SOURCE: "Keynesian Economics: The Road to Nowhere?" in J. M. Keynes in Retrospect: The Legacy of the Keynesian Revolution, edited by John Hillard, Edward Elgar, 1988, pp. 125-52. [In the following essay, Gerrard charts the development of what he terms "mainstream Keynesianism"—the various attempts made by economists since the publication of the General Theory to reconcile classical economic theory with the existence of involuntary employment—and assesses the value of these developments with respect to economic theory, method, and policy.]

INTRODUCTION

Economics in the last fifty years has been mainly Keynesian economics, inspired by Keynes' General Theory. Keynes challenged classical theory, the then prevailing orthodoxy in economics. Classical theory concluded that the economy tends automatically to a position of full employment if the price mechanism is free to operate in all markets. Keynes claimed to have broken away from this orthodoxy by showing that it is possible for...