Archive for the 'Keynes' Category

Keynes and Long-Term Economic Stagnation


In his book The General Theory of Employment, Interest, and Money, written in 1936, economist John Maynard Keynes (1883-1946) stated:

[T]he actual phenomena of the economic system are coloured by certain special characteristics of the propensity to consume, the schedule of the marginal efficiency of capital and the rate of interests, about which we can safely generalise from experience, but which are not logically necessary.

In particular, it is an outstanding characteristic of the economic system in which we live that, whilst it is subject to severe fluctuations in respect of output and employment, it is not violently unstable.  Indeed it seems capable of remaining in a chronic condition of sub-normal activity for a considerable period without any marked tendency either towards recovery or complete collapse.  Moreover, the evidence indicates that full, or even approximately full, employment is of rare and short-lived occurrence.  Fluctuations may start briskly but seem to wear themselves out before they have proceeded to great extremes, and an intermediate situation which is neither desperate nor satisfactory is our normal lot…The same thing is true of prices, which, in response to an initiating cause of disturbance, seem to be able to find a level at which they can remain, for the time being, moderately stable. (Keynes, 249-250)


Keynes, John Maynard.  The General Theory of Employment, Interest, and Money.  Houghton Mifflin Harcourt, 1964.

Quoted from John Bellamy Foster and Robert W. McChesney, “Monopoly-Finnance Capital and the Paradox of Accumulaiton,” Monthly Review 61, no. 5 (Oct. 2009): 1-20. (accessed November 2, 2009)


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