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[[Keynesian theory]],  as variously interpreted by the '''''Keynesians''''',  dominated mainstream economic thought from the publication of  ''The General Theory of Employment, Interest and Money'' (1936) <ref name=KEYNES1>[http://cepa.newschool.edu/het/texts/keynes/gtcont.htm KEYNES, John Maynard. ''The General Theory of Employment, Interest and Money'' (1936)]</ref> until the early 1970's. [[Keynesian theory]] created  the foundations of a new approach to [[economics]] and profoundly altered government's involvement in the economy.

==[[John Maynard Keynes]] (1883-1946)==
:::The ideas of economists and political philosophers, both when they are right and when they are wrong, are more powerful than is commonly understood. Indeed, the world is ruled by little else. Practical men, who believe themselves quite exempt from any intellectual influences, are usually the slaves of some defunct economist. Madmen in authority, who hear voices in the air, are distilling their frenzy from some academic scribbler of a few years back. <small>Keynes, 1936.</small>

'''[[John Maynard Keynes]]''' <ref name=KEYNESHET>[http://cepa.newschool.edu/het/profiles/keynes.htm '''John Maynard Keynes''']</ref> reputedly made one of the most important contributions for the science of Economics. His classic book, ''The General Theory of Employment, Interest and Money'' (1936) <ref name=KEYNES1/>, Keynes's famous treatise, revolutionized both economics and the political science, bringing what is generally regarded as the most influential social science treatise of the 20th century.  This single book permanently changed the way the world looked at the economy and the role of government in society.

After a brief period in the British civil service, Keynes returned to his ''alma mater'', Cambridge, in 1909 where he published ''Indian Currency and Finance'' <ref name=INDIANCURR>[http://www.archive.org/details/IndianCurrencyAndFinance KEYNES, John Maynard. ''Indian Currency and Finance''. London: MacMillan & Co., Ltd., 1913]</ref>, considered to be the best book in English about the [[gold standard]] and his ''A Treatise on Probability'' <ref name=TRTPBABLTYKEY>[http://www.archive.org/details/treatiseonprobab007528mbp KEYNES, John Maynard. ''A Treatise on Probability''.     London: Macmillan & Co. Ltd., 1921.]</ref> (1921), which dismantled the classical theory of probability, launching what has since become known as the ''"logical-relationist"'' theory of probability. 

In 1930 Keynes published his first major work on economics, the heavy two-volume ''A Treatise on Money'' <ref name=KEYNES2>KEYNES, John Maynard. ''A Treatise on Money''. New York: Harcourt, Brace and Co.; 1st American edition; 1930 </ref> which set out his ''[[Wicksellian Theory of the Credit Cycle|Wicksellian Theory]]'' <ref name=WICELLIANHET> [http://cepa.newschool.edu/het/essays/money/cumulative.htm Wicksellian Theory of the Credit Cycle]</ref> theory of the credit cycle. In it, the rudiments of a liquidity preference theory of interest are laid out. [[Friedrich von Hayek]] <ref name=HAYEKHET>[http://cepa.newschool.edu/het/profiles/hayek.htm Friedrich von Hayek]</ref>, the ''[[laissez-faire]]'' advocate, reviewed the ''Treatise'' <ref name=KEYNES2>KEYNES, John Maynard. ''A Treatise on Money''. New York: Harcourt, Brace and Co.; 1st American edition; 1930 </ref> so harshly that Keynes decided to ask [[Piero Sraffa|Sraffa]] <ref name=SRAFFAHET>[http://cepa.newschool.edu/het/profiles/sraffa.htm Piero Sraffa]</ref> to review Hayek's own competing work and condemn it, no less harshly.  The Keynes-Hayek conflict initiated a battle in the Cambridge-L.S.E. <ref name=CAMBLSEHET>[http://cepa.newschool.edu/het/profiles/hayek.htm Cambridge-L.S.E.]</ref> whose effects continue to the present day.

In the ''General Theory'' <ref name=KEYNES1/> Keynes developed a theory that could explain the determination of ''aggregate output'' - and as a consequence, employment. He explained how the determining factor to be aggregate demand. Among the revolutionary concepts initiated by Keynes was the concept of a ''demand-determined'' equilibrium wherein unemployment is possible, the ineffectiveness of price flexibility to cure unemployment, a unique theory of money based on ''"liquidity preference"'', the introduction of radical uncertainty and expectations, the marginal efficiency of investment schedule breaking [[Say's Law]] (and thus reversing the savings-investment causation), the possibility of using government fiscal and monetary policy to help eliminate recessions and control economic booms.  Indeed, with this book, he almost single-handedly constructed the fundamental relationships and ideas behind what became known as ''"[[macroeconomics]]"''.

The ''General Theory'' <ref name=KEYNES1/> set up the ''The Keynesian Revolution'' <ref name=KEYNESREVHET>[http://cepa.newschool.edu/het/essays/keynes/keynesrev.htm '''The Keynesian Revolution''']</ref> which split the economics world in two generations: the young lining up behind Keynes; the old rallying to condemn it.  John Maynard Keynes responded to his critics -- [[Jacob Viner]] <ref name=VINERHET>[http://cepa.newschool.edu/het/profiles/viner.htm Jacob Viner]</ref>, [[Dennis Robertson]] <ref name=ROBERTSONHET>[http://cepa.newschool.edu/het/profiles/robertson.htm Dennis Robertson]</ref> and [[Bertil Ohlin]] <ref name=OHLINHET>[http://cepa.newschool.edu/het/profiles/ohlin.htm Bertil Ohlin]</ref> -- in a series of 1937 articles, which expanded upon his theory. A densely-written and difficult book, it was followed up immediately by elucidatory publications by the members of the ''[[Keynes's Circus]]'' <ref name=KEYCIRCUSHET>[http://cepa.newschool.edu/het/schools/cambridge.htm#circus ''Keynes's Circus'']</ref>, such as [[Joan Robinson]] <ref name=ROBINSONHET>[http://cepa.newschool.edu/het/profiles/robinson.htm Joan Robinson]</ref>, and young economists such as [[Roy Harrod]] <ref name=HARRODHET>[http://cepa.newschool.edu/het/profiles/harrod.htm Roy Harrod]</ref> and [[Abba Lerner]] <ref name=LERNERHET>[http://cepa.newschool.edu/het/profiles/lerner.htm Abba Lerner]</REF>.  

Of particular importance was the 1937 article by [[John Hicks]] <ref name=HICKSHET>[http://cepa.newschool.edu/het/profiles/hicks.htm John Hicks]</ref> which introduced the '''[[Hicks-Hansen IS-LM Model]]''' <ref
name=ISLMHET>[http://cepa.newschool.edu/het/essays/keynes/hickshansen.htm'''The Hicks-Hansen IS-LM Model''']</ref> of Keynes's theory that launched the [[The Neo-Keynesian World|''"Neoclassical-Keynesian Synthesis"'']] <ref name=NEOKEYNESIANHET>[http://cepa.newschool.edu/het/essays/keynes/islmcont.htm '''"The Neoclassical-Keynesian Synthesis"''']</ref>, which became the World's mainstream form of macroeconomics in the post-war era until the early 1970s.

===Joan  Robinson and the Cambridge Keynesians===
''"[[Cambridge Keynesians]]"'' refer to the unique group of British economists inspired by John Maynard Keynes's ''General Theory'' in a more "fundamentalist" way than the ''[[American Neo-Keynesians]]'' <ref name=AMNEOKEYNESHET>[http://cepa.newschool.edu/het/schools/synthesis.htm ''American Neo-Keynesians'']</ref>.   

Their origin stems from the ''[[Keynes's Circus]]'' <ref name=KEYCIRCUSHET>[http://cepa.newschool.edu/het/schools/cambridge.htm#circus ''Keynes's Circus'']</ref> at Cambridge -- [[Joan Robinson]], [[Richard Kahn]], [[Piero Sraffa]], [[Austin Robinson]] and [[James Meade]]. Although it followed upon Joan Robinson's original queries about capital aggregation (1954, 1956), [[Piero Sraffa]] <ref name=SRAFFAHET>[http://cepa.newschool.edu/het/profiles/sraffa.htm Sraffa's]</ref> ''"capital critique"'' set the radical ''"counter-revolutionary"'' tone of the Cambridge Capital Controversy that ensued with the ''[[American Neo-Keynesians]]'' <ref name=AMNEOKEYNESHET>[http://cepa.newschool.edu/het/schools/synthesis.htm ''American Neo-Keynesians'']</ref>.

The Robinson-Kaldor growth theory and the Cambridge Capital Controversy galvanized a new generation of ''"[[Cambridge Keynesians]]"'' -- such as Luigi Pasinetti, Piero Garegnani, John Eatwell, Geoff Harcourt -- to initiate the ''"Neo-Ricardian"'' <ref name=NEORICARDIANHET>[http://cepa.newschool.edu/het/schools/neoric.htm ''"Neo-Ricardian"'']</ref> research program, an attempt at an explicit marriage of Keynesian theory of effective demand and the Ricardian theory of value.  In the course of their confrontation with Neo-Keynesian Synthesis,  the Cambridge Keynesians found sympathizers in the ''American Post Keynesian school'' <ref name=AMPOSTKEYNESIANHET>[http://cepa.newschool.edu/het/schools/postk.htm ''American Post Keynesian school'']</ref>.

===Franco  Modigliani, James  Tobin and the Neo-Keynesian Synthesis===
The ''"[[Neoclassical-Keynesian Synthesis]]"'' <ref name=NEOKEYNESIANHET>[http://cepa.newschool.edu/het/essays/keynes/islmcont.htm '''"The Neoclassical-Keynesian Synthesis"''']</ref> refers to the ''"[[Keynesian Revolution]]"'' <ref name=KEYNESREVHET>[http://cepa.newschool.edu/het/essays/keynes/keynesrev.htm '''The Keynesian Revolution''']</ref>, as interpreted by group of American economists in the early post-war period, which was centered in the '''[[Hicks-Hansen IS-LM Model]]''' <ref
name=ISLMHET>[http://cepa.newschool.edu/het/essays/keynes/hickshansen.htm'''The Hicks-Hansen IS-LM Model''']</ref> first introduced by [[John Hicks]] (1937) <ref name=HICKSHET>[http://cepa.newschool.edu/het/profiles/hicks.htm John Hicks (1937)]</ref> and then expanded upon by [[Franco Modigliani]] (1944)<ref name=MODIGLIANIHET>[http://cepa.newschool.edu/het/profiles/modigliani.htm Franco Modigliani (1944)]</ref>.  

However the '''[[IS-LM]]''' model was unable to obtain the Keynesian result of an ''"unemployment equilibrium"''.   The model tended to yield the ''[[Neoclassical]]'' result of  ''"[[full employment]]"''. To explain the results of this system of equations, the ''[[Neo-Keynesians]]'' <ref name=NEOKNSNS>[http://cepa.newschool.edu/het/schools/synthesis.htm''The Neoclassical-Keynesian Synthesis ("Neo-Keynesians")'']</ref> appealed to rigid money wages, interest-inelastic investment demand, income-inelastic money demand or some other imperfection to this system.   Thus it became '' a ''"synthesis"'' of ''Neoclassical'' and ''Keynesian'' theory. 

Later on the money demand function was derived from utility-maximization by [[William J. Baumol]] (1952) <ref name=BAUMOLHET>[http://cepa.newschool.edu/het/profiles/baumol.htm William J. Baumol (1952)]</ref> and [[James Tobin]] (1956, 1958) <ref name=TOBINHET>[http://cepa.newschool.edu/het/profiles/tobin.htm James Tobin (1956, 1958)]</ref> and the Neo-Keynesians added the [[Phillips Curve]] <ref name=PHILLIPSHET>[http://cepa.newschool.edu/het/essays/keynes/inflation.htm'''Phillips Curve''']</ref> ([[Alban William Phillips|Phillips]], <ref name=ALPHILLIPSHET>[http://cepa.newschool.edu/het/profiles/phillips.htm Alban William Phillips, 1914-1975]</ref> 1958; [[Richard G. Lipsey|Lipsey]], <ref name=LIPSEYHET>[http://cepa.newschool.edu/het/profiles/lipsey.htm Richard G. Lipsey, 1928-]</ref> 1960) to account for inflation. The international sector was incorporated into an extended [[IS-LM]] system known as the [[Mundell-Fleming model]] <ref name=MUNDELLHET> [http://cepa.newschool.edu/het/profiles/mundell.htm Robert A. Mundell, 1962]</ref>

The ''"[[Neoclassical-Keynesian Synthesis]]"'' was wildly successful and dominated macroeconomics in the post-war period.  For a long time, the [[Neo-Keynesian]] system was synonymous with the ''"[[Keynesian Revolution]]"''. 

The ''Neo-Keynesian'' system came under attack in the late 1960s and early 1970s by [[Axel Leijonhufvud]] (1968) <ref name=LEIJOHNHET>[http://cepa.newschool.edu/het/profiles/leijon.htm Axel Leijonhufvud]</ref>. However, the ''[[Neo-Keynesian]]'' system only came into serious trouble in the early 1970s, when a sustained bout of inflation and unemployment in the OECD countries, which became known as ''"[[stagflation]]"'', could not be explained by their models. [[Milton Friedman]]  <ref name=FRIEDMANHET>[http://cepa.newschool.edu/het/profiles/friedman.htm Milton Friedman (1968)]</ref>, the leader of the ''[[Monetarist School]]'' <ref name=MONETARISTHET> [http://cepa.newschool.edu/het/schools/monetar.htm '''Monetarist School''']</ref>, proposed a ''"[[natural rate of unemployment hypothesis]]"'' <ref name=NRU> [http://cepa.newschool.edu/het/essays/monetarism/acceleration.htm''The Inflation Acceleration Controversy'']</ref> that did seem consistent with the OECD experience.  This natural rate hypothesis formed the basis of a ''"[[New Classical]]"'' <ref name=NEWCLASSICHET>[http://cepa.newschool.edu/het/schools/newclass.htm '''New Classical Macroeconomics''']</ref> [[Macroeconomics|macroeconomic]] theory, which has risen since the 1970s to replace ''[[Neo-Keynesianism]]'' <ref name=NEOKNSNS>[http://cepa.newschool.edu/het/schools/synthesis.htm''The Neoclassical-Keynesian Synthesis ("Neo-Keynesians")'']</ref> as the new macroeconomic orthodoxy.

===Abba  Lerner and the American Post-Keynesians===
The principal concern of [[Post Keynesians]] is to have a more complex and realistic aggregate [[supply and demand]] framework that includes mark-up pricing, the trend to monopoly, the workings of endogenous money and credit, circular and cumulative causation, and a pragmatic guide to policy. The workings of uncertainty lead to an unstable capitalistic system that requires the making of agreements and accords to promote stability. At the global level, it requires a fairer distribution of power such that the onus is on nations with trade surpluses to adjust their policies. More than anything, Post Keynesians eschew the quantity theory of money, since money and credit are seen to affect output and employment in both the short and long term. Indeed, like the institutionalists and Marxists, they see the capitalist economy as a monetary system of production, where money and creative financing are essential aspects of its functioning. <ref name=POSTKEY1>[http://hetsa.fec.anu.edu.au/review/ejournal/pdf/37-RA-2.pdf O'HARA, Phillip Anthony. ''The Revival of Political Economy and its Main Protagonists: 1960s to the Present''. History of Economics Review pp. 140-151]</ref>

'''[[Abba P. Lerner]]''' <ref name=LERNERHET>[http://cepa.newschool.edu/het/profiles/lerner.htm Abba Lerner]</ref> was born in Russia, raised on the London East End and worked as a machinist, a capmaker, a Hebrew teacher, a Rabbinical student before enrolling in 1929 at the [[London School of Economics and Political Science|London School of Economics]] <ref name=LSEHET>[http://econ.lse.ac.uk/ '''London School of Economics and Political Science''']</ref> to which he was attracted by L.S.E.'s [[Fabian socialists|Fabian]] <ref name=FABIANHET>[http://cepa.newschool.edu/het/schools/fabian.htm Fabian Socialists]</ref> associations.

Lerner moved to the United States in 1937 where he taught at over a half-dozen universities, including the [[New School for Social Research]] <ref name=NSSRHET>[http://cepa.newschool.edu/het/schools/newsch.htm New School for Social Research]</ref>. Lerner became of of the most important ''[[American Post Keynesians]]'' <ref name=AMPOSTKEYNESHET>[http://cepa.newschool.edu/het/schools/postk.htm '''American Post-Keynesians''']</ref>, along with Evsey Domar, Sidney Weintraub, Paul Davidson, Alfred S. Eichner, Hyman P. Minsky, Alain Barrère, Josef Steindl, Edward J. Nell and  [[Athanasios Asimakopulos]] <ref name=ASIMAKOPULOSHET>[http://cepa.newschool.edu/het/profiles/asimak.htm Athanasios Asimakopulos]</ref>, the ''William Dow Professor of Political Economy'' in the Department of Economics at McGill University (Montreal), among others.

In 1934, Lerner wrote   paper  laying out the full Pareto-optimality conditions in a general equilibrium production economy, introducing the Paretian rule for efficiency, i.e. ''"that price equal marginal cost"'',             
'' '''P=MC''' ''.

His ''magnum opus'',''The Economics of Control: Principles of Welfare Economics'' (1944) <ref name=ABBA>LERNER, Abba. ''The Economics of Control: Principles of Welfare Economics''. New York: MacMillan, 1960. <small>First published in 1944</small></ref> synthesises his work on trade, welfare, socialism and Keynesian theory .

Lerner discovered the  [[factor price equalization theorem]] <ref name=FPETHEOREM>[http://gias.snu.ac.kr/wthong/course/trade/it7.pdf Factor Price Equalization Theorem]</ref> (1947), but never published it. It was rediscovered in 1948 by [[Paul Samuelson]] and published in 1952.

Lerner was the first to recognize the importance of accounting for inflation in Neo-Keynesian theory and laid out his analysis in a remarkable series of articles and books (1944, 1947, 1949, 1951, 1972). In particular, he introduced the concept of ''"seller's inflation"'', a  form of cost-push inflation which was to become central to Sidney Weintraub and Post Keynesian economics. In his analysis of inflation, Lerner was quite ahead of his time: he recognized the possibility of ''"stagflation"'', the unemployment-inflation trade-off of the ''"[[Phillips Curve]]"'' <ref name=PHILLIPSHET>[http://cepa.newschool.edu/het/essays/keynes/inflation.htm '''"Phillips Curve"''']</ref>, what he called ''"high full employment"'' (a predecessor of the Friedman's ''NARU - natural rate of unemployment'' <ref name= NARU>[http://www.economyprofessor.com/economictheories/naru.php '''NARU - natural rate of unemployment''']</ref> <ref name=NARU2>[http://repec.org/res2004/PanagiotidisBratsiotisMartin.pdf BRATSIOTIS, George Bratsiotis (University of Manchester), MARTIN, Christopher (Brunel University) and PANAGIOTIDIS, Theo. (Loughborough University) ''Monetary Policy and the Natural Rate of Unemployment'', September 2003.]</ref>, the differential effects of expected and unexpected inflation and the theory of implicit contracts long before any of these concepts were discussed elsewhere.

===Robert Clower, Axel Leijonhufvud  and Disequilibrium Keynesianism===
On an scholarly study ''On Keynesian economics and the economics of Keynes : a study in monetary theory'' <ref name=LEIJOHNUFVUD>LEIJOHNUFVUD, Axel. ''On Keynesian economics and the economics of Keynes : a study in monetary theory''. New York: Oxford University Press, 1968.</ref> (1968) [[Axel Leijonhufvud|Leijonhufvud]]  <ref name=LEIJOHNHET>[http://cepa.newschool.edu/het/profiles/leijon.htm Axel Leijonhufvud]</ref> (1968) differentiated between ''"Keynesian Economics"'' (Hicks-[[Paul Samuelson|Samuelson]] type of synthesis) and ''"Economics of Keynes"'' (the work of J.M. Keynes) and essentially demonstrated that the two had little in common. He joined Clower <ref name=CLOWERHET>[http://cepa.newschool.edu/het/profiles/clower.htm Clower]</ref> in calling for a dynamic, ''"microfounded"'' formulation of Keynesian theory which explained underemployment equilibrium rather than merely referring to it as an imperfection. In particular, Leijonhufvud relies on differing speeds of quantity and price adjustments to create the coordination failures which yield protracted unemployment.

His later work in the 1970s and 1980s still mirrored this quest. In the 1990s, Clower and Leijonhufvud identified the fast-growing evolutionary theory and computational economics as moving in the right direction and founded a fledgling school, ''"[[Post Walrasian]]"'' <ref name=POSTWALRASHET>[http://cepa.newschool.edu/het/schools/postw.htm '''"Post Walrasian"''']</ref>, intent on harnessing [[Macroeconomics|macroeconomics]] to it.

===Joseph E. Stiglitz and the New Keynesians===
'''[[Joseph E. Stiglitz]]''' <ref name=STIGLITZ>[http://cepa.newschool.edu/het/profiles/stiglitz.htm Joseph Stiglitz]</ref> is one of the most important leaders of the ''[[New Keynesians]]'' <ref name=NEWKEYNESHET>[http://cepa.newschool.edu/het/schools/newk.htm '''"New Keynesians"''']</ref>. In 2001 he shared the ''The Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel 2001'' <ref name=NOBEL2001>[http://nobelprize.org/nobel_prizes/economics/laureates/2001/press.html ''The Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel 2001'']</ref> a.k.a., imprecisely, ''Nobel in Economics'' with George A. Akerlof and  A. Michael Spence ''"for their analyses of markets with asymmetric information"''. His career began at Yale, where he became a tenured professor at the age of 27. Stiglitz has also been a faculty member at Princeton, Oxford and Stanford universities. At the age of 29, he became a Fellow of the Econometric Society and is a member of the National Academy of Science. Stiglitz is also the recipient of the prestigious ''John Bates Clark Medal'', awarded every two years to the American economist under the age of 40 who has made the most significant contributions to the subject.

Stiglitz has also become influential in the making and evaluation of economic policy in the last decade. He served on President Clinton's Council of Economic Advisers – first as a member and later as chairman with cabinet rank. He was later named chief economist of the World Bank. Since January 2000, Stiglitz has been a visiting professor at Columbia's Graduate School of Business and Department of Economics in the Graduate School of Arts and Sciences. 

Noting that many of the major political debates over the past two decades have centered around one key issue: ''"the efficiency of the market economy"'', and the appropriate relationship between
the market and the government, and based on his lifelong experiences, Stilglitz  became to question <ref name=LECTURE>[http://nobelprize.org/nobel_prizes/economics/laureates/2001/stiglitz-lecture.pdf STIGLITZ, Joseph E. ''Information And The Change In The Paradigm Of Economics''.(Prize Lecture, December 8, 2001). New York: Columbia Business School, Columbia University, 2001.]</ref> the argument of Adam Smith (1776) that free markets led to efficient outcomes, ''"as if by an invisible hand"'', which  has played a central role in these debates: it suggested that we could, by and large, rely on markets without government intervention. There was, at best, a limited role for government.

However his childhood told him otherwise. When he began the study of economics over forty years ago, Stiglitz was struck by the incongruity between the models that he was taught and the world that he
had seen growing up, in Gary Indiana, a city whose rise and fall paralleled the rise and fall of the industrial economy. Founded in 1906 by U.S. Steel, and named after its Chairman of the Board, by the end of the century it had declined to but a shadow of its former self. But even in its heyday, it was marred by poverty, periodic unemployment, and massive racial discrimination. Yet the theories that Stiglitz was taught paid little attention to poverty, said that all markets ''"cleared"''  including the labor market, so unemployment must be nothing more than a ''"phantasm"'', and that the profit motive ensured that there could not be economic discrimination. The central theorems argued that the economy was [http://cepa.newschool.edu/het/essays/paretian/paretoptimal.htm Pareto efficient] and that, in some sense, he had been  living in the best of all possible worlds. It seemed to Stiglitz that he should be striving to create a different world. As a graduate student, he set out to try to create models with assumptions  and conclusions  closer to those that accorded with the real world he saw, with all of its imperfections.

====Stiglitz's contributions to economics====
Stiglitz helped create a new branch of economics, [[Information economics|''"The Economics of Information"'']] exploring the consequences of information asymmetries and pioneering such concepts as ''adverse selection'' and ''moral hazard'', which have now become standard tools not only of theorists, but of policy analysts. He has made major contributions to macro-economics and monetary theory, to development economics and trade theory, to public and corporate finance, to the theories of industrial organization and rural organization, and to the theories of welfare economics and of income and wealth distribution. In the 1980s, he helped revive interest in the economics of R&D. <ref name=TRENDS1>[http://www.sciencedirect.com/science?_ob=ArticleURL&_udi=B6TVG-4JXY1S0-J&_user=10&_coverDate=10%2F01%2F2006&_rdoc=1&_fmt=&_orig=search&_sort=d&view=c&_acct=C000050221&_version=1&_urlVersion=0&_userid=10&md5=74c8b7b60c77ce48b9b13aa02f3fc710 GALEGATI, Mauro et al.''Worrying trends in econophysics]</ref>

His work has helped explain the circumstances in which markets do not work well, and how selective government intervention can improve their performance.<ref name=POSTWASHINGTON>[http://www2.gsb.columbia.edu/faculty/jstiglitz/download/2005_More_Instruments.pdf STIGLITS, Joseph E. ''More Instruments and Broader Goals: Moving Towards The Post Washington Consensus''. World Institute for Development Economic Research - WIDER; The United Nations University: 1998 WIDER Annual Lecture.]</ref>

For Stiglitz there is no such a thing as Adam Smith's "[[invisible hand]]": "Adam Smith's invisible hand - the idea that free markets lead to efficiency as if guided by unseen forces - is invisible, at least in part, because it is not there". <Ref name=NOTTHERE>[http://www.guardian.co.uk/comment/story/0,3604,863426,00.html#article_continue STIGLITZ, Joseph E. ''There is no invisible hand''. London: The Guardian Comment, December 20, 2002.]</ref>
{{main|Joseph E. Stiglitz}}

===The Mandarins===
From the very beginning of time, economists have served government and influenced policy-making.  Many of the earliest economists, such as the [[Mercantilists]], were precisely government civil servants writing on the affairs of their nation. 

The golden age for the [[The Mandarins|''"Mandarin"'']] economist was doubtlessly the post-war period.  Perhaps the most critical event in the government-economist relationship was the publication of John Maynard Keynes's General Theory in 1936.  The Keynesian Revolution found a theoretical role for interventionist, discretionary government policy in the economy.

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