From Keynes to a theoretical-political approach to conventional economics

ABSTRACT

The aim of this study is twofold. The first is to question the claim that the price system is the only form of coordination of individual actions. The attempt to overcome this assumption highlights the need for other forms of coordination to regulate behaviours that are not price-related, proposing the concept of Keynesian Convention as a special kind of coordination. The second is an effort to define the theoretical-political dimension of the economics of conventions. In fact, focusing on the strategic approach of conventions, depending on whether the concept of a convention is used to resolve problems finding a balance in coordination games, it seems reasonable to seek a political dimension of the economics of conventions. We will show how the assumptions underlying the theory of general economic balance are extremely restrictive, because they assume a complete lack of uncertainty or strategic interaction between the different agents. For the purpose of ensuring objectivity, we will highlight the role of the concept of the convention as a mechanism of coordination that transcends prices. Finally, although the standard theory strives to prove otherwise, the narrow path of validation is proof that an analysis of coordination cannot consider only the price system and is inseparable from the concept of rules.

KEYWORDS:

• Conventional economics
• coordination
• political theory
• strategic interaction
• uncertainty

JEL CLASSIFICATIONS:

• B21
• E11
• E12
• E13

Disclosure statement

No potential conflict of interest was reported by the author.

Notes on contributor

Alessandro Morselli is a professor of international economic policy at the Department of Law and Economics, University of Rome Unitelma Sapienza. His area of research interests is: International economic; History of economic thought and economic history; Theory and decision; Evolutionary economics.