Professor Syll will be playing the part of provocateur and the usual suspects should begin their cameos right about now.
Let's see if this one has legs.
From Lars P. Syll:
Lord Keynes
has some interesting references and links for those wanting to dwell
upon the question if Keynes really “accepted” Hicks’s IS-LM model.
My own view is that IS-LM doesn’t adequately reflect the width and
depth of Keynes’s insights on the workings of modern market economies:
1 Almost nothing in the post-General Theory writings
of Keynes suggests him considering Hicks’s IS-LM anywhere near a
faithful rendering of his thought. In Keynes’s canonical statement of
the essence of his theory — in the famous 1937 Quarterly Journal of Economics article
— there is nothing to even suggest that Keynes would have thought the
existence of a Keynes-Hicks-IS-LM-theory anything but pure nonsense.
John Hicks, the man who invented IS-LM in his 1937 Econometrica review of Keynes’ General Theory
— “Mr. Keynes and the ‘Classics’. A Suggested Interpretation” —
returned to it in an article in 1980 — “IS-LM: an explanation” — in Journal of Post Keynesian Economics. Self-critically
he wrote that ”the only way in which IS-LM analysis usefully survives —
as anything more than a classroom gadget, to be superseded, later on,
by something better — is in application to a particular kind of causal
analysis, where the use of equilibrium methods, even a drastic use of
equilibrium methods, is not inappropriate.” What Hicks acknowledges in
1980 is basically that his original IS-LM model ignored significant
parts of Keynes’ theory. IS-LM is inherently a temporary general
equilibrium model. However — much of the discussions we have in
macroeconomics is about timing and the speed of relative adjustments of
quantities, commodity prices and wages — on which IS-LM doesn’t have
much to say.
2 IS-LM forces to a large extent the analysis into a static
comparative equilibrium setting that doesn’t in any substantial way
reflect the processual nature of what takes place in historical time. To
me Keynes’s analysis is in fact inherently dynamic — at least in the
sense that it was based on real historic time and not the
logical-ergodic-non-entropic time concept used in most neoclassical
model building. And as Niels Bohr used to say — thinking is not the same
as just being logical ….MORE
