Working Paper No 879



primarily determined by institutions and social norms. If one accepts these features as essential,

and based on the aforementioned methodological criteria for abstraction, the Kaleckian closure

emerges as a more appropriate and general closure compared to the classical, neoclassical, and

neo-Keynesian ones. This answers the first of the two endogeneity critiques.

Finally, I turn to the “shock-dependent effects” critique. The main conclusion of the

methodological discussion was that one cannot criticize a model just by the complications that

arise at a less abstract level, except if the abstract model fails the criteria for appropriate

abstraction. The Kaleckian model does not fail these two criteria. Therefore, I conclude that the

second “endogeneity critique” is also not valid, although it provides insights for future work

within the Kaleckian framework.

The paper proceeds as follows. Section 2 discusses the concepts of abstraction and closure.

Section 2.1 examines the use of abstraction as an indispensable methodological tool of the

economist; section 2.2 explains Lawson’s two methodological criteria for what constitutes an

appropriate abstraction and section 2.3 argues that closure is also a special kind of abstraction.

Section 3 discusses the Kaleckian model and section 4 shows why the model should be

understood as a hybrid closure of classical and Keynesian origins. Section 5 argues that the

Kaleckian closure can capture the basic and essential characteristics of the capitalist economy

better than the closures proposed by the classical, the neoclassical, and the neo-Keynesian models.

In section 6, we discuss the “shock-dependent effects” critique. Section 7 concludes.


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