IDEAS home Printed from https://ideas.repec.org/p/zbw/cessdp/321891.html
   My bibliography  Save this paper

Keynes's principle of effective demand reconsidered: The core of of a heterodox post-Keynesian paradigm, or a fundamentalist Keynesian concept that should be abandoned?

Author

Listed:
  • Heise, Arne

Abstract

Keynes's Principle of Effective Demand is widely recognized not only as a major theoretical innovation but also as one of the core concepts uniting various post-Keynesian strands. However, Keynes's own treatment of the Principle of Effective Demand - known as the Z/D model and identified by himself as central to his attempt to fundamentally refute Say's Law - has been ignored or even outright rejected by many post-Keynesians on the grounds that it remains too deeply rooted in mainstream economics. This paper addresses such criticism by emphasizing that any evaluation of the Z/D model must take into account the paradigmatic shift Keynes sought to initiate.

Suggested Citation

  • Heise, Arne, 2025. "Keynes's principle of effective demand reconsidered: The core of of a heterodox post-Keynesian paradigm, or a fundamentalist Keynesian concept that should be abandoned?," ZÖSS-Discussion Papers 119, University of Hamburg, Centre for Economic and Sociological Studies (CESS/ZÖSS).
    • Handle: RePEc:zbw:cessdp:321891
    as

    Download full text from publisher

    File URL: https://www.econstor.eu/bitstream/10419/321891/1/1931286949.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Rogério Arthmar & Michael Emmett Brady, 2009. "Patinkin, Keynes and the Z curve," History of Economic Ideas, Fabrizio Serra Editore, Pisa - Roma, vol. 17(3), pages 127-146.
    2. Don Patinkin, 1978. "Keynes’ Aggregate Supply Function: A Plea for Common Sense1," History of Political Economy, Duke University Press, vol. 10(4), pages 577-596, Winter.
    3. Victoria Chick, 1983. "Macroeconomics after Keynes: A Reconsideration of the General Theory," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262530457, December.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Jochen Hartwig, 2021. "Zur Genese von Patinkins Interpretation des Keynes'schen Prinzips der effektiven Nachfrage," Chemnitz Economic Papers 046, Department of Economics, Chemnitz University of Technology, revised Jun 2021.
    2. repec:pke:ecbook:nggt is not listed on IDEAS
    3. Toshio Watanabe, 2020. "Financial Instability and Effects of Monetary Policy," Bulletin of Political Economy, Bulletin of Political Economy, vol. 14(1), pages 117-145, June.
    4. Jochen Hartwig, 2006. "Explaining the aggregate price level with Keynes's principle of effective demand," Review of Social Economy, Taylor & Francis Journals, vol. 64(4), pages 469-492.
    5. Mark Setterfield & Y.K. Kim, 2024. "How financially fragile can households become? Household borrowing, the welfare state, and macroeconomic resilience," Review of Evolutionary Political Economy, Springer, vol. 5(1), pages 121-151, June.
    6. D. Patinkin, 1995. "The training of an economist," BNL Quarterly Review, Banca Nazionale del Lavoro, vol. 48(195), pages 359-395.
    7. John B. Davis, 2017. "The Continuing Relevance of Keynes's Philosophical Thinking: Reflexivity, Complexity and Uncertainty," Annals of the Fondazione Luigi Einaudi. An Interdisciplinary Journal of Economics, History and Political Science, Fondazione Luigi Einaudi, Torino (Italy), vol. 51(1), pages 55-76, June.
    8. Stephanie Bell, 1999. "Functional Finance: What, Why, and How?," Economics Working Paper Archive wp_287, Levy Economics Institute.
    9. Jochen Hartwig, 2017. "The Comparative Statics of Effective Demand," Review of Political Economy, Taylor & Francis Journals, vol. 29(3), pages 360-375, July.
    10. Jesper Jespersen, 2012. "Keynes’s General Theory after 75 years: time to re-read and reflect," Chapters, in: Jesper Jespersen & Mogens Ove Madsen (ed.), Keynes’s General Theory for Today, chapter 8, pages 131-150, Edward Elgar Publishing.
    11. Angel Asensio, 2010. "Macroeconomic trouble and policy challenges in the wake of the financial bust," Working Papers halshs-00496921, HAL.
    12. Nicola Meccheri, 2007. "Wage behaviour and unemployment in Keynes' and New Keynesians' views: A comparison," The European Journal of the History of Economic Thought, Taylor & Francis Journals, vol. 14(4), pages 701-724.
    13. Earl, Peter E., 2015. "Anchoring in economics: On Frey and Gallus on the aggregation of behavioural anomalies," Economics - The Open-Access, Open-Assessment E-Journal (2007-2020), Kiel Institute for the World Economy (IfW Kiel), vol. 9, pages 1-25.
    14. Jespersen Jesper, 2000. "Some Aspects of J. M. Keynes's Theoretical Contributions to the Economic Debate of the 1920's'," Jahrbuch für Wirtschaftsgeschichte / Economic History Yearbook, De Gruyter, vol. 41(1), pages 219-224, June.
    15. Klausinger, Hansjörg, 2000. "Walras' law and the IS-LM model. A tale of progress and regress," Department of Economics Working Paper Series 69, WU Vienna University of Economics and Business.
    16. Philip Arestis & Malcolm Sawyer, 1997. "Reasserting the Role of Keynesian Policies for the New Millenium," Economics Working Paper Archive wp_207, Levy Economics Institute.
    17. Huang, Wenge & Zhang, Jinsong, 2015. "A New Interpretation of the Mechanism for the Determination of Interest Rate and Its Policy Implications," MPRA Paper 66208, University Library of Munich, Germany.
    18. Heller, Claudia, 2009. "Keynes’s slip of the pen: aggregate supply curve vs employment function," MPRA Paper 12837, University Library of Munich, Germany.
    19. Mark Setterfield & Bill Gibson, 2013. "Real and financial crises: A multi-agent approach," Working Papers 1309, Trinity College, Department of Economics, revised Jul 2014.
    20. James C. W. Ahiakpor, 1997. "Full Employment: A Classical Assumption or Keynes's Rhetorical Device?," Southern Economic Journal, John Wiley & Sons, vol. 64(1), pages 56-74, July.
    21. Sheila C. Dow, 1986. "Post Keynesian Monetary Theory for an Open Economy," Journal of Post Keynesian Economics, Taylor & Francis Journals, vol. 9(2), pages 237-257, December.

    More about this item

    Keywords

    ;
    ;
    ;

    JEL classification:

    • B50 - Schools of Economic Thought and Methodology - - Current Heterodox Approaches - - - General
    • E12 - Macroeconomics and Monetary Economics - - General Aggregative Models - - - Keynes; Keynesian; Post-Keynesian; Modern Monetary Theory
    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
    • J23 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Demand

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:zbw:cessdp:321891. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: ZBW - Leibniz Information Centre for Economics (email available below). General contact details of provider: https://edirc.repec.org/data/zohamde.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.