Relevance of recent developments in monetary theory for developing economies: A sceptical note

Recent contributions to the theory of money claim derivation from Keynes' General Theory, but come to conclusions different from the latter. This paper analyses how their claim to Keynesian lineage is wrong in substance, for the essence of the Keynesian contribution on money lies in the special position which money occupies vis-à-vis goods, and the uncertainty elements in the functioning of a money economy. It then analyses how equilibrium analysis (which Keynes sought to unseat), has reasserted itself, due partly to the neoclassical methodology of analysis through comparative statics and the concept of thriftiness cast in personal rather than corporate terms.Following on from this, this paper refers to the great deficiency of the Keynesian approach as being reliance on analysis confined to the level of the market and inadequately linked with the institutional features of the capitalist system, which the Kaleckian version of the General Theory of Employment emphasizes. This aspect is then used by the author to analyse the political economy of a developing economy.