The Enduring Importance of The General Theory
AbstractThis paper examines some features of The General Theory that remain relevant 75 years after its publication. Keynes showed that even in a competitive economy with perfectly flexible prices, wages and interest rates, market prices could not guarantee full employment and that the achievement of full employment would only be a fluke. In other words, he showed that there was no natural mechanism to drive the economy to full employment, and that the level of employment was determined by effective demand rather than by the wage rate. He demonstrated this by using a method that stressed the relationship between cause and effect in determining key variables and relations in the economy. Keynes demonstrated that monetary variables affected real variables, and real variables affected monetary ones, in both the short run and long run. This can be contrasted with mainstream theory, where the long-run neutrality of money remains a key result. The paper proposes a rehabilitation of Keynes's analysis of the supply and demand for money—away from its original role in explaining domestic monetary influences and towards providing an analysis of supply and demand for international money.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoArticle provided by Taylor and Francis Journals in its journal Review of Political Economy.
Volume (Year): 23 (2011)
Issue (Month): 4 (October)
Contact details of provider:
Web page: http://taylorandfrancis.metapress.com/link.asp?target=journal&id=102233
You can help add them by filling out this form.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Michael McNulty).
If references are entirely missing, you can add them using this form.