On Keynes’s Method in Economic Theory

Abstract

This chapter discusses Keynes’s methods¹ starting with his own legacy when he decided to become an economist in the early part of this century. Keynes himself, and others on his behalf, notably Joan Robinson, claim that he tried to change our method of doing economics, as well as our way of seeing how economies work. As for the latter aspect, James Meade put it most succinctly when he described Keynes’s change of our way of looking at economics as like a dog called ‘savings’ which wagged its tail called ‘investment’, into a model where a dog called ‘investment’ wagged its tail labelled ‘savings’. Instead, the case for a change in method has, I fear, been aborted in recent years, not only by those who oppose all things Keynesian, but also by some Keynesians themselves — especially those who were brought up on ‘Keynesian economics’, in quotes, with little or no contact with The General Theory and its related writings, as opposed to the ‘economics of Keynes’ (a distinction which Axel Leijonhufvud (1968) has forcefully brought to our attention). To make this case we have to remind ourselves of two important facts. First, Keynes came to economics through his own distinctive kind of philosophy and concern with certain philosophical issues; and second, his earliest mentor in economics, and one by whose methods he was greatly influenced, was Alfred Marshall.

An early version of this essay was published under the title ‘Theoretical Methods and Unfinished Business’, in D. N. Rease (ed.), The Legacy of Keynes (New York: Harper & Row).