Summary of John Maynard Keynes's The General Theory of Employment, Interest and Money , livre ebook

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67 pages

English

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Please note: This is a companion version & not the original book.
Sample Book Insights:
#1 I have called this book the General Theory of Employment, Interest and Money, placing the emphasis on the prefix general. The object of such a title is to contrast the character of my arguments and conclusions with those of the classical theory of the subject, upon which I was brought up and which dominates the economic thought of the governing and academic classes of this generation.

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Général

Economics

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Publié par	Everest Media LLC
Date de parution	04 mars 2022
Nombre de lectures	1
EAN13	9781669349600
Langue	English
Poids de l'ouvrage	1 Mo

Informations légales : prix de location à la page 0,0150€. Cette information est donnée uniquement à titre indicatif conformément à la législation en vigueur.

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Insights on John Maynard Keynes's The General Theory of Employment Interest and Money
Contents Insights from Chapter 1 Insights from Chapter 2 Insights from Chapter 3 Insights from Chapter 4 Insights from Chapter 5 Insights from Chapter 6 Insights from Chapter 7 Insights from Chapter 8 Insights from Chapter 9 Insights from Chapter 10 Insights from Chapter 11 Insights from Chapter 12 Insights from Chapter 13 Insights from Chapter 14 Insights from Chapter 15 Insights from Chapter 16 Insights from Chapter 17 Insights from Chapter 18 Insights from Chapter 19 Insights from Chapter 20 Insights from Chapter 21 Insights from Chapter 22 Insights from Chapter 23 Insights from Chapter 24
Insights from Chapter 1

#1

I have called this book the General Theory of Employment, Interest and Money, placing the emphasis on the prefix general. The object of such a title is to contrast the character of my arguments and conclusions with those of the classical theory of the subject, upon which I was brought up and which dominates the economic thought of the governing and academic classes of this generation.
Insights from Chapter 2

#1

The question of the size of the available resources, in the sense of the size of the employable population, the extent of natural wealth and the accumulated capital equipment, has been discussed descriptively in many treatises on the theory of value and production. But the fundamental theory underlying it has never been examined in detail.

#2

The classical theory of employment is based on two fundamental postulates: the first states that the wage is equal to the marginal product of labor, and the second states that the utility of the marginal product is equal to the disutility of the marginal employment.

#3

The classical theory of unemployment is based on the assumption that the price of non-wage-goods is higher than the price of wage-goods, and that the marginal physical productivity of labor in the wage-goods industries is higher than in the non-wage-goods industries.

#4

The classical school believed that the demand for labor at the existing money-wage may be satisfied before everyone willing to work at this wage is employed. They believed that if labor as a whole would agree to a reduction of money-wages, more employment would be forthcoming. But this is not always the case.

#5

The classical theory of wages asserts that the unemployment which characterizes a depression is caused by a refusal by labor to accept a reduction in money-wages. However, this is not always the case. For example, if more labor than is currently employed is available at the existing money-wage, even though the price of wage-goods is rising, the wage-goods equivalent of the existing money-wage is not an accurate indicator of the marginal disutility of labor.

#6

The traditional theory argues that the wage bargains between the entrepreneurs and the workers determine the real wage. If this is not true, there is no reason to expect a tendency towards equality between the real wage and the marginal disutility of labor.

#7

The second postulate of the classical theory is that the general level of real wages is determined by the wage bargain between the workers and the employers. However, this assumption is not always true. There may be no method available for labor as a whole to bring the general level of money-wages into line with the marginal disutility of the current volume of employment.

#8

The struggle over money-wages between individuals and groups is often believed to determine the general level of real wages. However, this is not the case. The general level of real wages depends on the other forces of the economic system.

#9

The third category of unemployment is involuntary unemployment in the strict sense. It occurs when a small rise in the price of wage goods relative to the money-wage causes both the supply of labor willing to work for the money-wage and the demand for it at that wage to be greater than the existing volume of employment.

#10

The second postulate of the classical theory, which states that the economy will always be in equilibrium, is fallacious. We need to throw over this postulate and work out the behavior of a system in which involuntary unemployment is possible.

#11

The first postulate of the classical system, that real wages are positively correlated with the volume of employment, remains unchanged in our system. With a given organization, equipment, and technique, real wages and the volume of output are uniquely correlated.

#12

The classical economists taught that supply creates its own demand. This meant that the costs of production were spent on purchasing the product. Any individual act of abstaining from consumption inevitably led to the labor and resources being invested in the production of capital wealth.

#13

The classical theory of economics assumes that the demand price of output is equal to its supply price, and that all the net increments of the wealth of individuals are exactly equal to the aggregate net increment of the wealth of the community. This assumption is the classical theory's axiom of parallels.

#14

The classical theory of wages is based on the assumption that the real wage is equal to the marginal disutility of the existing employment. This assumption, however, is all the same thing as saying that there is no involuntary unemployment, that supply creates its own demand, and that aggregate demand equals aggregate supply.

#15

The classical theory of employment states that when n men are employed, the nth man adds a bushel a day to the harvest and wages have a buying power of a bushel a day. The n + 1th man would only add. 9 bushel a day, and employment cannot rise to n + 1 men unless the price of corn rises relative to wages.

#16

The distinction between consumption and investment is important when it comes to the economy. If people did not spend their money on buying new clothes, they would spend it on hiring workers and creating new businesses.
Insights from Chapter 3

#1

The aggregate supply price of the output of a given amount of employment is the expectation of proceeds which will just make it worth the while of entrepreneurs to give that employment. The amount of employment, both in each individual firm and in the aggregate, depends on the amount of the proceeds which entrepreneurs expect to receive from the corresponding output.

#2

The classical theory, which underlies all economic theory, states that the aggregate demand price or proceeds always accommodates itself to the aggregate supply price. If this were true, competition between entrepreneurs would always lead to an expansion of employment up to the point at which the supply of output as a whole ceases to be elastic.

#3

The theory of employment states that when employment increases, aggregate real income is increased. The psychology of the community is such that when aggregate real income is increased, aggregate consumption is increased, but not by as much as income.

#4

The General Theory of Employment states that the amount of labor that entrepreneurs decide to employ depends on the community’s income and its propensity to consume. The amount of labor that is employed depends on the sum of two quantities, D1, the amount that the community is expected to spend on consumption, and D2, the amount that it is expected to devote to new investment.

#5

The volume of employment is not determined by the marginal disutility of labor, which is measured in terms of real wages, except in so far as the supply of labor available at a given real wage sets a maximum level to employment. The propensity to consume and the rate of new investment determine between them the volume of employment, and the volume of employment is uniquely related to a given level of real wages.

#6

The complete victory of the Ricardian theory over the Malthusian theory is a curiosity and a mystery. It was probably due to a complex of suitabilities in the doctrine to the environment into which it was projected.

#7

The traditional economic theory ofOptimism, which has led to economists being viewed as Candides, who believe that everything is fine in the best of all possible worlds if we just let things alone, is based on the assumption that there is an insufficiency of effective demand.

#8

The user cost is the cost incurred by an entrepreneur when he uses a given amount of a good. It is the cost of producing one unit of output. It is deducted from the proceeds and the aggregate supply price of a given volume of output, so that both terms are interpreted net of user cost.
Insights from Chapter 4

#1

The three main problems that impeded my progress in writing this book were the choice of the units of quantity appropriate to the problems of the economic system as a whole, the part played by expectation in economic analysis, and the definition of income.

#2

The problem of the unsatisfactory units in which economists commonly work is illustrated by the concepts of the National Dividend, the stock of real capital, and the general price-level. The National Dividend is the volume of current output or real income, and it depends on net output. It is a grave objection to this definition that the community’s output of goods and services is a non-homogeneous complex which cannot be measured in terms of money.

#3

The fact that two incompatible collections of objects cannot, in themselves, provide the material for a quantitative analysis should not prevent us from making approximate statistical comparisons, which can have significance and validity within certain limits.

#4

The quantity of employment is measured in two fundamental units of quantity, money-value and quantities of employment.