Chapter 18 of the General Theory “Further Analysed”: The Theory of Economics as A Method
AbstractIn 1987, Greenwald and Stiglitz accused Keynes’s summary of the General Theory in chapter 18 of relying upon “neoclassical and Marshallian tools”. A number of contributions have on the contrary emphasized the methodological importance of this chapter, which this paper revisits in the light of A Treatise on Probability. It thereby shows that the notions of cause and dependence used to discuss the relationships between independent and dependent variables of the General Theory are related to the concept of “independence for knowledge”, which concerns logical connections between arguments rather than material connections between events. We demonstrate that such logical connections established in chapter 18 are rediscussed in chapters 19-21, where Keynes allows for probable repercussions between the factors and removes the simplifying assumptions previously introduced. After stressing the methodological continuity this method provides with the analysis of credit cycles in A Treatise on Money, we argue that chapter 18 is an indispensable tool to decode the internal text structure of the General Theory. We thus characterize the latter as a vademecum to the complex economic world, the author providing an analytical method allowing – and requiring – the readers to emulate his efforts to grasp the complexity and interdependence of the economic material.
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Bibliographic InfoPaper provided by SEMEQ Department - Faculty of Economics - University of Eastern Piedmont in its series Working Papers with number 128.
Date of creation: Mar 2011
Date of revision:
John Maynard Keynes; The General Theory; complexity; economic methodology;
Find related papers by JEL classification:
- B31 - Schools of Economic Thought and Methodology - - History of Economic Thought: Individuals - - - Individuals
- B41 - Schools of Economic Thought and Methodology - - Economic Methodology - - - Economic Methodology
- A10 - General Economics and Teaching - - General Economics - - - General
This paper has been announced in the following NEP Reports:
- NEP-ALL-2011-05-14 (All new papers)
- NEP-HME-2011-05-14 (Heterodox Microeconomics)
- NEP-HPE-2011-05-14 (History & Philosophy of Economics)
- NEP-PKE-2011-05-14 (Post Keynesian Economics)
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