

Conference Paper The New Interpretation of Ricardo's Four Magic Numbers and t...

Dear Yoshinori Shiozawa,

No doubt the policy is quite unproductive for classifying the economic theories and my intention is definitely not in that direction. I emphasized Keynes's "reformist" approach to point out on the fundamental division between the visions on the economic system as an automatic self sufficient system and - as an "driven" one. A division which you may better expressed as " ... neoclassical theory is in its essence the economics of exchange whereas classical theory is the economics of production" in the linked paper.

I also tend to agree that Keynes, while applying principally different (macro) approach  remained within the neoclassical paradigm.And that might be the reason for so much controversy over his economics.

Perhaps, that controversy inspires such statements: "Keynesian economics today, while having its roots in The General Theory, is chiefly the product of work by subsequent economists including..." (www.econlib.org). I ask myself where is the point here? If we prefer Okun or Samuelson economics - why should we refer to that as a Keynesian? This kind of "logical transformation" is precisely, what requires to me a better criterion for theoretical differentiation than the slogan 'Keynesian economics is the one which uses Keynesian themes'.

No. Keynes enforces a macroeconomic theory liberalism in my opinion gives a rpivilege to microeconomics.

Frankly, I don't think it is a good idea to organise the material by models, rather than by schools. This might be possible if the different theories developed the same method and presupposed the same ontology. Otherwise, you don't make economic theories intelligible, but confusing. Unfortunately, there is no unified method in economics. This is why you have problem in deciding where to put Keynes. Even if you don't want to enter the methodological (and ontological) debate, you should at least separate between bourgeois economics and the critique of political economy. This will allow you to characterise Keynes as a bourgeois economist, looking at the surface rather than at the essence (in this respect, similar to neoclassical economists) with a different view, with respect to the liberal self-equilibrating dogma, on the working of the surface.