Please explain Keynesian economic theory? What is its relationship to the neoliberal marketplace?
Keynesian economics is a theory of total spending in the economy (called aggregate demand) and its effects on output... View the full answer
- its relationship to the neoliberal marketplace: American Keynesians (known as neo-Keynesians) tend to accept the neoliberal “paid what you are worth” theory of income distribution, while European Keynesians (widely associated with Cambridge, U.K., and known as post-Keynesians) reject it. Instead, post-Keynesians argue that income distribution depends significantly on institutional factors. Thus, not only do a factor’s relative scarcity and productivity matter, but so too does its bargaining power, which is impacted by institutional arrangements. This explains the significance of trade unions, laws governing minimum wages, employee rights at work, and systems of social protection such as unemployment insurance. Finally, public understandings of the economy also matter, since a public that views the economy through a bargaining power lens will have greater political sympathies for trade unions and institutions of social protection.
- May 10, 2016 at 3:27pm