Posted to Crooked Timber blog on the so-called failure of Macroeconomics:
Keynesian economics was the original macroeconomics, created precisely because classical economics failed to deal with the Great Depression. (And I believe it is profoundly wrong and useless in other ways too.) But then true Keynesian economics, which has deep social democratic implications, got twisted more and more back into the classical tradition, which exists to create continuing rationale for capitalist greed and exploitation, and his little validity otherwise. So it’s certainly no surprise that the purest successors to the Classical tradition missed the Great Recession like their forbears, and my successive twisting explanation may explain many of the New Keynesians. The failure to see a place for fiscal policy is one example. Those who retained more real Keynesian views were more likely to be among those who saw it coming.
But important parts of what Keynes suggested have not been explored, and better approaches to non-equilibrium ways of modeling economics exist. Perhaps if we can’t simply dump the plutocrat shills, we can make the study of macroeconomics more heterdox. Since they’ve been systematically excluded for so long, one need would be for more left economists, including Marxists and marxians.