Marshall, Models, and Macroeconomics: Comments on Michel De Vroey’s “The Marshallian Roots of Keynes’s General Theory”

Abstract

Michel and I both agree that the correct interpretation of Keynes’s work involves seeing Keynes as a Marshallian. Where we differ is on what it means to be a Marshallian. Michel interprets Marshallian as “one who uses Marshallian models”; I interpret Marshallian as “one who uses the Marshallian method. ” A Marshallian in my sense would use models in quite different ways than a Marshallian in Michel’s sense. Because Michel interprets Marshall as someone who uses Marshallian models, much of his discussion is about Marshallian models, such as Marshall’s market clearing labor market. He judges Keynes’s work within this “model ” interpretation of Marshallian, and finds that Keynes essentially added nothing to the Marshallian models in terms of an explanation of unemployment. He argues that Keynes did not extend Marshall’s theory, because Keynes did not develop a macroeconomic theory of unemployment based on Marshallian models. He ultimately concludes that seeing Keynes as a Marshallian does not reinforce the validity of Keynes’s argument, but rather shows its weaknesses and undermines Keynes ’ contribution. I fully agree that Keynes did not develop a macroeconomic theory of

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