Kenneth Boulding's Reconstruction of Macroeconomics
L. Randall Wray
Review of Social Economy, 1997, vol. 55, issue 4, 445-463
Boulding's reconstruction of macroeconomics provides a “microfoundation” based on liquidity preference theory, a balance sheet approach, and a process of homeostasis. These microfoundations are consistent with his aggregate theory and avoid fallacies of composition—such as the paradox of thrift—as well as the “adding up” problems of marginal productivity theory. His distrubution theory links income shares to the determinants of employment and output and the conditions of equilibrium of saving investment. His definitions provide clear alternatives to the NIPA definitions adopted in “Keynesian” theory. He provides an alternative view of fiscal and monetary policies that will not prove to be impotent in the face of the ongoing conservation counterrevolution. Indeed, his theories are quite close to the modern Post-Keynesian understanding of “endogenous money” the deficit-growth relation, and the investment-saving connection, while his policy recommendations are often consistent with those of Post-Keynesians.
Keywords: Boulding; macroeconomics; Keynesian economics; Post-Keynesian; economics; balance sheets; homeostasis (search for similar items in EconPapers)
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