Have the Early Coordination Failures Models Achieved Keynes's Programme ?

The aim of this paper is to assess how three seminal coordination failure models (Diamond ([1982] [1991]), Howitt [1985] and Roberts [1987]) have fared against ?Keynes?s programme?. The first part of the paper characterises Keynes?s programme as consisting of the following four objectives: (a) demonstrating the existence of involuntary unemployment, (b) demonstrating that wage rigidity can be exonerated as its cause, (c) giving a general equilibrium interdependency explanation of the phenomenon within a perfect competition framework, and (d) demonstrating that demand stimulation is the proper remedy to suppress involuntary unemployment. In a second part, I claim that no correct assessment of Keynes?s programme can be made without drawing a distinction between involuntary unemployment and underemployment. These prerequisites being settled, in part three I undertake the study of the three models to conclude that none of them succeed in achieving Keynes? programme in its entirety. In the last part of the paper, I raise the issue as to whether Keynesian economists should continue to fight for the involuntary unemployment concept.