Thomas Palley

Paul Krugman wrote a reply to my two postings (Part 1 and Part 2) on the flimflam of mainstream economics. Below is my response to Paul that was posted as a comment on his Conscience of a Liberal website. I am posting it because I think it sheds more light on the failings of so-called New Keynesianism.

Dear Paul,

I enjoy what you write and have great admiration for your work, but this piece is unfair.

(1) Here is an article of mine on what you term the paradox of flexibility, published in 2008 and extending James Tobin’s seminal paper on “Keynesian Models of Recession and Depression”.

“Keynesian Models of Deflation and Depression Revisited,” Journal of Economic Behavior and Organization, 68 (October 2008), 167 – 77.

(2) I do not think I am misportraying you. Your own macroeconomic framework seems unconvincing to me as a description of a capitalist economy, being Keynesian at the zero lower bound and classical the rest of the time. I think of Keynesianism as being a macroeconomic theory that applies at all times. But these are issues that require more space for discussion.

Best,

Tom

Simon Wren-Lewis has graciously replied to my post on mainstream economics’ flimflam and says he cannot find it (the flimflam). Here are some hints on where to look.

(1) A first con is the labeling adopted by New Keynesians. As I showed in my post, New Keynesianism has near-nothing to do with Keynes’s theoretical thinking as expressed in The General Theory. I too am not interested in an exegesis of what Keynes meant, but I am interested in honesty in labeling to help avoid damaging confusions. (more…)