Study On The Post Keynesian Monetary And Financial Theories And Its Recent Developments

In the field of economics, there has been a distinction between mainstream and non-mainstream for a long time. When studying, absorbing and learning from Western economics, we should focus firstly on the mainstream economics. The cutting-edged, comprehensive, popular and practical character the mainstream economics possesses makes the theories and methods it advocates in the highly respected in economic circles in the contemporary era, which is the very reason why "mainstream" can become "mainstream". However, when concerned with mainstream economics, we can not ignore the development of non-mainstream economics. The world is so diverse that the development of economic theories is diverse. Therefore, it is very normal for each school to put forward explanations from different angles and at different levels about the same economic subject. As John Hicks said, "economic activity is like a house, which will come to different theoretical results from different angles to observe." Mainstream economic theories, although dominant, do not mean that there is a perfect explanatory at all economic phenomenon. At this point, non-mainstream economics has become a powerful supplement to help us to knowledge the real-world economy more perfectly. From the perspective of theoretical development, the concern for non-mainstream theories also helps us to grasp the whole picture of the development of Western economics, making the Western economic theories serve us better, and putting forward constructive guidance for our country's economic construction.In the current schools of economic theories, neoclassical synthesis is the representative of the mainstream economic schools. The concept of "Neoclassical synthesis" was put forward in the Second World War by Paul Samuelson, who combined the neoclassical theories with the Keynesian ideas together. In this integrated system, because the Keynesian doctrine has been incorporated into the general analysis of neo-classical framework, in terms of its basic theoretical characteristics, today's mainstream Western economics is actually a neo-classical tradition. Neoclassicism advocates that the market possesses the automatic adjustment mechanism, the free market can automatically solve unemployment, economic recession and other issues, and the Neoclassicism is against government intervention as well. Post-Keynesian economics is a non-mainstream school of economics in Microeconomics and Macroeconomics. This school of economics was formed in the 1950s after the Second World war, the main ideological orientation of which is opposed to the integration of Keynesian theories and neo-classical theories, and advocates the abandon the neo-classical tradition and the restoration of the classical tradition. The school of Post Keynesian economics inherited the traditional theories in Keynes'"General Theory", continue to emphasize the effective demand, and made the improvement and development of the original Keynesian theories. This article researches and analysis on the basis of the monetary and financial theories of Post Keynesian economics, which aims at proposing a new concept that emphasizes the endogenous money supply and exogenous interest rates, lays stress on the instability of the capitalist economy, insists on the concept of Keynesian state interventionism, and criticized the free-market ideology the neo-classical theory advocates from various angles. The theoretical proposal of "no choice" by Post Keynesian economics is a valid correction, which provides a strong theoretical foundation for the criticism of the mainstream ideology and its tightening policy, and makes a series feasibly alternative policyThis paper traces the Post-Keynesian school of monetary and financial theories extensively, aiming at piecing together the development context and the latest evolvement of Post-Keynesian monetary and financial theories. This paper mainly studies on the following questions:Firstly, it answers what on earth is the post-Keynesian monetary and financial theories, what are the basic contents, which are the non-mainstream features. Secondly, Post-Keynesian school is always focusing on itself and against the neo-classical features, then how are the characteristics of its monetary and financial theories embodied in it, and what are the apparently severed but actually connected areas between it and the neo-classical theories. Thirdly, what nutrition the Post-Keynesian monetary and financial theories learn and draw from other non-mainstream schools. Fourthly, what the new contributions Post-Keynesian monetary and financial theories generates from the persistence in its own methodology, and how about the interpretation and recommendations are according to the breakout of the financial crisis.Based on the above questions, this paper presents the structure and research ideas as follows.There are seven parts in the dissertation. Chapter 1:Introduction. This chapter focuses primarily on the research significance, research methods, train of thoughts, and structural arrangements.Chapter 2:the basic content and main features of Post-Keynesian monetary and financial theories. This chapter Includes the discussion about the definition and function of money by Post-Keynesian scholars, the main content of endogenous money theory, the endogenous money supply and interest rate decisions by accommodationist and structuralist, Minsky's financial instability hypothesis and so on. Subsequently, the article summarizes the non-mainstream characteristics in the Post-Keynesian monetary and financial theories, and highlights its features against the neo-classical economics.Chapter 3:Summary of early Post-Keynesian monetary theoretical overview. In this section, the chapter researches the main founders'early Post-Keynesian monetary theories, including the early literatures of Minsky, Kaldor, Davidson, Rousseas, Robinson and Kahn. It is noticed that, the theoretical ideas of the Post-Keynesian scholars identified as pioneers, have undergone a process of change. These scholars were originally grew up in the background of mainstream neo-classical economic theories, and in the process of theoretical research, they gradually queried the mainstream theories. From the study of early literatures, we find that Minsky, Kaldor, Davidson and Rousseas who were originally thought to be the representatives of Post-Keynesian school, in fact, can not be called the founders of Post-Keynesian monetary theories, because in their the writings are more or less residual traces of orthodox theory, thus leading us to show new solutions to the question of who are the founders of the theory. While the monetary theory of Joan Robinson and Kahn's can be seen as the cornerstone and starting point of post-Keynesian monetary theories, and especially Kahn's literature on monetary theory is usually ignored for the Institute. It is both of them who most strongly and most thoroughly break with the mainstream theories.Chapter 4:the comparison between Post-Keynesian monetary theories and other schools'. In this section, the paper compare Post-Keynesian monetary theories with other school-related theories, mainly with neoclassical theory, monetary Circuit theory, the new Keynesian monetary theory and Austrian monetary credit cycle theory. Among those, the comparison with the neoclassical theory is the most deep-going and detailed. From this comparison, we not only have to examine the difference between Post-Keynesian theories and neo-classical theories, but we also need to notice that as a non-mainstream monetary theory, its theoretical source is still from the mainstream. That is to say, it is far from achieving the goal for the Post-Keynesian monetary theories to break with the mainstream theories. What the current Post-Keynesian scholars can do is only starting slowly to amend to "erode" the territory of the mainstream theories, whereas it is a very long task to overthrow or rebuilding it. When it comes to the comparison with the Monetary Circuit theories, it is generally considered as a trip for the root of Post-Keynesian monetary theories. The two schools are close relatives, or related part of the currency in circulation of Post-Keynesian monetary theories is derived from Monetary Circuit theory, but merely because the school was developed by some French and Italian scholars, it does not belong to the scope of the list of core countries in economics, making it difficult to be concerned by people. With respect to the relationship between the Post-Keynesian theories and the New Keynesian theories, this paper has done a general analysis and a comparison of the existence of similarities and differences in the macro monetary theories and monetary policy between the two schools of thought. Through the comparison of cycle of the credit currency between the Austrian school and the Post-Keynesian school, we notice the similarities of the two schools on uncertainty and time, but there is a significant difference between them on the two functions of government:the Austrian school is firmly against unnecessary government intervention, while the Post-Keynesian idea of government intervention in the economy should be proactive, and it deems that government intervention is always insufficient.Chapter 5:a number of recent evolvements of Post-Keynesian monetary and financial theories. In this section, the paper examines a number of evolvements of Post-Keynesian monetary and financial theories in the specific branches, which consists of three parts. First, we studied and tracked the determination of the interest rate of Post-Keynesian theories. In the traditional sense, there are two opposing branches on endogenous money supply of the Post-Keynesian theories:accommodationist and structuralist, which are thought to be diametrically opposed before. However, in the discussion, we will notice the two branches are interrelated and influence by each other, and according to the latest literature, some Post-Keynesian scholars suggests that the difference are attributed to the time dimensions used. The accommodationist is corresponding to the short-term analysis, while structuralist is corresponding to the long-term analysis. We can put the former as a special case for the latter. Secondly, in the second part of this chapter, the paper criticized the new consensus macroeconomic theories. Post-Keynesian theories do not agree with the policy of pegging the rate of inflation target proposed by new consensus, but put forward a number of different responses. In the last part of this chapter, we track the evolvement of the latest model on Minsky's financial instability hypothesis, which allows us to understand the hypothesis from a mathematical point of view, and demonstrates that the interest rate, the profits rate, the propensity to save and other factors will impact on the global and local of three kinds of Minsky's financing structures, making our hypothesis a more intuitive understood.Chapter 6:the explanation of sub-prime crisis from the Post-Keynesian perspective. In this section, the paper interpreted the economic crisis sweeping the globe in the last three years from a brand new Post-Keynesian perspective. It analyzes the surface causes of the crisis, the root reasons discussed by various schools, and then focuses on the explanation from the perspective of fundamental uncertainty and Minsky's instability hypothesis demonstrating that the sub-prime crisis is the application and validation of Minsky's instability hypothesis in practice In this last part of chapter, it also put forward the inspiration and meaning to Post-Keynesian monetary via the sub-prime crisis in theory and in practice.The final chapter, Chapter 7 is the concluding part of this article. Based on the above chapters, the paper tries to make some general analysis and evaluation of Post-Keynesian financial and monetary theories, point out some deficiencies existing in current time. as well as some use for reference for the economic problems in China. At the same time, the final chapter in this article also pointes out the developing tendency of Post-Keynesian monetary theories and the future efforts from my own perspective. It is unrealistic to attempt to sort out the nearly twenty-year development of a school via merely 100,000 words, so it is hoped that the paper can play a serve as a stimulus, which could cause the attention of the world about the theories and school outside of the mainstream teaching material of economics.