The Conventional Wisdom: The Standard Interpretation of Keynes

Abstract

In order to make precise the way in which the promise of The General Theory, to radically change economic theory, has not been realized, we need to identify those concepts in The General Theory which are and those which are not a part of today’s mainstream macroeconomics. We need to make clear how the neglected ideas of Keynes lead to views about both the economy’s behavior and the possibilities and limitations of economic policy that are quite different from current conventional macroeconomics. This means that we will have to sharpen some of the clumsy presentations and fill in some gaps in the argument of The General Theory. This is necessary, for the neglected ideas have neither been made as precise nor been as fully worked out in academic debates as have the formulations which have been integrated into mainstream macroeconomics. However, before we turn to a presentation of an alternative interpretation of The General Theory, we need to survey the current standard interpretations of Keynes’s work, so that what we deviate from is clear.