quality:corruption
The Cambridge Circus

During World War II Keynes acted as adviser to HM Treasury again, negotiating major loans from the U.S., helping formulate the plans for the International Monetary Fund, the World Bank, and the International Trade Organisation at the 1944 Bretton Woods Conference, a package designed to stabilize world economy fluctuations that had occurred in the 1920s and create a level trading field across the globe. Keynes died little more than a year later, but his ideas had already shaped a new global economic order, and all Western governments followed the Keynesian economics program of deficit spending to avert crises and maintain full employment.

One of Keynes's pupils at Cambridge was Joan Robinson (1903–1983), a member of Keynes's Cambridge Circus, who contributed to the notion that competition is seldom perfect in a market, an indictment of the theory of markets setting prices. In The Production Function and the Theory of Capital (1953) Robinson tackled what she saw to be some of the circularity in orthodox economics. Neoclassicists assert that a competitive market forces producers to minimize the costs of production. Robinson said that costs of production are merely the prices of inputs, like capital. Capital goods get their value from the final products. And if the price of the final products determines the price of capital, then it is, argued Robinson, utterly circular to say that the price of capital determines the price of the final products. Goods cannot be priced until the costs of inputs are determined. This would not matter if everything in the economy happened instantaneously, but in the real world, price setting takes time – goods are priced before they are sold. Since capital cannot be adequately valued in independently measurable units, how can one show that capital earns a return equal to the contribution to production?

Alfred Eichner (1937–1988) was an American post-Keynesian economist who challenged the neoclassical price mechanism and asserted that prices are not set through supply and demand but rather through mark-up pricing.Eichner is one of the founders of the post-Keynesian school of economics and was a professor at Rutgers University at the time of his death. Eichner's writings and advocacy of thought, differed with the theories of John Maynard Keynes, who was an advocate of government intervention in the free market and proponent of public spending to increase employment. Eichner argued that investment was the key to economic expansion. He was considered an advocate of the concept that government incomes policy should prevent inflationary wage and price settlements in connection to the customary fiscal and monetary means of regulating the economy.

Richard Kahn (1905–1989) was a member of the Cambridge Circus who in 1931 proposed the Multiplier.

Piero Sraffa (1898–1983) came to England from Fascist Italy in the 1920s, and became a member of the Cambridge Circus. In 1960 he published a small book called Production of Commodities by Means of Commodities, which explained how technological relationships are the basis for production of goods and services. Prices result from wage-profit tradeoffs, collective bargaining, labour and management conflict and the intervention of government planning. Like Robinson, Sraffa was showing how the major force for price setting in the economy was not necessarily market adjustments.

John Hicks (1904–1989) of England was a Keynesian who in 1937 proposed the Investment Saving – Liquidity Preference Money Supply Model, which treats the intersection of the IS and LM curves as the general equilibrium in both markets.