According to Crotty (1994), the existence of social conventions generates ‘conditional stability’ in the system. Indeed, even in presence of fundamental uncertainty which undermines the decision-making process at the individual level, the macro-state of the system does not exhibit chaotic behavior as much as some degrees of ‘order and continuity’ (ibidem: 14). From a Post-Keynesian perspective, conventions can be thought of as a ‘structure of interdependent beliefs’ which results from interactions among agents and between the latter and the system itself. This calls for of the complexity-reflexivity framework, which can provide sound methodological foundations for Keynes’ analysis of ‘beauty contest’ (see Davis 2017) and thus the emergence of a social convention which supports in guiding their behavior. Shaikh’ formalization (2010) of the theory of reflexivity (Soros 2013) shows how a specific structure of market fundamentals could act as path-dependent gravitational center for actual and expected prices, thus conferring to the system a degree of conditional stability.

In the light of this premises, the aim of our paper is twofold. Firstly, we provide a theoretical and methodological investigation of the role of conventions as emergent phenomenonfrom a Post-Keynesian perspective. Drawing upon the notion of ‘general’ and ‘dynamic’ complexity (Simon 1962; Rosser 1999), we analyze Keynes’ (1936, Ch. 12) view of financial markets to show how social conventions generate a dialectical tension between the stability of individual expectations at the individual level and the potential instability of the macroeconomic structure. This calls for an interpretation of financial markets as dinamicallu complex systems (Sau 2013). Then, we adopt this framework to investigate the implications of monetary policy to stabilize the system. Tymoigne (2008) shows how the adoption of a ‘convention approach’ to policy making allows the central bank to intervene, and thus shape, a convention. Modenesi et al. (2013) strengthen this argument by appealing to the conventional nature of the long-term interest rate, that the monetary authority can affect through a credible monetary policy carried out by gradually altering the short-term rate of interest. The features of this theoretical framework could contribute to build a Keynesian macrotheory that envisages complex dynamics as a foundational element to understand the contemporary financial system.