The General Theory of Employment, Interest, and Money

The General Theory of Employment, Interest, and Money

John Maynard Keynes

Language: English

Pages: 403

ISBN: 0156347113

Format: PDF / Kindle (mobi) / ePub

Keynes profoundly influenced the New Deal and created the basis for classic economic theory. “I can think of no single book that has so changed the conception held by economists as to the working of the capitalist system” (Robert L. Heilbroner). Index.















another. In what follows it will be convenient, as a rule, to omit 2 and write for the aggregate sales of all kinds, Aj for the aggregate sales from one entrepreneur to another and for the aggregate user costs of the entrepreneurs. Having now defined both income and consumption, the definition of saving, which is the excess of income over consumption, naturally follows. Since income is - u and consumption is equal to equal to - U. Similarly, it follows that saving is equal to t we have net saving

depreciation in the price of securities and other assets. For if a man is enjoying a windfall increment interest, in the value of his capital, it is natural that his motives towards current spending should be strengthened, even though in terms of income his capital is worth no more than before; and weakened if he is suffering capital But this indirect influence we have allowed for losses. Apart from this, the main already under (3) above. conclusion suggested by experience is, I think, that the

much in excess of any present requirements for expenditure on repairs and renewals, a tendency which has been accentuated, where the investment has been made by local authorities and public boards, by the principles of "sound" finance which often require sinking funds sufficient to write off the initial cost some time before replacement will actually fall due; with the result that even if private individuals were ready to spend the whole of their net incomes it would be a severe task to restore

writes, 2 "is that rate which, employed in computing the present worth of all the costs and the present worth of all the returns, will make these two equal." Professor Fisher explains that the extent of investment in any direction will depend on a comparison between the rate of return over cost and the rate of interest. To induce new investment "the rate of return over cost after allowing shall see in — 1 But was he not wrong in supposing that the marginal productivity theory of wages is

largely govern marginal prime Thus if money-wages change, one would have cost. expected the classical school to argue that prices would change in almost the same proportion, leaving the real wage and the level of unemployment practically the same as before, any small gain or loss to labour being at the expense or profit of other elements of marginal cost which have been left unaltered. 1 They seem, however, to have been diverted from this line of thought, partly by the settled conviction that

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