Cambridge Economics in the Post-Keynesian Era

This book chronicles the rise and especially the demise of diverse revolutionary heterodox traditions in Cambridge theoretical and applied economics, investigating both the impact of internal pressures within the faculty as also the power of external ideological and political forces unleashed by the global dominance of neoliberalism. Using fresh archival materials, personal interviews and recollections, this meticulously researched narrative constructs the untold story of the eclipse of these heterodox and post-Keynesian intellectual traditions rooted and nurtured in Cambridge since the 1920s, and the rise to power of orthodox, mainstream economics. Also expunged in this neoclassical counter-revolution were the structural and radical policy-oriented macro-economic modelling teams of the iconic Department of Applied Economics,  along with the atrophy of sociology, development and economic history from teaching and research in the self-purifying faculty. This book will be of particular interest to researchers in the history of economic thought, sociology of knowledge, political economy, especially those engaged in heterodox and post-Keynesian economics, and to everyone wishing to make economics fit for purpose again for negotiating the multiple economic, social and environmental crises rampant at national and global levels.

“This book is awesome in both its depth and range. It is avowedly  a story of how the Economic  Faculty of  Cambridge University where not just Keynesian economics but macroeconomics was born and became home not just to Keynesians  such as Joan and Austin Robinson, Nicholas Kaldor and Brian Reddaway but also Marxists such as Maurice Dobb, was converted into a fortress of not just neoclassical but neoliberal economics from the 1980s. Saith traces the change in the political atmosphere with the rise to power  of Margaret Thatcher and Ronald Reagan. But he also shows how there was a planned attack on heterodox economics and economists  by  Matthews, Hahn and Dasgupta, who saw to it that only people of their choice were appointed to the Faculty and to all prestigious committees and editorial boards of journals, not only in Cambridge but everywhere else in Britain. They found allies in the LSE and in Chicago and Cambridge, Mass. overseas. The attackers took advantage of dissensions among the leaders of Keynesian economics in Cambridge. Saith also brings in sociology, development and economic history in his intense focus.  This book should be required reading for everybody interested in the survival of people-friendly  heterodox social sciences, including economics. Readers would realize that very similar tactics have been used by neoliberal economists wherever they have been able to obtain a foothold. That acquisition has been made easier with the omnipresence of the IMF and the World Bank. Saith's book is a notable addition to the history of economic thought and to the history of our times.”

—AMIYA BAGCHI, Emeritus Professor and Emeritus Director, Institute of Development Studies, Kolkata; Adjunct Professor, Monash University, Australia

"This book explains how Cambridge (and indeed British) preeminence in post-Keynesian economics was undermined in the 1970s. With outstanding forensic scholarship, Saith reveals the institutional and personal networking that replaced a distinctive and empirical tradition in political economy by neoclassical orthodoxy. The book is destined to become the definitive account in the history of economic thought of how neoclassical economists reinforced their hegemony over the academic discipline in the 20th Century.”

—TERRY BARKER, Former Director, Cambridge Growth Project, Department of Applied Economics, University of Cambridge; Coordinating Lead Author, IPCC 1996-2006; Director, Cambridge Econometrics Ltd.

 “The Economics Faculty at the University of Cambridge is, arguably, one of the most famous in the world, suffused with the history of great ideas and the remarkable achievements of distinguished men and women. As a history of this Faculty, with particular emphasis on the past 75 years, Ashwani Saith’s book is a tour de force. This is a compelling account of the jousts between the heterodox defenders of the Cambridge castle, who eschewed quantitative methods in economics, and their foreign invaders in the form of neoclassical economists who were devoted to the American tradition of using mathematics and statistics. Saith tells a fascinating story of how the seemingly impregnable citadel fell to a combination of enemies within the faculty, aided by the university administration, and with the active assistance of the government of the day in the UK.  Was this a Pyrrhic victory, which reduced a once great and independent faculty to an imitation of US economics departments, or was such an overthrow long overdue? And who were the winners and losers? and what became of them? These are all issues addressed by the author in this fascinating analysis of the fall of economics at Cambridge from its glory days.”

—VANI BOROOAH, Emeritus Professor and Chair of Applied Economics, University of Ulster; Past President, Irish EconomicAssociation, and Secretary, Royal Irish Academy

“The Keynesian-Sraffian double revolution of the Years of High Theory (1926-1939-1960) laid the basis for the Keynesian triumph from, broadly, 1945 to 1975—We are all Keynesians now!—became a current saying. In his immensely important book Ashwani Saith now pictures in great detail the tragedy linked to the systematic destruction of the Keynesian tradition at Cambridge through the neoclassicals from 1975 onwards. His book represents a substantive contribution to the recent history of economics.”

—HEINRICH BORTIS, Emeritus Professor of Political Economy, History of Economic Theory and Economic History, Department of Economics, University of Fribourg, Switzerland

“I came to Cambridge in 1985 to work in the Department of Applied Economics as part of an interdisciplinary project involving Economics, Sociology and Social Psychology, progressing onto a lectureship in Social and Political Sciences (SPS) and finally a Chair and sometime Head of Department in Sociology. This book makes it clear why such a career path is no longer an option and does a lot to make sense to me of the period from the mid 1985s until now.  It also explains, in a large part, why the Faculty of Economics has, for a long time now, been seen as an outlier amongst Cambridge institutions, cut off from the other social sciences.  Reading this manuscript forced me to reflect deeply on just how things worked out like they did.  Perhaps for now the music has stopped, but when (as it invariably will) the music starts playing again, I hope that someone with Ashwani Saith’s eye for details and the bigger picture will be around to write the sequel!”

—BRENDAN BURCHELL, Professor in the Social Sciences Chair, Archaeology, Anthropology and Sociology Degree Committee; President of Magdalene College, University of Cambridge

“This book opens up the shadowy world whereacademic orthodoxy aligns with neo-conservative politics and corporate power to block applied research in the Keynesian tradition making the search for solutions to long-standing global problems very, very hard if not impossible. Ashwani Saith digs deep to uncover not only the procedures through which protagonists of the neo-classical paradigm purged researchers whose evidence stood in their way but also the doubts and hesitations of the galaxy of world-famous economists who contributed to the rise and subsequent demise of Keynesian economics at its birthplace in Cambridge. The author describes the step-by-step process of demolition of the Cambridge Department of Applied Economics and purge of heterodox teaching of economics, sociology, development and economic history at a Faculty that had been the birthplace of the twentieth century Keynesian revolution, attracting graduate students from around the world. People who share concerns about governance in the twenty-firstcentury should read this book and think hard about how damage done in the last quarter of the twentieth century can be repaired and how open and plural research environments demanded by contemporary students can be restored.”

—FRANCIS CRIPPS, Director, Alphametrics Co., Ltd, Bangkok, Thailand

“The strange death of Cambridge heterodox economics is a significant development in intellectual history and is well worth the detailed attention it gets in this book. It has an excellent source basis: relevant archival documents, a wide range of publications, and interviews or email exchanges with many of those directly involved. The book covers a wide range of Cambridge issues, from Hahn’s self-image as John the Baptist to the critiques of economics by Polly Hill and Michael Postan. However, the book is not confined to internal Cambridge matters but pays attention to national and international developments outside Cambridge that influenced or determined the outcome. These range from the decisions by the SSRC & ESRC to stop funding the major research programmes at the DAE (Department of Applied Economics), to the creation and activities of the Mont Pelerin Society and the vicissitudes of Keynesianism in the USA. This remarkable and well-written book is a mine of information. It is well worth reading and recommending to colleagues and libraries.”

—MICHAEL ELLMAN, Emeritus Professor, University of Amsterdam, Awarded 1998 Kondratieff Gold Medal; Co-editor, Cambridge Journal of Economics

"I had the great pleasure to read early versions of this meticulously researched history of the rise and demise of Cambridge heterodox economics in the post-Keynesian era. I warmly congratulate Ashwani for his tour de force." 

—GEOFFREY HARCOURT (27 June 1931–7 December 2021), Emeritus Professor of Economics, University of Adelaide, Australia; Emeritus Reader in History of Economic Theory, University of Cambridge

“Ashwani Saith has written a carefully researched and compelling account of the means by which the Cambridge Faculty of Economics and Politics was purged of heterodox applied economic analysis in the last quarter of the twentieth century. It draws on memoirs and interviews with participants in the contest for control, and a detailed archival analysis to reveal the methods by which this was achieved. These methods extended beyond the Faculty into the operations of major research funders. It should be read by anyone with an interest in the ways in which power can be exercised to control the nature of academic discourse and for the implications this may have for the future and relevance of the economics discipline.”

—ALAN HUGHES, Emeritus Margaret Thatcher Professor of Enterprise Studies and Director, Emeritus, Centre for Business Research, Judge Business School, University of Cambridge; Life Fellow, Jesus College, Cambridge

“History is usually written by the victors, but Ashwani Saith speaks for and from the other side of the battlelines of how Cambridge Economics came to expunge its vibrant heterodox traditions, closed its hitherto distinguished applied department, narrowed its methodological approach and rejected scholarly dissent. It is a voice that should be heard, and a book that must be read, certainly by anyone interested in making economics socially meaningful and fit again for the pursuit of public purpose.”

—JANE HUMPHRIES, Centennial Professor, London School of Economics; Emeritus Professor of Economic History, University of Oxford; Fellow of All Souls College, Oxford

"When I joined the University of Cambridge in early 2002 and was invited to tutor students of the Faculty of Economics, I was shocked to see that none of those I met ever read Kaldor or Robinson, and the only thing about Keynes they came across was the IS-LM caricatureportrayed by Mankiw. Frequent conversations with Ken Coutts, Francis Cripps, John Eatwell, Wynne Godley, Geoff Harcourt, Ajit Singh and others helped uncover important pieces of the puzzle. But this comprehensive and rigorous book offers a full picture. Ashwani’s opus excels. Through the painstaking account of events at Cambridge there grows an unmistakable appreciation of the imperative for the economics profession worldwide to become meaningful again."

—ALEX IZURIETA, Senior Economist, UNCTAD, Geneva; Former Senior Researcher, Judge Business School, University of Cambridge

“Ashwani Saith’s book is monumental, enthralling, beautifully written with its occasional satirical tone, but as we are being warned, depressing. It explains how the Faculty of Economics of the University of Cambridge—the world centre of post-Keynesian economics—was gradually and entirely taken over by neoclassical economics and why the Department of Applied Economics, also at theheart of heterodox economics, eventually came to be dismantled. This was so far an untold story, except for a chapter on ‘Faculty wars’ in Saith’s previous book, the intellectual biography of Ajit Singh. The current book provides 14 chapters of a meticulous detective story, relying mostly on Cambridge archives, but also on testimonies, interviews, emails, and previous articles of participants to these events. The book makes clear that, besides possible strategical mistakes by the incumbent heterodox economists, there were inexorable and ineluctable outside forces that led to this dismal state of affairs, through the Americanization of the economics profession and through the changing political winds that blew out heterodox and left-wing economics nearly everywhere in the world. The last chapter shows that all is not lost, both in Cambridge and elsewhere in the world.”     

 —MARC LAVOIE, Professor Emeritus, University of Ottawa, Canada; Professor Emeritus, Université Sorbonne Paris Nord, France

“This is an important book, and one that makes compelling reading for anyone interested in the developments in economics over the last few decades. It is a fascinating investigation into how ideas are shaped and in turn shape power relations within the academic world, and a passionate defence of the side which was defeated in Cambridge in the feud between heterodox and mainstream economics. Ashwani Saith witnessed the events and, while standing firmly on the side of those who lost the battle, manages to remain fair, balanced and scholarly.  Highly recommended.”

—MARIA CRISTINA MARCUZZO, Professor, Accademia dei Lincei, Universita di Roma 'La Sapienza'

“Henry Kissinger once said that “The reason that university politics is so vicious is because stakes are so small”.  This is often true, but not in the case of the Faculty of Economics at Cambridge in the 1980s.  The elections of Thatcher and Reagan and the rise of neo-liberalism made the conflict at Cambridge the exception: the stakes were high because this was part of a much larger conflict.  When I started my academic career, Cambridge was the place where to be; but when I got an appointment in 1981, little did I know of what was coming!  When I joined, the intellectual life of the Faculty consisted mostly of its own internal controversies between two powerful intellectual groups; those controversies kept everyone on their intellectual toes.  But political changes in the outside world gave one group the opportunity to ally themselves with powerful external political interests and with internal bureaucracies always all-too eager to acquiesce to external demands.  What this group could not win by the power of ideas they achieved through brute force.  Little by little, as it's made clear by the meticulous research in Saith’s brilliant book, they squeezed heterodox economics out of the Faculty.  When I retired in 2014, a member of the other group told me jokingly: there goes the last of the Mohicans!  As a great psychoanalyst discusses in his work, there seems to be an inverse relationship between the expectation of understanding the real, and the tolerance of dissent.  As soon as the 1980s began to show the limitation of neo-liberalism as an ideology and neo-classical economics as an economic theory, the dread of having misunderstood the real led to a desperate need for the annihilation of disagreement―as soon as the DAE rightly predicted that Thatcherism will lead to unemployment jumping to 3 million the writing was on the wall.  In other words, when expectation of understanding the real is high, difference of opinion is tolerable, but when there is little or no expectation of understanding, the need for agreement is absolute.  This brings the destructive instinct into play, turning a belief system into an absolutist one, and this into an engine of ideological genocide.  From this perspective Ashwani Saith's book is not just a great contribution to the history of economic thought, but also to the understanding of the intellectual obscurantism of our times.”

—JOSE GABRIEL PALMA, Senior Lecturer Emeritus, Faculty of Economics, University of Cambridge; Professor of Economics, University of Santiago, Chile; Joint Editor, Cambridge Journal of Economics

“The Keynesian Revolution was not just about the vacuity of Say’s Law or the correct understanding of the determinants of the interest rate. It revolutionized economics as a whole, by completely opening up the subject, liberating it from the straitjacket of a belief in the desirability of perfect markets, and bringing in bold, new thinking in many spheres. In development theory for instance it created room for the entry of structuralism; and in development policy it encouraged novel forms of state intervention within the dirigiste regimes that came up in the post-decolonization era.  The Sraffa Revolution, though of a somewhat esoteric nature, had a similar liberating effect. As both revolutions began in Cambridge, it became a magnet for economists from all over the world. The capture of Cambridge by economic orthodoxy therefore was a major episode in the counter-revolution against the liberation of economics. It occurred not because of the superiority of orthodox ideas, but above all through the use of political and economic power. Ashwani Saith’s book is a meticulous and comprehensive discussion of this capture. It is a tour de force that throws valuable light on the sociology behind the dominance of ideas. Given the profound significance of this capture, which prepared the intellectual ground for the subsequent ascendancy of neo-liberal thinking, it should be of interest to every economist, not just those who were directly involved; and it is written with remarkable scrupulousness and lucidity. An essential read.”

—PRABHAT PATNAIK, Emeritus Professor of Economics, Centre for Economic Studies and Planning, Jawaharlal Nehru University, New Delhi

“This book chronicles the sustained undermining of heterodox economics and the severing of the links between economics and other social sciences in the Cambridge economics faculty from the 1970s onwards.  This mattered as Cambridge was the renowned centre for Keynesian and heterodox economics and the suppression of this legacy was important in securing the domination of the neoclassical mainstream. This process was spreading across the world but as Ashwani Saith makes clear, through the most amazingly detailed evidence-based account, it was the specific strategies and practices deployed in Cambridge over decades by a small coterie of powerful academics that led to the evisceration of heterodoxy and cognate disciplines from the Economics Tripos. Painful as it was to relive through thisoutstanding book the years of intrigue, disrespect and intense job insecurity that I had to experience in a key period of my academic life, for me the saddest consequence is that young people now are denied the inspiring, theoretically diverse and interdisciplinary education that I enjoyed in Cambridge in the early 1970s. After the financial crisis economics students across the world started to ask why the economics curriculum no longer had power to explain or resolve real world problems.  Many of the answers are to be found here.”  

—JILL RUBERY, Emeritus Professor of Comparative Employment Systems, University of Manchester; Former Director, Work and Equalities Institute at Alliance Manchester Business School

“Ashwani Saith has produced a fascinating social anthropology of the warring tribes of Econ at one of their earliest settlements. Drawing on a wealth of original documents and the accounts of a host of participant-observers, he carefully documents the battles for the control of the priesthood, the seminar rituals and the sacred journals, in the liminal time before the old gods of Cambridge Economics were finally displaced. It is both a revealing account of internecine academic warfare and an entertaining read.“

—RON SMITH, Professor of Applied Economics, Department of Economics, Mathematics and Statistics, Birkbeck, University of London

“The history of Cambridge Economics in the Post-Keynesian Era is a story that needed to be told—and Ashwani Saith's book does it extremely well. In what reads as a detective story-cum-period-novel-cum-family-drama, Saith offers a persuasive, richly documented and fascinating account of how productive, relevant and innovative heterodox economic traditions were purged from the Faculty of Economics of Cambridge University, for reasons of 'ideology' and in order to align the divided department with an increasingly irrelevant mainstream economics. Saith brilliantly manages to contextualise the local happenings in Cambridge within the global rise of the "neoliberal thought-collective", highlighting the crucial roles of individual knowledge brokers, networks, thinktanks, politicians and donors. Fundamental theoretical, ideological and methodological disagreements between the major actors in this drama are discussed with impressive clarity and purpose, and with a keen eye for biographical detail and historical setting. In the end, it is the sad story of the better road not taken. Saith's book brings us back to the fork in the road—and forces us to consider and reconsider our earlier decision. Cambridge Economics in the Post-Keynesian Era is an extraordinary piece of research, lovingly told and immensely worthwhile for the new light it sheds on the epoch-making purge of Keynesian thinking right in its original stronghold.”

—SERVAAS STORM, Senior Lecturer, Faculty of Technology, Policy and Management, Delft University of Technology, The Netherlands; Joint Editor, Development and Change

“This book should be read by anyone with an interest in the freedom of academic study. Ashwani Saith accurately describes the events surrounding the creation of the Cambridge Department of Applied Economic and its development into a successful and prestigious centre for research into economic and social policy, attracting researchers from around the world, and its subsequent dismantling and eventual closure. It is the story of how those who did not subscribe to the dogmas of neoclassical economics, who believed that to start from unrealistic abstract assumptions was not the best way to build models of reality or of understanding behaviour, were driven out of the University, in a number of cases to pursue their research in the private sector. In many cases, they were highly successful in doing so, but to the detriment of economics in Cambridge and to the students who came to study there, attracted by the legacy of Keynes and a desire to understand how economies work and the factors underlying economic and social development. The book is a testament to the investigative skills of the author and his painstaking pursuit of how a shameful episode in Cambridge University history unfolded by uncovering and crawling through countless documents in various archives and interviewing a great many of those that were directly involved. Although it brings back painful personal memories, it is a story that is important to tell, to show how those who have gained academic power can dictate what can be taught, what research questions it is legitimate to try to answer and what methods can be used to do so.”

—TERRY WARD, Research Director, Applica srl. Brussels; Managing Director, Alphametrics Ltd. U.K.

Ashwani Saith is an Emeritus Professor at the International Institute of Social Studies, Erasmus University Rotterdam, and former Professor of Development Studies & Director, Development Studies Institute, London School of Economics.