There is a limited case for reading Keynes today

I am returning to the question of whether it is worth one’s while to read The General Theory since I may have been a little hasty in my previous advice. It is not to be read for entertainment, nor to understand how an economy works. But if you are interested in the history of economic theory, then that is a different story altogether. I have now replied again.

Thinking over what you had written, of course since you are an historian of economics you have to read The General Theory. You are not looking for enlightenment in the normal sense but to see how economics has “progressed”, and to understand in detail the steps along the way. Importantly, you will be reading it backwards in time, so that you are looking at it from now and trying to understand the origins of what we find in our texts. My original copy of The GT has become so fragile that I had to buy a second copy that I look at instead since the older one is disintegrating. And while I have probably read at one time or another every page of the book, I have not read them in order, from page 1 to the end. But I have read the index! And all of the footnotes. Never ignore the footnotes.

As for his definitions, Keynesian terminology is now so pervasive you will not stumble on a thing. Even his idiotic term “marginal efficiency of capital” is straightforward enough so that won’t be the obstacle it was at the start – his adoption of “marginal” concepts was a stroke of genius given when he was writing, although there is nothing “marginal” about mec and the mpc. The general problem will be that the presuppositions of the classical era will have evaporated so that it is less obvious what he’s going on about and why any of it matters. In it’s own way, because of my focus on Say’s Law, it was the first three chapters and then Book VI, which are the last three chapters, where I began and that led me to the rest. But since everything since 1936 has depended on acceptance of aggregate demand, which everyone now does accept, the book seems less idiotic to a modern reader than it did to Frank Knight and Henry Clay. And even then, since there was a consensus even among classical economists to increase spending to diminish the impact of The Great Depression, the radical nature of The GT remains in disguise. Seriously, can anyone really understand what this means and why it is so important?

“Say’s law, that the aggregate demand price of output as a whole is equal to its aggregate supply price for all volumes of output, is equivalent to the proposition that there is no obstacle to full employment.” (GT: 26)

This may be the least controversial statement in the entire General Theory over which literally no controversy of any serious kind occurred. Yet it is this statement that has made economics into the useless mess it is, wrecking our economies without hardly a soul understanding what’s involved and why it matters.

Keynes knew what he was up to. So once you understand that the entire book is aimed at demonstrating that Say’s Law as Keynes understood it is wrong, reading the book is then a walk in the park – at midnight in the midst of a hurricane.

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