Abstract
The variety of attempts to generate neoclassical results in a ‘Keynesian’ framework, and ‘Keynesian’ results in a neoclassical framework, together point to important failings in the General Theory. I will argue that the key failures are the inadequacy of Keynes’s critique of the neoclassical theory of output and the important ambiguities introduced into the analysis by his marginalist treatment of the labour market and by his portrayal of the marginal efficiency of capital as an elastic demand schedule for investment. Garegnani (1978, 1979) has argued that these failings may be remedied by application of the results of the debate on the neoclassical theory of capital derived from Sraffa’s Production of Commodities. I will illustrate this point by reference to the implications of the debate for Fisher’s analysis of investment and the rate of interest which Keynes identified with his own analysis.
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Eatwell, J. (2018). Marginal Efficiency of Capital. In: The New Palgrave Dictionary of Economics. Palgrave Macmillan, London. https://doi.org/10.1057/978-1-349-95189-5_899
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DOI: https://doi.org/10.1057/978-1-349-95189-5_899
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