Keynesian School: Difference between revisions

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{{Ideology
{{Ideology
|title = [[File: Keynes.png]] Keynesianism
|title = [[File: Keynes.png]] Keynesianism
|image = Keynesssss.png
|image = Keynesianism-Pog.png
|caption = "Hey, remember the Post-War Economic Expansion? It was awesome. Wait, that was 70 years ago? Crazy! Anyway, we should meet back up some time.
|caption = "Hey, remember the Post-War Economic Expansion? It was awesome. Wait, that was 70 years ago? Crazy! Anyway, we should meet back up some time.
|aliases = Classical Keynesianism <br> Keynesian School <br> Keynesball <br> Centrism of Economics<br> [[File:Cball-Japan.png]] Japanese Economic Model
|aliases = Classical Keynesianism <br> Keynesian School <br> Keynesball <br> Centrism of Economics<br> [[File:Cball-Japan.png]] Japanese Economic Model

Revision as of 12:52, 24 September 2021

Keynesianism is an economically centrist ideology, whose general economic theory was pretty popular back in the day and still is in most of the western countries and Japan. He believes that the state should intervene in the economy to level out the economic cycle so businesses can make long-term investments and allow for long-run growth. He plans to do this by lowering taxes, lowering interest rates, and increasing spending when the economy busts, but also by cutting spending, raising interest rates, and raising taxes during economic booms.

History

TBA

Variants

Neo-Keynesianism

Neo-Keynesianism is an economically centrist ideology, whose general economic theory derived from the Neo-Classical economic thought in a mix with Keynesian economics.

A group of economists sought to synthesize the work of Keynes with numerous aspects of the neoclassical economic orthodoxy, this came to be known as the Neoclassical synthesis. This framework largely retained neoclassical analysis with regards to microeconomics and analysis on the level of the individual and/or the firm, while incorporating Keynesian analysis with regards to macroeconomics. This school of thought was dominant from the 1950s to the 1970s. Neo-Keynesianism fell out of favor due to the stagflation of the 1970s and the work of monetarists such as Milton Friedman.

The two most prominent economic models with roots in Neo-Keynesian thought are:

  • IS-LM model: It relates aggregate demand and employment to three exogenous quantities, i.e. the amount of money in circulation, the government budget, and the state of business expectations. It became really popular as a way to analyze the effect demand shocks on the overall economy
  • Phillips curve : This curve was an empirical view of analyzing, to get to the conclusion, that more inflation would cause a lower employment rate.

Post-Keynesianism

Post-Keynesianism is a more left-wing current of economic thought developed from the 1930s in England and the United States, where it is currently most present, which presents itself as the closest current to Keynes' ideas. It takes the most radical views of Keynes, who throughout his life has moved further and further away from neoclassicals. As such Post-Keynesianism takes a position radically opposed to that of neoclassical economics by emphasizing the following points:

  • A realistic and non-instrumentalist epistemology. The assumptions made by post-Keynesians must correspond to reality; they do not have a simple predictive function.
  • A holistic and non-individualistic approach, for example, the possibility of an autonomous macroeconomics compared to the microeconomics, and an area of ​​analysis and reflection specific to macroeconomics.
  • Giving up on the assumptions of absolute or even limited rationality of agents.
  • Considering the problem of scarcity in the economy as secondary; and placing the problems of production, reproduction, growth, and circulation at the center of the analysis.
  • Favorising state interventionism over the free market.
  • Inflation is analyzed from a cost-push perspective. Money is endogenous, wages in monetary terms are determined by oligopolies and unions, and the stock of capital is homogeneous.

New Keynesianism

New Keynesianism is a macroeconomic school of thought that strives to provide more consistent micro-foundations to Keynesianism in response to sustained attacks from New Classical economists. Like Neo-Keynesianism, New Keynesianism is Keynesian in the short run but neoclassical in the long run.

However, unlike the neoclassical synthesis, New Keynesianism attempts to provide theoretical explanations for a variety of market failures.

  • Menu costs: The restaurants can print out new menus in response to their price changes, hence the name. However, menu cost is actually the cost of firms adjusting their nominal prices. The burden causes businesses to change prices slowly rather than continuously. The macroeconomic effect of changing a single firm's price on the demand of all products is called the "aggregate-demand externality."
  • The staggering of prices: According to New Keynesians, enterprises don't set prices at the exact same time. Each one cares about its price relative to the ones charged by other firms. As a result, the prices are sluggish because no firms want to be the first to increase its price significantly.
  • Coordination failure: In the real world, the number of businesses is very large, so it's hard to predict what others may do after the adjustment of the money supply. The failure of businesses to coordinate the changes in prices is a possible explanation for recessions.
  • Efficiency wages: Markets may fail to clear due to the tendency for employers to pay above equilibrium wages. Abnormally high wages cause existing workers to be more productive and thus less likely to switch to a new job.

Moreover, New Keynesianism has two models that don't appear in the last iteration of Keynesianism:

  • New Keynesian DSGE model: Enterprises and households are assumed to have rational expectations, but prices are set by monopolistically competitive firms and can't shift quickly or without cost.
  • New Keynesian Phillips Curve: Like an expectations-augmented Phillips curve, it implies that the trade-off between unemployment and inflation is only applicable in the short run.

Tenets

Keynesianism advocates for appropriate fiscal (by the government) and monetary (by the central bank) policies to manage aggregate demand to correct the boom and bust cycles. He also desires full employment.

Personality

Keynesianism is the sort of guy who you know you can ask for help on homework, but you can't really remember ever having a proper conversation. He can become a little obsessive when it comes to refining mathematical models to prove his point, and this can make him seem disconnected. 

Stylistic Notes

Keynesianism has multiple jokes about him which are displayed in his behaviours:

  • He likes to break other people's windows
  • Likes to bury money in ditches to dig it up again
  • Big Consoomer
  • Likes to have gay sex with twinks a lot

How to Draw

Coat of Arms of Keynesian School

The ball design is based on the Coat of Arms of John Maynard Keynes (Specifically the Escutcheon a.k.a. the Shield)

  1. Draw a ball.
  2. Fill it with blue.
  3. Draw three grey diagonal lines from top left to bottom right.
  4. Draw two fleur-de-lis symbols in bottom left and top right with the same color.
  5. Draw the eyes and you're done.
Color Name HEX RGB
Blue #105BB0 16, 91, 176
Grey #B8C1CD 184, 193, 205


Relationships

Friends

Frenemies

  • Hayekism - I see it took a detour down the road to serfdom...
  • Neoliberalism - I like you depending on your mood, my dear brother. Though I'm still a bit pissed at how much you tried to undo my work.
  • Protectionism - Protectionism is good but cant you import a bit more things?
  • Mercantilism - I learned a lot from him but he's a bit too blunt when it comes to violence.
  • Corporatism - I took many ideas from you but your idea of abolishing democracy is preposterous.
  • Syndicalism - Stop complaining about wages already! Go on welfare you lazy, good-for-nothing commies!
  • Social Libertarianism - I dont think you understand the buisness cycle, but atleast your fine with the fed.

Enemies

  • Communism - I am not a communist, on the contrary, my methods are the only way to stop communists!
  • Libertarianism - This simpleton doesn't like it when the machine goes BRRRR. And for the last time, I'm not a goddamn socialist just because I like government spending.
  • Minarchism - The country is in debt and you bought war bonds but I still got paid sucker!
  • Anarcho-Capitalism - Oh Christ... They're way more retarded than those dorks.
  • Fiscal Conservatism - The machine will go BRRRR whether you like it or not!
  • Austrolibertarianism - Why cut spending after WW2?

Further Information

Literature

Wikipedia

People

Videos

Articles

Neoclassical Synthesis Keynesianism, New Keynesianism and Post Keynesianism: A Review

Gallery

Template:Centrist Template:Welfare <comments />

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