Duncan K. Foley (New School for Social Research)
Abstract. The debates of recent years in the advanced economies between “Keynesian” advocates of direct demand stimulation and “austerian” advocates of balanced budgets reprise to a remarkable extent the debates of the late 1920s and 1930s between Keynes and the “Treasury view” of his time. The roots of these differences lie in different conceptions of microeconomic market equilibrium and price determination, a set of issues that macroeconomic theory largely lost sight of in the debates in the 1970s over the “Keynesian” view of macroeconomics as a special case of microeconomics with “sticky” money wages largely espoused by American Keynesian textbook writers and teachers. A reexamination of these issues reveals an alternative microeconomics that largely substantiates Keynes’ conclusions.