Overview
Paul Davidson took Keynes’ General Theory of Employment Interest and Money seriously.
The interpretation in mainstream textboooks misses important points.
Keynes’ book was about theory, not primarily about (short-run?) fiscal or monetary policy.
Keynes does not explain persistent unemployment from imperfections or sticky or rigid money wages or prices.
A general theory is one that has less axioms
than the special case treated by, say, Marshall. Davidson identified,
specifically, three axioms relaxed or rejected by Keynes:
Neutrality of money. For Keynes, money is non-neutral in all runs.
Gross substitution. Money has no substitutes; it cannot be produced from labor.
Ergodicity. Important time series in economics can be non-ergodic. Numerical probabilities cannot necessarily