The Institute Blog

A Post-Keynesian Pioneer Meets the University of Chicago

Vital economic debate is alive and well in Chicago.

Post-Kenyesian economist Paul Davidson recently was invited to the University of Chicago to give a lecture on Keynes’s solutions to current economics crises – solutions that are very much at odds with the traditional approaches associated with Chicago School economics.

In his talk titled “The Keynes Solution: The Path to Global Economic Prosperity via a Serious Monetary Theory,” Davidson discusses the failures of orthodox economics and explores how Keynes would have addressed them. You can watch the lecture and download the video or audio here.

Davidson points to Keynes’s theory of liquidity to explain why laissez-faire financial markets cannot be efficient and do not solve the problem they claim to solve: optimally allocating capital. He also notes that traditional explanations of financial markets fail to explain unemployment or bubbles – phenomena that Keynes studied throughout his body of work. In particular, Davidson cites the failure of risk-management approaches that rely on a stable and knowable future, which is impossible according to Keynes’s idea of radical uncertainty.

Davidson also explains how orthodox theories guide economic policy such as Quantitative Easing (QE). Quoting Keynes on why QE doesn’t stimulate the economy, Davidson says, “If you want to get fat, buy a bigger belt,” before adding that “QE doesn’t help you get fat, but it may help drop your pants.”

In all, Davidson’s presence at Chicago shows that the school that shook up economics in the mid 20th century by thinking outside the box is still pushing the boundaries of economic thinking.  Chicago remains a vital center for economic debate. INET applauds both the University of Chicago and Davidson for promoting the kind of healthy economic discussion that is necessary for the economics profession – and the economy – to get back on course. Hopefully more economics departments will follow its lead.

Watch the lecture

Comments

0

"INET applauds both the University of Chicago and Davidson for promoting the kind of healthy economic discussion that is necessary for the economics profession – and the economy – to get back on course."
Interesting you say that - when Paul Davidson reports on the Real Economics blog that
"I sent a hard copy of my presentation to Chicago BEFORE my talk so all who wanted could read it in advance. Interestingly, although Jim Heckman thought that his “rational expectations” colleagues were prepared to heckle me at my presentation, only one faculty member attended– Tom Coleman a newly appointed finance professor who had spent most of his career working for the finance industry. Apparently the rational expectations people could not find a flaw with the argument presented."
So it looks like the old guard are still refusing to play ball.

0

Tried linking through to this in a variety of different ways and it seems to have some serious recording issues that make it pause every second or so... gave up in the end.

0

It appears there is suddenly an issue with the U. Chicago site or their video hosting, hopefully it will be taken care of soon!

0

If anyone is having difficulty with the video of my presentation, I can send you a copy of my paper presented at the University ofChicago as an attachment to an email. just send request to pdavidson@utk.edu with your return email address

paul Davidson

0

If anyone is having difficulty with the video of my presentation, I can send you a copy of my paper presented at the University ofChicago as an attachment to an email. just send request to pdavidson@utk.edu with your return email address

paul Davidson

0

can't wait until I see the video. interesting, because most bloggers in financial sites would have though keynes would support Qe. there is a lot of misunderstandings about the man.

Hey, as a side note, BOE stopped their QE, cause it ain't working. I find it an interesting deabte, but I never suspected the federal reserve did Qe for the "economy" but fopr other reasons we aren't privy to

0

audiol quality is rather poor. vry hard to hear due to volume

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