chapter  7
10 Pages

Keynes’s Marshallian heritage

While Marshall’s industrial economics fell into neglect, to be revived much later, his monetary economics was displaced by the Keynesian revolution. In the late 1960s and early 1970s, which marked the climax of Keynesian hegemony in economic policy, the main controversy was between defenders of the radical nature of the revolution, later betrayed by ‘bastard Keynesians’ (Robinson 1979: 121), and supporters of the need for its micro-foundations, in order to reconcile it with the hard core of the Neo-Walrasian research programme, even at the cost of dropping uncertainty (Weintraub 1975). Only a few economists, Leijonhufvud in particular, continued to stress that Keynes’s work should be placed in a Marshallian framework. Of the many threads supporting this link – process versus equilibrium analysis, partial versus general equilibrium, quantities versus prices adjustment – the most relevant to our subject is Marshall’s scepticism concerning optima and maxima. Leijonhufvud (1976: 105-7) blamed the Neo-Walrasian ‘maximizing behaviour postulate’ for diverting attention from the main features of Keynes’s theory and trying to constrain it into an unfriendly environment.