Progressive economists everywhere should say a thank you this week to Wynne Godley, who passed away May 13. He started out his career as an economist working for the U.K. Treasury, then got to know Nicholas Kaldor and moved over to Cambridge to help establish the Department of Applied Economics there (from which he retied in 1993). His more recent work was published through the Levy Institute in New York State. His final major volume (published by Palgrave in 2007) was a tour de force of heterodox macro theory, co-written with Canada’s (and the PEF’s) own Marc Lavoie: Monetary Economics: An Integrated Approach to Credit, Money, Income, Production and Wealth.
Like Minsky, he can say “I told you so” to the whole neoclassical profession – although unlike Minsky, Godley could do this while he was still alive. (But he was hardly gleeful about that, given the human hardship which the failure of orthodoxy has begot.) I met him when I was a student at Cambridge in the mid-1980s. He was passionate about inserting pragmatic heterodox ideas into real-world debates (wasting less time than most on arcane philosophical disputes). He paid serious attention to the relationships between stocks and flows in heterodox macro models (and between balance sheets and incomes). His work exploring the implications of basic macro identities (such as the basic but oft-ignored fact that all sector deficits in the economy have to sum to zero in equilibrium, and hence not all sectors can be paying down debt simultaneously – someone must be increasing their debt to keep the money flowing) has influenced heterodox writers of all stripes (post-Keynesan, structuralist, and Marxist). That approach has proven especially timely in the current crisis: it’s at the core, for example, of my recent post here on deleveraging.
Thanks Wynne from all of us.