Very good interview here by Phil Pilkington with Marc Lavoie. It’s a bit wonky, but we’re in the business of wonk so enjoy:
“Marc Lavoie is a professor in the Department of Economics at the University of Ottawa. He is the author of numerous books on post-Keynesian economics. His latest work ‘Monetary Economics’, written with the late Wynne Godley, is now available in paperback from Amazon.com.
Interview conducted by Philip Pilkington
Philip Pilkington: Monetary Economics quite consciously departs from the neoclassical paradigm while at the same time setting itself the high task of producing concise and coherent models. So, let’s start from the beginning: why did you and Godley feel the need to depart so forcefully from the neoclassical paradigm? To tear yourselves away from it in such black and white terms as stated in the introduction to the book suggests to me that you and Godley found it lacking at a very fundamental level. Could you explain why this is?
Marc Lavoie: First I should point out that Monetary Economics started out as a project initiated by my co-author Wynne Godley in the early 1990s. Already in a paper published in 1993, and hence written much earlier, Wynne was announcing the preparation of a substantial monograph, in collaboration with a Cambridge colleague. But while Wynne managed to write working papers around his book project, he had only written a rather dry draft of the book itself when I got to meet him for the first time at the end of 1999. So it should be clear that the soul of the book comes from Wynne, while one may say that the body comes from me!
Having dealt with real world economics, through his position at the British Treasury until 1970, Wynne was convinced that mainstream macroeconomics just did not make any sense, whether it was monetarism or the standard Keynesian IS/LM model of the time; in fact he could not understand how any reasonable person, not yet brainwashed by courses in mainstream economics, could grant any credibility to the textbook and to the sophisticated models of mainstream economics. So it is clear that Wynne wished to depart from neoclassical economics, and start from scratch, which is what he did to some extent already when Wynne and his colleague Francis Cripps wrote a highly original book that was published in 1983, Macroeconomics. This book was written because Wynne got convinced that the Keynesians of all strands were losing their battle against Milton Friedman and the monetarists, because Keynesians could only provide very convoluted answers to simple questions such as: “Where does money come from? Where does it go? How do the income flows link up with the money stocks? How is new production financed?”
Our book Monetary Economics also tries to provide appropriate answers to these questions. We agonized for a while between trying to engage in a constructive dialogue with our mainstream colleagues and targeting a non-mainstream audience, or perhaps trying to achieve both goals. In the end, we figured that it would be very difficult to please both audiences, and we chose to focus on a heterodox audience. In any case, I have spent most of my academic career trying to develop alternative views and alternative models of economics – what is now called heterodox economics; this is the literature we know best. So we took our book as a formal contribution to this heterodox literature and more specifically as a contribution to post-Keynesian economics.”