Society matters: A post-Keynesian approach to economic development

Abstract

This paper discusses methodological individualism and the perceived “need” for microfoundations in economic theory. It argues that the persistent focus on microfoundations has led a large part of the field to overlook the complexity of social interactions, the relevance of historical processes, and the characteristics of each society in understanding economic growth and development. The paper suggested focusing on social foundations as an alternative to microfoundations that is particularly relevant for studying economic development processes. It proposes framing the post-Keynesian view of demand-led growth and distribution-led growth within a conceptual framework of socio-economic development as a valid approach, consistent with social foundations, to understand a phenomenon as complex and multi-causal as development.

Keywords

• methodological individualism
• microfoundations
• economic development
• demand-led growth