Keynesianism and U.S. Economic Transformation

Hiroaki Hayakawa reinterprets Keynesianism as a structural framework shaped by institutional and heterodox economics, arguing it is essential for understanding financialization, market concentration, and democratic erosion in advanced economies.

Hiroaki Hayakawa· Review of Economic Analysis· 2026· DOI 10.15353/rea.v18i1.6580

The core problem

The paper presents a historically grounded reinterpretation of Keynesianism within the context of U.S. economic development and global capitalist transformation. It traces the evolution of Keynes's core insights into a form of **structural Keynesianism**, shaped by institutionalism, post-Keynesian and new Keynesian economics, and broader heterodox traditions. This evolution unfolded through successive global-scale crises amid accelerating technological change and the rising concentration of economic power. The central argument is that these dynamics facilitated rent-seeking, regulatory capture, and elite entrenchment, undermining democratic governance and exacerbating inequalities in income, wealth, and labor power.

The paper employs a synthesis of institutional, geopolitical, and macroeconomic analyses. It engages critically with competing schools of thought, including monetarism, rational expectations, supply-side economics, and computational macroeconomics. The approach is historically grounded, tracing the transformation of Keynesian ideas through successive global crises and technological shifts. By integrating heterodox traditions, the author develops structural Keynesianism as an analytical framework to examine advanced economies characterized by financialization, market concentration, globalization, and shifting geopolitical constraints.

Introduction

The paper presents a historically grounded reinterpretation of Keynesianism within the context of U.S. economic development and global capitalist transformation. It traces the evolution of Keynes's core insights into a form of **structural Keynesianism**, shaped by institutionalism, post-Keynesian and new Keynesian economics, and broader heterodox traditions. This evolution unfolded through successive global-scale crises amid accelerating technological change and the rising concentration of economic power. The central argument is that these dynamics facilitated rent-seeking, regulatory capture, and elite entrenchment, undermining democratic governance and exacerbating inequalities in income, wealth, and labor power.

The paper advances structural Keynesianism as an essential framework for understanding advanced economies increasingly characterized by financialization, market concentration, globalization, and shifting geopolitical constraints. It argues for rethinking economic governance beyond demand management toward institutional reform and democratic accountability. The discussion highlights the need to address the root causes of inequality and democratic erosion, including the concentration of economic power and the capture of regulatory institutions. By synthesizing institutional, geopolitical, and macroeconomic analyses, the paper offers a comprehensive approach to reimagining economic policy in the face of contemporary challenges.

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