ECON102: Principles of Macroeconomics (2021.A.01)

The "Cambridge Keynesians," also known as the Cambridge "Circus," refers to the group of British economists inspired by John Maynard Keynes's General Theory. The five members at Cambridge – Joan Robinson, Richard Kahn, Piero Sraffa, Austin Robinson, and the visiting member James Edward Meade – began meeting to discuss Keynes' Treatise on Money when it was published in 1930. They continued meeting and discussing successive drafts of his General Theory before it was published. In fact, it was their questioning, arguing, and general challenging of orthodox economic assumptions that led to the "revolution" in economic thinking that characterized Keynes' General Theory when it was published in 1936.

Geographically more distant, but no less important for the later development of Keynesian economics, were contemporary young economists at other universities in England at that time. These included Roy F. Harrod at Oxford and Nicholas Kaldor and John Hicks at the London School of Economics (LSE). These were the first to expand upon Keynes' work and make it known beyond Cambridge.

Joan Robinson

Joan Robinson embodied the "Cambridge School" in most of its issues in the twentieth century: as a cutting-edge Marshallian before and after 1936; as one of the earliest and most ardent Keynesians and finally as one of the leaders of the Neo-Ricardian and Post-Keynesian schools. Robinson's early contributions tended to be fundamental extensions of Neoclassical theory, such as her expository article on the Neoclassical marginal productivity theory of distribution. However she made a quick turnaround, prompted by Keynes' General Theory. As a member of Keynes's "Circus" at Cambridge during the writing of that treatise, Robinson produced early faithful expositions of Keynes' theory. Although not exactly entranced by the labor theory of value, Robinson's 1942 Essay on Marxian Economics was among the first studies to take Karl Marx seriously as an economist.

Austin Robinson

Austin Robinson was the husband of Joan Robinson, and also an economist at Cambridge. A close associate of Keynes, Robinson served as assistant editor during Keynes' period as editor of the Economic Journal; following Keynes' retirement in 1944, Robinson took over the joint editorship with Roy Harrod.

Richard Kahn

Richard Kahn was a student of Keynes who then taught at Cambridge. He was involved in the genesis of Joan Robinson's work on imperfect competition. Arguably, Kahn's most notable contribution to economics was his principle of the multiplier – the relation between the increase in aggregate expenditure and the increase in net national product (output). The multiplier effect refers to the idea that an initial spending rise can lead to an even greater increase in national income. In other words, an initial change in aggregate demand can cause a further change in aggregate output for the economy. It is the increase in aggregate expenditure (for example government spending) that causes the increase in output (or income). This multiplier effect became the centerpiece of the Keynes' General Theory. Kahn was a "fundamentalist" Keynesian, and strongly rejected efforts to unite Neoclassical and Keynesian economics that stretched away from the original message of the General Theory.

Piero Sraffa

Piero Sraffa was brought by Keynes to Cambridge in the 1920s. Sraffa has been sometimes considered a "closet Marxian". He was part of the legendary "cafeteria group" which explored Keynes' 1921 Treatise on Probability. Sraffa joined Keynes against Friedrich Hayek in the business cycle debates. Sraffa's Production of Commodities by Means of Commodities spearheaded the Neo-Ricardian School at Cambridge and elsewhere in the 1960s and 1970s.

Nicholas Kaldor

Joan Robinson's work on growth paralleled and complemented that of Nicholas Kaldor. Together, they developed what became known as "Cambridge growth theory". After Keynes's General Theory appeared in 1936, Kaldor abandoned his LSE roots and joined the Keynesian Revolution. His seminal contributions to Keynesian theory include the concept of "own rates of interest" and dynamic effects of speculation. An outgrowth of his intense debate with Friedrich Hayek was his construction of the "Cambridge" approach to growth theory which invoked several Ricardian concepts and was to become central to Neo-Ricardian and Post-Keynesian theory.

Roy Harrod

Roy Harrod, an Oxford economist, was also included in Keynes' circle of correspondents. His urging of a "dynamic" rather than "static" approach to economic issues was an Oxford contribution, accepted only later among the Cambridge economists. His career had taken the strangest turns of all. A two-year delay in the publication by Keynes (then editor of the Economic Journal) of Harrod's original "marginal revenue curve" denied the Oxford economist primacy in this field. Another independent discovery by Harrod, effectively the long-run envelope of short-run average cost curves, also went unrecognized – the credit being awarded to Jacob Viner. In that same article, he laid out the analytical foundations for the theory of imperfect competition – for which Joan Robinson took the credit. Finally, the laurels for his remarkable multiplier-accelerator model, developed in his Trade Cycle in which the equations of the IS-LM model were written down by Harrod, were given to the mathematically-expressed versions by Samuelson and Hicks based on Hicks' (later) drawing of the diagram. Although he spent only a short time at Cambridge, his career being at Oxford, he remained in close touch for the rest of Keynes' life, serving as his official biographer. He published Keynes' biography in 1951.

Michal Kalecki

Although not an official member of the "Circus," Michael Kalecki, claimed to have anticipated much of the principles stated in Keynes' General Theory. Between 1929 and 1936 he worked for the Institute of Studies of Economic Conditions and Prices (Instytut Bada_ Koniunktur Gospodarczych i Cen) in Warsaw, during which time he wrote some of his most famous works. Unfortunately, as he published these in Polish or French rather than English, his contributions remained unrecognized until much later. Kalecki's claim of precedence to Keynes, in a 1936 article, likewise went into oblivion as the article was not translated into English. In 1936 he moved to England where he first worked at the LSE and later at Cambridge, collaborating directly with Keynes on an economic plan of rationing under wartime conditions. His later work incorporated several Classical and Marxian concepts, relying to a good extent on "class conflict," income distribution, and imperfect competition, items which would inspire the Cambridge Keynesians – particularly Joan Robinson, Nicholas Kaldor, and Richard M. Goodwin – as well as modern American Post-Keynesian economics.