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This path-breaking book - written by a leading economist - is certain to create controversy and will lead to a fundamental reassessment of Keynesian economics. Building on his previous work on modern capitalism, Robin Marris has made an important theoretical advance which will have a major impact on the economics profession. The book has four main aims. The first is a piece of intellectual surgery - to replace an Achilles heel in the Keynesian theory of aggregate demand and in so doing help to reduce confusion concerning the relation in Keynesian economics between employment and the real wage. The second is to support the revised theory with an economic model based on a rich, user friendly microcomputer simulation which is included free with the book. The third is to apply the model to the macroeconomic problems of the industrialized market economies in the 1970s, 80s and beyond. And finally, Robin Marris embellishes the narrative with a personal view of the relationships between Cambridge economists which sheds new light on the intellectual history of the Keynesian revolution.A brilliant and fascinating tour de force, the book is likely to provoke extreme reactions of hostility or admiration either way it advances an argument that no serious economist can afford to ignore.
Marris has written a book about the Keynes's General Theory(1936)that is based on a claim, made by Richard Kahn,Joan Robinson,and Austin Robinson,that Keynes provided little or no microeconomic foundations ,in price theoretic terms,in the GT.Furthermore,because Keynes had been a poor mathematician since 1927,whatever mathematical analysis is in the GT is full of errors.Marris,like Don Patinkin and a host of other economists, simply assumes that Kahn and the Robinson duo are correct.Marris then proceeds to rewrite the General Theory ,based on a microeconomic foundation of imperfect competition ,because it is not possible to demonstrate the existence of involuntary unemployment in a purely competitive theory of microeconomics.Of course,this was another of the claims made by both Kahn and Joan and Austin Robinson.Any one who is mathematically literate(differential and integral calculus)will find Keynes's worked out mathematical and microeconomic analysis in chapters 19(and the appendix to chapter 19),20,and 21 of the GT in the form of elasticities.Keynes's basic result is that w/p=mpl/(mpc+mpi),where w/p is the real wage,mpl is tha marginal product of labor derived from a neoclassical aggregate production function,mpc is the marginal propensity to spend on consumption goods,and mpi is the marginal propensity to spend on investment goods.Only in the special case of mpc+mpi=1(which is a point on the boundary of both the dynamic and static production possibilities curves)will the standard classical and neoclassical result occur that w/p=mpl.If mpc+mpi<1, a set of stable,multiple equilibriums will result.It will be impossible for labor to cut its money wage in order to reduce unemployment.Thus,their unemployment is involuntary as Keynes proved mathematically in 1936.Marris needs to reconsider his beliefs in the numerous canards told by Kahn and the Robinsons.
