Keynesian Economics The Search for First Principles By ALAN CODDINGTON Queen Mary College University of London I would like to acknowledge various forms of indebtedness in con nection with this paper: to, among others, Thanos Skouras, Alan Peacock, David Currie, and an anonymous referee of this journal for helpful comments on an earlier draft; to Michael Kennedy and Co- lette Bowe for indispensable guidance at various stages; and to the University of Manchester for the Hallsworth Fellowship in Political Economy, which made this work possible I. Introduction n The General Theory of Employment, method consisted of analyzing markets or Interest and Money [13, 1936]and else- the basis of the choices made by individual where, Keynes attacked a body of theory traders. Thus, the resulting theory oper that he designated"Classical "In posing ates at two distinct levels-that of in a threat to the"Classical"system-or at dividual choice, and that of market least to a recognizable caricature of it- phenomena-even though the connection Keynes also called into question the between the two levels may be provided method of analysis by which this system only by an analysis of the choices of a"rep- was constructed The purpose of this arti- resentative"trader. Moreover, in order to cle is to inquire into the various ways in provide a basis for a manageable analysis which methods of economic analysis have of market phenomena, the analysis of in- come to terms with this threat, either by dividual choice has to be of a particularly esponding to it or by reinforcing it with stereotyped and artificial kind. This tion: " What has to be changed or sacrificed based on choice theory of a type that al in order to accommodate Keynesian ideas lows the two levels to be connected i will within standard methods of analysis?"Its refer to as"reductionism, "on the grounds theme will be the variety of ways in which that the central idea is the reduction of this may be done: three broad types will market phenomena to (stylized)in- be presented and the contrasts between dividual choices them explored Considerations of tractability impose The first task accordingly is to charac- restrictions on the kind of choice theory terize the method of analysis of that body on which the market theory can be based of theory in opposition to which Keynes the theory cannot deal with choices in all presented his own. Very broadly, this the idiosyncratic detail in which actors 1258