IDEAS home Printed from https://ideas.repec.org/a/taf/revpoe/v23y2011i4p503-519.html
   My bibliography  Save this article

The Enduring Importance of The General Theory

Author

Listed:
  • G. C. Harcourt
  • Peter Kriesler

Abstract

This 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.

Suggested Citation

  • G. C. Harcourt & Peter Kriesler, 2011. "The Enduring Importance of The General Theory," Review of Political Economy, Taylor & Francis Journals, vol. 23(4), pages 503-519, October.
  • Handle: RePEc:taf:revpoe:v:23:y:2011:i:4:p:503-519
    DOI: 10.1080/09538259.2011.611616
    as

    Download full text from publisher

    File URL: http://hdl.handle.net/10.1080/09538259.2011.611616
    Download Restriction: Access to full text is restricted to subscribers.

    As the access to this document is restricted, you may want to search for a different version of it.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:taf:revpoe:v:23:y:2011:i:4:p:503-519. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Chris Longhurst). General contact details of provider: http://www.tandfonline.com/CRPE20 .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.