John Maynard Keynes and Alvin Hansen: Contrasting methodologies and policies for social economics
Contrasts the methodologies and policy implications of the respective theories of John Maynard Keynes and Alvin Hansen. Keynes used a rationalistic epistemology and deductive logic to deduce a pure theory of employment which implied that monetary policy would be an appropriate remedy for unemployment. Hansen used an empirical epistemology and inductive logic to formulate an applied theory of employment which explained the causes of the Great Depression in the USA. Hansen's theory of secular stagnation implied that a compensatory fiscal policy would be an effective remedy for unemployment. The respective theories of Keynes and Hansen are complementary, rather than contradictory; therefore, social economists should utilize both of these theories under appropriate circumstances.