On Theories and Policies

There are at least three schools of thought which may be said to underlie current debates on policy, two of which, though they start from different theoretical premises, nevertheless largely inform our present (late 1976 but pre-devaluation) policy stances.1 They also reflect the philosophy of the leaders of the present government, in so far as they could be said to have a coherent and consistent philosophy. The third school departs from the former two both in theoretical analysis and policy prescription. The three schools are, respectively, the monetarists (which have their greatest though by no means exclusive influence in the Reserve Bank); the Bastard Keynesians (which by and large is the stance of the treasury though there are also aspects of it in the often eclectic approach of the Reserve Bank economists, just as there are some monetarist elements in treasury thinking); and the Post-Keynesians. The Post-Keynesian school is the group of theorists who draw directly on the work of Keynes himself. The most influential members include Joan Robinson and Richard Kahn (that is to say, the people who actually worked with Keynes after he had published the Treatise on Money and when he was writing The General Theory), and their followers and contemporaries, for example, Nicholas Kaldor. The other major infuences are Michal Kalecki, and Marx and the classical political economists, especially as the latter have been interpreted through Piero Sraffa‘s and Maurice Dobb‘s edition of and writings on Ricardo, and through Sraffa‘s own original works, most importantly, the Production of Commodities.2