[118] This is a crucial part of the Definition & Reality methodology. In mathematical economics the theorems depend on axioms that are only hypothetical. In Political Economy that concerns reality, we also accept facts. On availability, see also the appendix on the presentation of the analysis for the US National Press in Washington 1993.
[119] If ‘animal spirits’ is not properly explained, it generates confusion. As this confusion exists, perhaps I need to provide this explanation here as well: Medieval philosophy distinguished between dead matter, plants and objects with a spirit - and the Latin word for spirit/mind is ‘animus’. So Keynes’s reference is not to wild beasts, though Mankiw suggests such with his mention of ‘irrationality’ and ‘arbitrary changes in attitude’. As I understand it, Keynes entertains the consideration that beings with a mind by definition develop conceptions about reality, and act and take decisions in a state of uncertainty.
[120] Krugman though allows for a temporary adverse development in technology. This chapter was basically written as the paper Colignatus (1997a), and since then Krugman has seen more scope for the technology argument.
[121] I can understand your misgivings about having to read five books before allowed to continue. Personally, I already knew most of what Krugman is writing about, and this may also be the case for you. But it was a useful refresher, lots of fun reading, and when everybody reads them then there is some common ground.
[122] That is, most economists don’t know yet, but I do, and thus ‘the economics profession’ knows it. In the same way, if a murderer knows that someone in the room knows that he is the villain, he is tempted to kill all in the room. This someone is going to tell !
[123] It is good to see that James Galbraith (1998) takes up this issue too. See below.
[124] Note that the reason why I am quite certain about my own approach is that I have given a mathematical theorem and proof based upon readily acceptable premisses. I also use a reduced form, but, deduction beats econometric testing.
[125] In 1997 I also wrote “(…bargaining…) has more to do with the level of wages than the (inflationary) rate of change.” I have to retract that statement. I temporarily forgot my very own analysis on the Phillipscurve ! Yes, I must have been irritated.
[126] And indeed, it must be feared that mainstream economists will not be interested much in inequality, so that they will also miss out on the interesting ‘tract’. We may presume, however, that Galbraith will take another occasion to repair that error.
[127] Palley is assistant director of Public Policy for the AFL-CIO, and author of a book “Plenty of Nothing”, that I have not read yet but that seems like a good buy.