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?

Arne Heise

No 119, ZÖSS-Discussion Papers from University of Hamburg, Centre for Economic and Sociological Studies (CESS/ZÖSS)

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.

Keywords: Keynes; Z/D model; principle of effective demand (search for similar items in EconPapers)
JEL-codes: B50 E12 E24 J23 (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:zbw:cessdp:321891

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