In a review of Asset Accumulation and Economic Activity by James Tobin, Hyman Minsky outlined three types of macroeconomic approaches after John Maynard Keynes: the neoclassical synthesis, the New Classical approach, and fundamentalist Keynesian scholarship. Each of the three streams of thought identified by Minsky had trouble finding acceptance. Regarding the fundamentalist Keynesians, Minsky’s third group, this chapter suggests why mainstream economists tended to ignore them, attributing this neglect to a form of dogmatism. The bulk of this chapter, though, focuses on criticism leveled against the two other approaches quite directly, namely, that they had inadequate microfoundations. Unless otherwise stated, the microfoundations referred to in this chapter concern the aggregate manifestations of the general equilibrium (of the Arrow-Debreu type) of maximizing individual agents. Also discussed are the arbitrariness of aggregate demand and its implications, the Sonnenschein-Mantel-Debreu theory, and ontological reduction and explanatory reduction.
