The Crisis in Keynesian Theory over the Incompatibility of Rising Inflation Coupled with Rising Unemployment Was Resolved by Ignoring It

There were several responses among mainstream economists to the intellectual crisis associated with the demise of Orthodox Keynesianism. One such response was the growing popularity of Post-Keynesian economics. In many respects, this response was a return to the most primitive version of Keynesian economics, wherein output determination is the subject of economic analysis, but money-wage and price-level movements are seen as sociologically determined (in a tussle over the distribution of income). Hence, the crisis in Keynesian theory over the incompatibility of rising inflation coupled (sometimes) with rising unemployment was resolved by ignoring it, in effect, through seeking refuge in what is really a noneconomic theory of inflation.

--Don Bellante, "The Fork in the Keynesian Road: Post-Keynesians and Neo-Keynesians," in Dissent on Keynes: A Critical Appraisal of Keynesian Economics, ed. Mark Skousen (New York: Praeger Publishers, 1992), 122.