The circuit approach has done much to reawaken interest in Keynes's monetary theory of production and to extend it in new directions. Yet, it appears to remain confined within the limits of the industrial circulation of Keynes's Treatise; it thus does not deal with the determination of investment goods prices nor can it deal with the differential determination of the prices of assets and liabilities introduced in the General Theory in terms of the marginal efficiency of capital and liquidity preference. Since the impor¬tance of money in Keynes's theory is intimately linked with these concepts, it leads us to conclude that circuit theory needs further development in order to capture Keynes's views on the dominance of money over the real sector in a capitalist economy.

Who Is the Prince of Denmark?

The Cambridge-based Keynesian theories of growth and distribution developed in the 1950s and 1960s were presented as extensions or ‘generalizations’ of Keynes's General Theory. While they were sharply criticized by neoclassical economists, their develop¬ment was also accompanied by ‘internal’ criticism which only became externally evi¬dent sometime after the ‘Cambridge Debates’ had come to be classified as a history of economic thought. The first of these internal criticisms was associated with neo-Ricard¬ian economists who emphasized the differences between capital theory based on the generalization of Keynes's General Theory and on Sraffa's Production of Commodities. The second came from American post Keynesians such as Davidson and Minsky, as well as from Austrian economists such as Ludwig Lachmann, who criticized the emphasis on static or steady-state analysis when it was the process of history that the theory was trying to explain. Both of these criticisms concerned the role of uncertainty and expec-tations in the theory, the former was critical because it was too great, the latter because it was too small.

A third line of criticism, usually, but not always linked to the second, came from economists who considered Keynes's revolution to have been primarily concerned with monetary theory and considered the long-run models of steady growth in which money played no active role as unacceptable, if not unKeynesian. They argued that Keynes's conception of liquidity should play a crucial role in long-period analysis or else such analysis should be abandoned.

I INTRODUCTION

One of the most perplexing facts in interpreting post-war developments of Keynes's theory is his comment on Hicks's now-famous ‘Mr Keynes and the Classics’. Although Hicks himself has in recent years become critical of the uses to which his IS–LM appa¬ratus has been put, he still stands by it as representing the essence of Keynes's theory and supports his contention by reference to what he interprets as Keynes's tacit agree¬ment with the contents of his 1937 paper: ‘Keynes accepted the IS–LM diagram as a fair statement of his position’ (Hicks, 1977, p. 146).

The present chapter has two goals. The first is to assess Keynes's pointed criticism of the representation of the rate of interest upon which Hicks's 1937 paper was based. The second is to attempt an explanation of IS–LM which might be interpreted as a ‘fair representation’ of Keynes's theory. These two goals permit discussion of what I believe to be the most often overlooked aspect of Keynes's theory, the indissoluble rela¬tion between the multiplier and the liquidity preference explanation of money prices.

II KEYNES's CRITICISM OF ‘MR KEYNES AND THE CLASSICS’

The careful reader of Keynes's comments in his exchange of letters with Hicks (CW, XIV: pp. 74ff.) will note two points. Hicks centred his comparison of Keynes and the Classics on the effect of an increase in expenditure on the rate of interest. What Hicks calls ‘Mr Keynes's special theory’, ‘yields the startling conclusion that an increase in the inducement to invest, or in the propensity to consume, will not tend to raise the rate of interest, but only to increase employment’ (Hicks, 1982, p. 107). Keynes comments on this characterisation of his position:

Introduction

Migrants who came to Denmark in the 1960s and the 1970s mainly sought work there. Danish society hastily recruited a workforce from other countries (Jørgensen and Thomsen, 2013). Some of these laborers originated in Turkey, the former Yugoslavia, and Pakistan. As many of them were unskilled, they were employed in factories. In addition, both migrants and Danish society expected migrants to eventually return to their homelands as soon as their contracts terminated. Over time, however, destiny took its course as the so-called guest migrants, many of whom were young men, interacted with the Danes and gradually learned the language and culture. Some even intermarried with the Danes (Rytter, 2010). Furthermore, Danish volunteers also facilitated migrants’ learning basic Danish and assisted them in overcoming minor administrative and technical hurdles in society. At the time, Danish generosity mainly consisted of private undertakings, including people volunteering for mentoring tasks for migrants to adjust and become part of society. In this period, society did not fully develop institutional platforms for migrant and refugee education (Pedersen and Smith, 2001). Those who want to learn the language and society will have to do so on their own. The political situation was comparatively more relaxed and flexible. Similar to other European societies, Danish society needed labor to reconstruct the country after World War II. One obvious option is to recruit an additional workforce from abroad. Due to politically collaborative policies and diverting strategies, the Danes managed to save their country and society from German destruction (Dethlefsen, 1990). The open migration policy situation changed later, particularly when there was a lesser economic boom due to oil and other economic fluctuations and crises (Nannestad, 2004).

Eventually, most male migrants sponsored their wives to join them in Denmark. Consequently, Turks, Pakistanis, and other migrants have established permanent transnational communities, thereby becoming integrated into Danish society. Their children and grandchildren went to school and became more integrated into society as well as in the wider Danish system. Scholars find that communities, such as the Turks and the Pakistanis, have successfully tackled emerging social and political situations in multiple ways (Rytter, 2013).

In this important study, Dr. A. Osman Farah offers us rich descriptions and insightful theorization and conceptualization of dynamics of transnational political and civic mobilization in Aarhus, Denmark. Describing the manifold creative and critical works of AarhusSomali, a transnational civic body consisting of local people of Denmark and refugees and migrants from Somali, Farah also presents us with wider challenges of theories and practices of transnationalization and the limits of nation-state-centric approaches and organization of self, society, and polity now. Farah is a creative activist and scholar who embodies the vision and practice of scholar-activists. This book is an important contribution to this much-needed genre of scholarship in transnational studies and the wider fields of social science and humanities.

In this book, Farah offers us many valuable insights. He writes, for example, how “contemporary transnational societies often quest to overcome objectified nation-state enclosures, often from below. However, such societal processes remain neither static nor conclusive. From non-artificial platforms in the form of human-community-centric transnationalizations, with continuing dynamics of social and political exchanges and modifications, transnational community activities represent an end on their own terms” (p. 34). He also tells us how “In pragmatic terms, communities engage local, national, and transnational platforms through creative platforms, departing from the local contexts in the host society in gradual expansion to other platforms across nations and states.” Transnational civic mobilizations resist repatriation of some Somalis to Somalia. They also contribute to local public policy formation though challenges remain as the local political and administrative leadership have sometimes apriori prejudiced regarding people from Somalia, which came out starkly during the COVID-19 outbreak when the mayor of Aarhus tried to target the local Somali community as sources of spread. AarhusSomali creatively worked to dispel such misinformation and create a positive environment. The problem of Islamophobia is a major challenge in the world today including in Denmark. Here AarhusSomali tries to create conditions for more holistic realization of paths of Islam as well as improving the community image of the Somalis. Farah writes: “In improving the community's image, ArhuSomali engages multiple fronts, both in the form of bonding within the community and the cross-ethnic way of bridging with other communities.” Farah also tells us: “Ordinary people now know more about Islam and the Muslim communities” (p. 88).

This is the term used by Keynes in his General Theory (1936 ) to represent the forces deter¬mining changes in the scale of output and employment as a whole. Keynes attributed the first discussions of the determinants of the supply and demand for output as a whole to the classical economists, in particular the debate between Ricardo and Malthus con¬cerning the possibility of ‘general gluts’ of commodities, or what has come to be known as Say's Law of Markets. Indeed, Keynes's theory was intended to replace Say's Law, although the emergence of effective demand from his Treatise on Money (1930) critique of the quantity theory of money, and his insistence on its application in what he origi¬nally called a ‘monetary production economy’, suggests that it should also be seen in antithesis to classical monetary theory. For Adam Smith (1776, p. 285), ‘A man must be perfectly crazy who … does not employ all the stock which he commands, whether it be his own or other peoples’ on consumption or investment. As long as there was what Smith called ‘tolerable security’, economic rationality implied that it was impossible for demand for output as a whole to diverge from aggregate supply. Although Smith (p. 73) did call the demand ‘sufficient to effectuate the bringing of the commodity to the market’, the ‘effectual demand’ ‘of those who are willing to pay the natural price’ of the commodity, the idea referred to divergence of market from natural price of particular commodities and the process of gravitation of prices to their natural values. J.B. Say's discussion of the problem of the ‘disposal of commodities’ adopted Smith's position. Against those who held that ‘products would always be abundant, if there were but a ready demand, or market for them,’ Say's ‘law of markets’ argued ‘that it is production which opens a demand for products’ (1855, pp. 132–3); if production determined ability to buy, then demand could not be deficient. While excesses in particular markets were admitted, they would always be offset by deficiencies in others.

Introduction

With policies of forced expulsion and repatriation, Danish authorities introduce a “limbo-status” for refugees who already suffer from diverse forms of displacements and persecutions (Gade, 2022). For the Danish government, refugees are not legitimate asylum seekers, and they deserve repatriation to their countries—that Danish authorities assume are becoming more stable and will accept them back. In this regard, the government signs informal (not often public) agreements with ruling regimes in some African countries.

In contrast, communities and their networks consider refugees legitimate asylum seekers qualifying for protection. These are people who argue that they flee from ongoing conflicts and civil wars. Forced repatriation will, therefore, insist, lead to additional suffering from violence, if not worse. While the first proclamations and activities take place within the state-society policy framework, the latter occur within the dynamics of transnational and global civil society. Even the refugees themselves, though struggling under a stressful limbo, remain part of these formal and informal global encounters, networking, and connections. To verify such tendencies and structural formations, Saskia Sassen contended the following:

Similarly, Wright Mills argues that what we often consider as specific micro personal or group problems might well represent general macro-society challenges (Mills, 2010). For instance, the suffering of displaced and powerless asylum seekers and refugees following society and state exclusion might, in the short term, provide certain voter popularity and electability to certain political parties, both in the host and homeland states. However, in the long term, expanding restrictions through negligible populism might negatively affect societies negatively (Petersen, 2005). The challenge is that refugees suffer not because they themselves did something wrong, but because there is a societal and structural process that forces refugees to flee and seek protection from wherever they could get.

Introduction

In 2020, three presidential families in Kenya—the Kenyattas, Mois, and Kibakis—ranked among the richest 20 families in the country. This reality, according to Alexia Rij (2021), is a product of the country's entrenched neo-patrimonial regime that dates back to colonialism. The characteristic feature of this type of regime is the conflict of public and private interests, with the latter taking precedence over the former, resulting in the elite accumulating wealth through various corrupt practices: “Although the features and forms of corruption have changed over time, the underlying logic persists while becoming more complex” (Rij 2021: 9). In an inadvertent acknowledgment of the entrenched nature of corruption in Kenya, President Uhuru Kenyatta asserted, in January 2021, that KES 2 billion is stolen daily from national coffers (Muriuki 2021). The fact that corruption in Kenya has reached epidemic proportions is beyond question. In the 1960s and 1970s, bureaucratic corruption manifested itself in bureaucrats’ demands for kickbacks valued at around 10 percent of the total cost of a public tender, development project, or whatever goods or services were under procurement. By the 1980s and 1990s, the rates had escalated to around 40 percent. Under the Uhuru–Ruto dispensation in Kenya (2013–22), the rates maxed out to 100 percent! (Nasong’o 2020). This is the situation where, for instance, a development project is conjured up, it is costed, awarded, and paid for, but nothing is done. The exemplification of this is the Kimwarer and Arror dams project scandal in which billions were paid out for nothing (Some 2019; Standard Digital Team 2019). Alternatively, public funds are simply withdrawn from bank accounts and directly pocketed by public officers, a most brazen form of corruption that was amplified by the investigative report in 2020 on the financial shenanigans at Maasai Mara University (Muia 2020). In view of the epidemic levels corruption had reached in Kenya, a national conference on corruption was convened in January 2019 at the Bomas of Kenya. At the conference, President Uhuru Kenyatta asserted that the government would relentlessly pursue high-profile cases already in the courts and launch a crackdown to ensure all corrupt persons are held accountable.

Introduction

In modern societies, including democracies, a substantial gap exists between the public and civic-private spheres (Bird, 2016). In a much more aggravated form, such cleavages remain integral to the daily lives of transnational communities (ethnic groups with persistent transnational ties) (Schiller, 2018). These communities are often excluded from their position of influence, particularly in public institutions. In addition, they often endure recurring discursive public assaults, leading to internal and external social and political enclosures with disempowering tendencies. At the same time, they are formally subordinate to distant bureaucratic public institutions (Brodkin and Majmundar, 2010).

Paradoxically, although such binary relationships prevail, the dynamics within and around authority-community encounters and connections generate a dialectical relationship in which involved actors separately and collectively contribute to the formation of alternative social and political understandings and even collaborations.

Recent media debates and interactions, in connection with a controversial COVID-19 prevention case in the Danish city of Aarhus, illustrate the potentiality of reevaluating the often-static, pregiven conceptions of the relationship between public authorities and transnational communities.

From the currently competing global public debates, two main ideas on the COVID-19 pandemic seem to persist, particularly in relation to the explanations of the origin and spread of the virus. The first is the optimistic view that the virus is an all-encompassing natural and biological phenomenon. This reflection suggests that, with sincere effort and patience, humans will eventually and collectively overcome the latest trial. The second pessimistic turn connects the virus to societies and ethnicities (Verghese and John, 2020). This argument revolves around the point at which such societies not only represent the core source of the origin of the virus but also constitute its main spreading factor. This proposition encourages the increased control and discipline of such states, societies, and groups. However, evidence shows that the current pandemic remains unpredictable and impacts all societies regardless of background and status (Hepburn, 2020). This is close to what Jeffrey Alexander once suggested as “collective social trauma, which could unleash multiple conflicting social and political frames, claims, and contestations” (Alexander, 2013). In addition, the pandemic and ensuing debates remind us, as concerned inhabitants within this world, of the persistence of human vulnerabilities and diversities, as well as the prevailing universality—often forgotten or denied in the public discourse.

Introduction

In recent years, certain Danish politicians, comprising populists, liberals, and even social democrats, amplified by their voter constituencies, portrayed inhabitants as refugees and migrants as an alien group of people whose preoccupation with the construction of identity-based parallel societies might undermine Danish society culturally as well as its identity of national homogeneity. Populists have added that such migrant subversive societies emphasize their own specific culture and ethnicity, thereby establishing their own specific traditions and norms. In return, increasingly, it is not just segregating and isolating diverse ethnic communities from mainstream Danish society. Some even suggest that reluctant migrant societies could evolve into positions in which they could pose a national cultural threat to the well-being of society.

Similar cases from studies on Dutch politicians and how they portray migrants in demanding top-down cultural assimilation, Suvarierol (2012) identifies a relational process in which a kind of “nation-freezing” emerges:

Although societies have debated the dynamics of cultural belonging or not belonging for centuries, in recent times, following Huntington's well-known thesis of cultural and civilization clash following the end of the Cold War, diverse forms of political identity assertions, formations, and struggles have emerged. In relation to the specific debates on ethnic cultural formation and consolidation—particularly where and with whom migrants belong—the concept of cultural belonging and related images have since attained greater significance and priority in mainstream discourse, including in society.

Unlike other postwar interpretations, the Post Keynesian approach starts with a “mon¬etary” theory of production. Keynes introduced this terminology to emphasize the fact that money was not a “veil,” but a “real” factor determining production decisions in a modern economy. Not only was this approach innovative in its treatment of money, it built on Keynes’ original formulations of a number of basic propositions in the theory of finance. In addition to the well-known “finance motive,” Keynes employed his original theory of interest rate parity and carried out his analysis in terms of forward, futures, and options contracts. Economists working in the Keynesian tradition have usually cho¬sen to ignore these aspects of Keynes’ work, while finance theorists have incorporated them into their basic theory and instead concentrate on Keynes’ approach to probabil¬ity, dismissing it as based on a “subjective” approach.

This essay calls attention to Keynes’ contributions to the modern theory of finance that might serve in the development of a Post Keynesian approach to finance. Three areas are highlighted. The first is the treatment of expectations, and inevitably, the relationship between risk and uncertainty. The second is the importance of this diverse approach to expectations for the determination of prices, in particular of financial assets. The third is the reciprocal of the theory of asset price formation as found in the theory of interest, and in particular the explanation of the yield curve.

The theory of monetary production: the influence of changing views about the future

The characteristic feature is that “changing ideas about the future” have a determi¬nant influence on present decisions. The first requirement for a theory of monetary production is thus specification of the way the “changing ideas about the future” are formulated.

Introduction

In African fables and folktales, people depict the lion as an undeniable king and as the most dominant and intimidating creature in nature. The lion asserts a fierce hierarchy imposed upon less powerful creatures. Such unequal relationships often ensure that the lion has access to and monopolizes the highest and most invaluable spaces and resources. However, other smaller, smart creatures often bypass and resist outright submissions to domination. Though remaining anxious and fearful of a reckless confrontation with the superordinate by not willingly trespassing the lion's demarcations, certain creatures, individually or collectively, mobilize resources for perseverance. Occasionally, the lion demands not only an unbalanced share of bounties but also additional requirements for sustaining the imbalance, hereunder the caring of domination entitlements. In one occasional encounter, a lion got sick and was called homage by other creatures. Among other things, the fox refrained from complying with this disposition. When the lion inquired about sidestepping, the fox responded, “I would have come straight away, if I did not see a lot of tracks going in but none coming out.” Though the powerful might often designate and accumulate a “lion's share” of collective resources, actual unintended processes intervene within a complex dialectical relationship—including potential reluctance and scrutiny from often subordinate constituents.

The application of an animal analogy illustrating existing struggles and perseverance under imbalanced power relationships might seem superficial and exaggerated in comparison to the realities of the lives of transnational communities. However, all living creatures exist in situations of inequalities and subordination, resting on differences in power, unfair distributions, and the potential scarcity of resources. According to Aristotle and other classics, humans are thinking political animals (Willingham and Riener, 2019). For Arendt and other modern political theorists, the social animal conception fits the human condition better (Arendt, 2013). Others have modified such propositions by portraying humans as linguistic animals (Steiner, 2008). More recently, postmodern critical scholars profiled humans not just as thinking, social, political, and linguistic creatures but also probably as a city and urbanized sociopolitical agents (Derrida, 2008). It is certain that humans combine and balance the natural side of their beings with the ethical and moral dimensions of their existence. On the one hand, within such complexities, desires, unguided energetic impulses, and sometimes aggressions might sustain the human quest for power and prestige.