Involuntary Unemployment
Routledge Frontiers of Political Economy Series

The Great Depression of the 1930s with its dramatic unemployment rates was one of the most striking economic events of the past century. It shook economists' beliefs in the existence of self-adjusting forces and prompted Keynes to write his masterwork, The General Theory of Employment, Interest and Money.

Involuntary unemployment was the central concept of Keynes' book. However, after having been considered the sine qua non of economics for decades, it has gradually disappeared from textbooks and research. This book recounts and ponders this demise, asking whether the abandonment of the concept of involuntary unemployment is the manifestation of some inner defect of recent economic theory or is rather due to some intrinsic weakness of the concept itself, which makes it of little use when it comes to economic theorising.

In order to disentangle these issues, the author critically reviews the different explanations of involuntary unemployment that have been offered from Keynes up to the end of the 1980s. After consideringThe General Theory, the author studies the works of pioneering macroeconomists such as Hicks, Modigliani, Lange, Leontief, Tobin, Klein and Hansen. An examination of the 're-appraisal of Keynes' and of the so-called disequilibrium school is followed by a discussion of Friedman's and Lucas' anti-Keynesian attack. The final part of the book investigates a series of models purporting to revive the Keynesian project, namely implicit contract, efficiency wages, insider-outsider, coordination failures, and imperfect competition.

1. IntroductionPart One: Conceptual Prerequisites2. Defining Involuntary Unemployment3. From Labour Rationing to (Involuntary) Unemployment4. Trade OrganisationPart Two: Involuntary Unemployment in Keynes' General Theory5. Keynes' Programme. A Reconstruction6. Involuntary Unemployment in Keynes' General TheoryPart Three: IS-LM Macroeconomics7. Hicks <>8. IS-LM à la Modigliani9. Lange, Leontief, Tobin, Klein and Hansen10. Involuntary Unemployment in Macroeconomic TextbooksPart Four: Reconstructing Keynesian Economics: the Disequilibrium Approach11. The Forerunners: Patinkin, Clower, Leijonhufvud12. The Second Generation: Barro and Grossman, Dréze, Benassy and MalinvaudPart Five: The Anti-Keynesian Offensive13. Friedman14. Lucas Part Six: The New Keynesian Counter-Attack15. Implicit Contract Theory16. Efficiency Wages Models17. Insiders-Outsiders Theory18. Coordination Failure Models19. Imperfectly Competitive General Equilibrium Model20. Epilogue

Michel De Vroey is Professor of Economics at the Université catholique de Louvain (Belgium). His main research interest is the history of macroeconomics. He has held visiting positions at the Université de Paris, Panthéon-Sorbonne, Duke University and the Université de Montréal. He has published articles in Economics and Philosophy, The Cambridge Journal of Economics and in the main history of economic thought journals.