Re: Davidson and World System

Thu, 23 Jan 1997 13:17:25 +1100
Bruce R. McFarling (

On Tue, 21 Jan 1997 11:40:09 -0500 (EST), Gernot Kohler
<> wrote, on PKT

> Keynes's _General Theory_ has a reputation for
> being nothing but a closed-economy theory. A recent article
> by Davidson corrects that view:
> REFERENCE: Paul Davidson,
> "The _General Theory_ in an Open Economy
> Context," in:
> _A Second Edition of the General Theory_,
> edited by G.C. Harcourt and P. Riach
> (London, Routledge, 1996), pp. 102-130

> The GT contains many statements relating to
> international economics, as Davidson shows.
> In a theory section of the article, Davidson develops
> the point that "(i)n a flexible exchange rate world,
> governments can have an incentive to pursue export
> policies rather than stimulating internal components
> of aggregate demand, if growth without inflation
> is an objective." (p. 110)
> This section is followed by a presentation of
> Davidson's IMCU proposal for a reform of the
> exchange rate mechanism, along lines developed
> in his book PKMT.
> The article concludes with an Appendix which shows
> how "Thirlwall's law" concerning the relationship
> between the foreign trade sector and national income
> is an extension of Keynes's multiplier.

> * * *
> COMMENTS: Rather than commenting on details of the
> article (pkt mouse squeaking at pkt CAT),
> I would like to point to an interesting possibility.
> It would be fascinating, to my eccentric imagination
> anyway, to bring about a theoretical linkage
> between the Keynes/Davidson/Thirlwall "open economy
> Keynesianism" and the Amin/Chase-Dunn/Frank/Wallerstein
> et al. "world system perspective".
> Small problem, though. Keynesians are afraid
> of getting too close to Marxists and Marxists see
> in Keynesians nothing but running dogs of capitalism.
> Apart from that, such a linkage between "open economy
> Keynesianism" and "world(-)system analysis" would be really
> neat, in the sense of Classicism-bashing.

As someone who's interested in both, I wonder if the Post
Keynesians and World Systems theorists on these two lists could
comment on (a) potentials of such a linkage and (b) whether each
has the posited view of the other.


Bruce R. McFarling, Newcastle, NSW