Abstract
How did Keynes proceed from A Treatise on Money (hereafter the Treatise) to the General Theory? What was it that enabled him to change from the world of the former to that of the latter, and where exactly is the change to be located? These questions are crucial in understanding the Keynesian Revolution, and many interpretations have consequently been put forward. In our view, however, they lack the groundwork of thorough investigation. The present paper seeks to answer these questions convincingly with a new interpretation.
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Notes
- 1.
The present author’s understanding of Keynes’s achievement, with regard to the Treatise and the General Theory, differs from Leijonhufvud’s. In consequence, although the discussion here covers the same historical ground as Leijonhufvud (1981a), it provides a different analysis of the Wicksell Connection. This is examined in Hirai (1997–1999, Chapters 3 and 7). See also Chiodi (1991) and Laidler (1991).
- 2.
- 3.
See Hirai (1997–1999, Chapter 8).
- 4.
See Hirai (1997–1999, Chapter 15).
- 5.
This is our basic understanding of the General Theory, in contrast with the stance viewing the General Theory exclusively in terms of the second aspect.
- 6.
For details, see Hirai (1997–1999, Chapter 15 (2)).
- 7.
JMK.y—here 13—means The Collected Writings of John Maynard Keynes, Vol.y—here 13. See References.
- 8.
This methodology is developed in Chapter 4 of the General Theory.
- 9.
For a similar line of thought, see GT, pp.42 and 286.
- 10.
See JMK.13, p.403.
- 11.
This leads to the argument in GT, pp.139–140.
- 12.
For the first time he defined a supply schedule along these lines.
- 13.
See Hirai (1997–1999, Chapter 10, Section 2).
- 14.
This idea appeared for the first time in “Notes on the Definition of Saving” (JMK.13, pp.275–289. Esp. 276), enclosed in Keynes’s letter to Robertson of 22 March 1932.
- 15.
Referring to the relation between income and consumption in connection with the stability condition for P1, Keynes does not explicitly delineate the relations between saving, consumption, and income.
- 16.
A similar description appears at GT, p.250.
- 17.
- 18.
See JMK.29, pp.62–66, and Hirai (1997–1999, Chapter 10).
- 19.
Rymes, 1988, A-1–A-52, D-2–D-22, and I-1–I-28. We also have Rymes’s reconstruction (Rymes 1989, pp.47–84).
- 20.
See JMK.13, p.381 and Hirai (1997–1999, Chapter 8, Section 2).
- 21.
This means Mr X’s—here Tarshis’s—notes transcribed by Rymes.
- 22.
This might relate to MTP. See JMK.13, pp.382–387.
- 23.
The diagram appears in Bryce’s notes (Rymes 1989, A-29).
- 24.
“Suppose we have [the] case where everybody wants to hold” (Rymes [Bryce] 1989, A-29). See also JMK.13, pp.422, and 424.
- 25.
“Historical Retrospect” (JMK.13, pp.406–408) precedes this. Malthus, Hobson, and Douglas are yet to be mentioned.
- 26.
Keynes’s reference to “effective demand” and “Malthus” is brief. Kates (1998, p.140) regards the last lecture as decisive, stressing Keynes’s reading of Malthus’s letters.
- 27.
Our view of the role played by Kahn is in the same direction as Marcuzzo (2002b), although she states that, accepting Kahn’s theory by the summer of 1932, Keynes developed an aggregate supply-aggregate demand analysis and regards the lectures at the Harris Foundations and MTP as belonging to the General Theory world. On the other hand, Patinkin (1993, p.651) underestimates the importance of Kahn (1931).
- 28.
The “Manifesto” (JMK.29, pp.42–45) and some related letters (JMK.13, pp.376–380 and JMK.29, pp.46–47) are worth noting. See Hirai (1997–1999, Chapter 8, Section 3). The relation of “Mr Meade’s relation” to Kahn’s multiplier is clarified by Meade (1993). Robinson (1933a, p.24) criticizes Keynes’s position in the Treatise. See also Moggridge’s comments (JMK.13, p.340). Bridel (1987, pp.155–156) regards Robinson (1933a) itself as confined within the Treatise theory.
- 29.
This point is stated by Kahn both in his letter to Patinkin dated 11 October 1978 and on p. 11 of the typescript of Kahn (1984, the fourth lecture), for which see Patinkin (1993, p.659). Keynes (1939) refers to the same thing. Kahn (1984, pp.99–100) argues that because his 1931 article is not free from the Treatise, it fails to put sufficient stress on the supply-demand theory as a whole.
Bridel (1987) does not refer to “the standard supply-demand analysis”, although he points out, as the crux of Kahn’s paper, the disposition of the “Treasury View”, and a precise formulation of the multiplier (1987, p.153). Bridel, however, is rather critical of Kahn (1931), saying that it belongs to the Treatise world.
- 30.
- 31.
For a theoretical cleavage between Kahn and J. Robinson on the one hand and Sraffa on the other, see Marcuzzo (2003).
- 32.
Davis (1980) states that Hawtrey formulates the multiplier theory in his working paper for the Macmillan Committee, which he omitted from his subsequent publications. See also Clarke (1988, p.242). It was Robertson (1940, pp.117–121) who vehemently opposed the multiplier theory, defending the theory of forced saving. See Presley (1979, pp.169–176). Concerning Hawtrey’s influence on Kahn and Keynes in this regard, there exist divergent views. See Davis (1980), Cain (1982), Deutcher (1990, pp.102–105), Dimand (1997), and Ohara (1999).
- 33.
Keynes’s activities began immediately after Lloyd George’s pledge. See “Does Employment Need a Drastic Remedy?” (May 1924; JMK.19, Part I, pp.219–223), the Liberal Party (1928), and “A Draft Report” (October 1930; JMK.20, pp.437–443). However, he did not mention the multiplier theory in his Harris Foundation lectures (June 1931. JMK.13, pp.343–367), which were within the Treatise framework.
- 34.
- 35.
See JMK. 13, p.422.
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Hirai, T. (2024). The Turning Point in Keynes’s Theoretical Development: From A Treatise on Money to the General Theory. In: Keynes as an Economist, World System Planner and Social Philosopher. Palgrave Studies in the History of Economic Thought. Palgrave Macmillan, Cham. https://doi.org/10.1007/978-3-031-40135-0_3
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