Reasserting the Role of Keynesian Policies for the New Millennium

Levy Economics Institute WP #207

25 Pages Posted: 26 Jan 1998

See all articles by Philip Arestis

Philip Arestis

University of Cambridge - Department of Land Economy; Universidad del País Vasco (UPV/EHU)

Malcolm C. Sawyer

Levy Economics Institute

Date Written: August 1997


It is often asserted that, whatever role Keynesian policies may have played in underpinning the long post-war boom, those policies are no longer relevant. In contrast this paper seeks to reassert the need for Keynesian policies in order to secure full employment. In doing so, as will be seen below, we interpret Keynesian economic policies in a rather broad sense and specifically wish to distance ourselves from treating Keynesian policies as virtually synonymous with fiscal demand management designed to fine tune the economy. We also recognize that there are many constraints on the pursuit of full employment, arising from the demand and the supply sides, and that the key objective of Keynesian policies is to alleviate those constraints in the pursuit of full employment.

This paper puts forward an approach to economic policy which could be described as post Keynesian. Since the term Keynesian policies has been variously defined, we indicate in section II what we mean by the term, which is broader than most usages. The case for Keynesian policies arises out of, and can only be appreciated by reference to, a conception underlying this paper in section III. This is further elaborated in section IV by a consideration of the constraints on the achievement on full employment in a market economy. This leads into section V in which we outline the nature of Keynesian policies which relate to both the demand side and the supply side of the economy. The final main section, section VI, considers some of the constraints on the implementation of the type of Keynesian policies which we are advocating.

JEL Classification: E12, E61

Suggested Citation

Arestis, Philip and Sawyer, Malcolm C., Reasserting the Role of Keynesian Policies for the New Millennium (August 1997). Levy Economics Institute WP #207. Available at SSRN: or

Philip Arestis (Contact Author)

University of Cambridge - Department of Land Economy ( email )

19 Silver Street
Cambridge, CB3 9EP
United Kingdom

Universidad del País Vasco (UPV/EHU)

Barrio Sarriena s/n
Leioa, Bizkaia 48940

Malcolm C. Sawyer

Levy Economics Institute ( email )

Annandale-on-Hudson, NY 12504-5000
United States
845-758-7700 (Phone)
845-758-1149 (Fax)

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