A Keynesian and Post-Keynesian Theoretical Brief: Selected Concepts

This chapter includes a review of the theories of Keynes, Minsky and Kindleberger regarding financial crises, the role of liquidity, the function of expectations and the implications of speculation encompassed by several controversial assumptions of conventional monetary theory. Part of the three authors’ work is analysed and presented here as essential to the understanding of the inherent and systemic characteristics of over-liquid markets in capitalist societies. Along with the selected Keynesian and post-Keynesian concepts, part of neoclassical literature on efficient markets will be presented in order to point out some of its inherent contradictions. This is delivered in order to establish an overall framework that will then be used to evaluate the proximity of the book’s findings to theoretical underpinnings. This chapter sets the framework for the later investigation and comprehension of the function and consequences of high monetary circulation in newly emerging capital markets. As mentioned in the introduction, if the reader feels comfortable with this literature they may continue directly to the empirical investigation starting in the next chapter.