The path leading Keynes to the early formulation (in the 1933 draft of the 'General Theory') of the notion of "effective demand" is described and its analytical role in Keynes' view of output fluctuations is clarified. In this reconstruction, the notion of "effective demand" is interpreted as the landing-place of a long and conscious effort to escape from the pitfalls implied by the theory of output fluctuations proposed in the 'Treatise on Money'. Hawtrey's and Robertson's severe criticism persuaded Keynes to shift analytical emphasis from the divergence between saving and investment to the difference between aggregate expenditure and aggregate production costs (taken as proxy of entrepreneurs' expected profitability). Thus, 'effective demand' is just an expositoty device aimed to sinthesize the mode of behaviour of expected profit maximizing firms. The comparative analysis of a 'capitalist' and a 'cooperative' economy, where Keynes used the notion of effective demand for the first time, supporst our beliefs about the explanatory role of such a concept.
THE MAKING OF KEYNES' NOTION OF "EFFECTIVE DEMAND"
D'ACUNTO, Salvatore
2011
Abstract
The path leading Keynes to the early formulation (in the 1933 draft of the 'General Theory') of the notion of "effective demand" is described and its analytical role in Keynes' view of output fluctuations is clarified. In this reconstruction, the notion of "effective demand" is interpreted as the landing-place of a long and conscious effort to escape from the pitfalls implied by the theory of output fluctuations proposed in the 'Treatise on Money'. Hawtrey's and Robertson's severe criticism persuaded Keynes to shift analytical emphasis from the divergence between saving and investment to the difference between aggregate expenditure and aggregate production costs (taken as proxy of entrepreneurs' expected profitability). Thus, 'effective demand' is just an expositoty device aimed to sinthesize the mode of behaviour of expected profit maximizing firms. The comparative analysis of a 'capitalist' and a 'cooperative' economy, where Keynes used the notion of effective demand for the first time, supporst our beliefs about the explanatory role of such a concept.I documenti in IRIS sono protetti da copyright e tutti i diritti sono riservati, salvo diversa indicazione.
