The General Theory of Employment, Interest and Money
John Maynard Keynes
The General Theory of Employment, Interest and Money
FictionNonfictionEconomics & Business
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Written in the Great Depression, Keynes's argument that an economy can settle into long unemployment with nothing to pull it out, because employment depends on total spending, and that governments can and should act to sustain demand. The book that founded modern macroeconomics (1936). This edition lacks Keynes's footnotes.
Contains spoilers for the entire book
- Themes
- Atmosphere
About the book
Published in 1936, during the Great Depression, The General Theory of Employment, Interest and Money is John Maynard Keynes’s challenge to the economics he had been taught. Classical theory held that markets would correct themselves and that lasting mass unemployment could not occur; Keynes argued that an economy could settle for years at a level of output far below what its people and machines could produce. He places total spending, or effective demand, at the centre of the analysis, and sets out the ideas of the multiplier, liquidity preference and the “animal spirits” that drive investment. The book makes the case that governments can and should act to sustain demand and employment, and it reshaped economic policy and the study of economics for decades.
Characters
The classical economists — The opposition
The school, from Ricardo to Marshall, whose assumption that markets bring full employment Keynes sets out to overturn.
Professor Pigou — The chief opponent
A. C. Pigou, Keynes’s Cambridge colleague, whose theory of unemployment is examined most closely as the classical case.
Thomas Malthus — A forerunner
Praised for having seen that demand could fall short, against Ricardo, whose view prevailed.
Silvio Gesell — The unduly neglected prophet
A merchant and monetary reformer whose proposal for money that loses value over time Keynes treats with respect.
Bernard Mandeville — Author of The Fable of the Bees
Whose satire on thrift and spending Keynes revives in his notes on the economic thinkers before the classical school.
The mercantilists — Rehabilitated predecessors
Earlier writers on trade whom Keynes argues had grasped practical truths that later economists dismissed.
About the author
John Maynard Keynes (1883–1946) was an English economist, born in Cambridge and educated at Eton and King’s College, Cambridge, where he spent much of his career. After a spell at the India Office he joined the Treasury during the First World War, and resigned from the British delegation at the Paris Peace Conference in protest at the reparations demanded of Germany, setting out his objections in The Economic Consequences of the Peace (1919). A member of the Bloomsbury Group, he married the Russian ballerina Lydia Lopokova in 1925. His books A Tract on Monetary Reform (1923) and A Treatise on Money (1930) led to The General Theory of Employment, Interest and Money (1936), which transformed economic thinking about unemployment and the role of government. During the Second World War he advised the Treasury again and led the British delegation at the Bretton Woods conference of 1944. He died in Sussex in 1946.