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The Generalisation of the General Theory

In: The Generalisation of the General Theory and other Essays

Author

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  • Joan Robinson

Abstract

Keynes’ General Theory of Employment is an application to output as a whole of the analysis developed by Marshall of the short-period equilibrium of a particular industry. In a typical Marshallian short period, demand for a commodity (for example, fish1) has recently risen and is expected to remain at its new level. Output is limited for the time being by the existing capital equipment of the industry (trawlers). Competition prevails and the price of the commodity is equal to marginal costs to the firms concerned. Marginal costs are rising sharply as demand strains against the limits of capacity. Marginal cost, and therefore price, exceeds average cost, and profits (quasi-rents) stand at a level which causes the firms already in the industry to place orders for more capital equipment, and induces new firms to enter the market. This corresponds, when extended to output as a whole, to a situation where prospective profits are inducing a level of investment which keeps effective demand at a satisfactorily high level.

Suggested Citation

  • Joan Robinson, 1979. "The Generalisation of the General Theory," Palgrave Macmillan Books, in: The Generalisation of the General Theory and other Essays, edition 0, pages 1-76, Palgrave Macmillan.
    • Handle: RePEc:pal:palchp:978-1-349-16188-1_1
    DOI: 10.1007/978-1-349-16188-1_1
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    Citations

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    Cited by:

    1. Fernando Zarzosa Valdivia & Maximiliano Micheli, 2020. "The random forest path of real exchange rate misalignments. The Argentinean case," Asociación Argentina de Economía Política: Working Papers 4429, Asociación Argentina de Economía Política.
    2. Claudia Heller, 2003. "Technical progress in Joan Robinson's view: an attempt at systematisation and formalisation," Review of Political Economy, Taylor & Francis Journals, vol. 15(4), pages 521-544.
    3. Massimo Pivetti, 2019. "On Interest as a Monetary Phenomenon and the ‘Best’ Interest-rate Policy," Bulletin of Political Economy, Bulletin of Political Economy, vol. 13(2), pages 167-187, December.
    4. Alessandro Giovannini & Maurizio Iacopetta & Raoul Minetti, 2013. "Financial Markets, Banks, and Growth : Disentangling the links," Revue de l'OFCE, Presses de Sciences-Po, vol. 0(5), pages 105-147.
    5. Tapia, Jose, 2015. "Profits encourage investment, investment dampens profits, government spending does not prime the pump — A DAG investigation of business-cycle dynamics," MPRA Paper 64698, University Library of Munich, Germany.
    6. Massimo Pivetti, 2007. "Distribution, Inflation and Policy Analysis," Review of Political Economy, Taylor & Francis Journals, vol. 19(2), pages 243-247.
    7. Ichiro Takahashi & Isamu Okada, 2020. "An artificial Wicksell–Keynes economy integrating short-run business cycle and long-term cumulative trend," Journal of Economic Interaction and Coordination, Springer;Society for Economic Science with Heterogeneous Interacting Agents, vol. 15(4), pages 953-998, October.
    8. Greg Hannsgen, 2012. "Fiscal Policy, Unemployment Insurance, and Financial Crises in a Model of Growth and Distribution," Economics Working Paper Archive wp_723, Levy Economics Institute.
    9. Halil D. Kaya, 2021. "The Impact Of The 2008 Global Crisis On The Efficiency Of The Financial System," Annals - Economy Series, Constantin Brancusi University, Faculty of Economics, vol. 5, pages 86-97, October.
    10. Mpabe Bodjongo, Mathieu Juliot, 2012. "Infrastructures institutionnelles et développement financier en zone CEMAC [Institutional infrastructures and financial development in zone CEMAC]," MPRA Paper 37824, University Library of Munich, Germany.
    11. Omar F. Hamouda, 2012. "The General Theory: Seventy-Five Years Later," Chapters, in: Thomas Cate (ed.), Keynes’s General Theory, chapter 12, Edward Elgar Publishing.
    12. Isabel Sainz-Fernandez & Begoña Torre-Olmo & Carlos López-Gutiérrez & Sergio Sanfilippo-Azofra, 2018. "Development of the Financial Sector and Growth of Microfinance Institutions: The Moderating Effect of Economic Growth," Sustainability, MDPI, vol. 10(11), pages 1-16, October.
    13. Roberto Marchionatti, 2003. "Dealing with Complexity: Marshall and Keynes on the Nature of Economic Thinking," Palgrave Macmillan Books, in: Richard Arena & Michel Quéré (ed.), The Economics of Alfred Marshall, chapter 3, pages 32-52, Palgrave Macmillan.
    14. Ichiro Takahashi, 2021. "An Artificial Wicksell—Keynes Macroeconomy," Springer Books, Springer, number 978-981-16-6839-5, December.
    15. Fatima Zahra Bendriouch & Harit Satt & Mohamed M hamdi, 2020. "Do Islamic Banks Contribute to Economic Growth? Evidence from the GCC Countries," International Journal of Economics and Financial Issues, Econjournals, vol. 10(5), pages 352-360.
    16. Victoria Chick, 2013. "The future is open: on open-system theorising in economics," Chapters, in: Jesper Jespersen & Mogens Ove Madsen (ed.), Teaching Post Keynesian Economics, chapter 3, pages 56-72, Edward Elgar Publishing.
    17. Ichiro Takahashi, 2021. "Market Mechanism: Stabilizing or Destabilizing?," Springer Books, in: An Artificial Wicksell—Keynes Macroeconomy, chapter 0, pages 1-20, Springer.
    18. Efe Can KILINÇ & Cafer Necat BERBEROĞLU, 2019. "The Relationship Between Saving, Profit Rates and Business CyclesAbstract:There are different approaches of economics schools on the sources, causes and determinants of business cycles. These approach," Sosyoekonomi Journal, Sosyoekonomi Society.
    19. Halil D. Kaya, 2021. "The Impact Of The 2008 Global Crisis On The Depth Of The Financial System," Annals - Economy Series, Constantin Brancusi University, Faculty of Economics, vol. 5, pages 5-18, October.
    20. Greg Hannsgen, 2014. "Fiscal Policy, Chartal Money, Mark-up Dynamics and Unemployment Insurance in a Model of Growth and Distribution," Metroeconomica, Wiley Blackwell, vol. 65(3), pages 487-523, July.
    21. repec:hal:spmain:info:hdl:2441/6o65lgig8d0qcro9p14jk1001 is not listed on IDEAS
    22. Bianchi, Benedetta, 2018. "Structural credit ratios," ESRB Working Paper Series 85, European Systemic Risk Board.

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