Notes

1 See chapter1 in Crotty (2017) for a detailed discussion of this important issue.

2 Chapter 19 argues that Keynes insisted that a capitalist economy is always sub­ject to endogenous dynamic motion and that, therefore, in Keynes's theory, comparative static models can only constitute the initial step in a full analysis of the phenomenon under investigation.

3 Keynes discussed the influence of AS in chapter 21 of The General Theory, titled "The Influence of Prices."

4 As Keynes explained in chapters 7 and 8 of The General Theory, the mpc is a com­plex and institutionally contingent variable.

5 This story of the centrality of cotton to nineteenth-century growth in Britain is well told in Beckert (2015).

6 As we have seen, the rate of interest had a high lower bound from 1925 to 1931 because Britain was back on the gold standard at an overvalued pound.

7 Keynes explained why market liquidity and price volatility are positively related in chapter12 of The General Theory.

8 In a 2014 article titled "Reflections on the new ‘Secular Stagnation hypoth­esis'," Larry Summers said, "Just seven years ago all seemed well in the field of macroeconomics. The phrase ‘great moderation' captured the reality that

Methodology and ideology 171 business cycle volatility seemed way down from levels of the first part of the post-war period. A broad methodological consensus supported the use of DSGE (dynamic stochastic general equilibrium) models to understand macro­economic fluctuation and to evaluate macroeconomic policies." DSGE models are deliberately constructed to generate a stable general-equilibrium position and they limit their financial sector to the determination of the interest rate - no casinos allowed - even as one of the greatest financial booms ever was about to bust. Yet they commanded a broad consensus among economists until the global crisis actually broke out. (See "Economic crisis has led to a crisis in the field of macroeconomics." Available at: https://voxeu.org/article/larry- summers-secular-stagnation, October 30, 2014.)

9 The recent spike in interest in the theory of secular stagnation has been accom­panied, in some cases, by attempts to understand the structural forces inhibiting growth.

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