Effective Demand and Profit in the Short Period

Abstract

Effective demand theory has devoted very limited attention to the analysis of profit. It has been more concerned with establishing the coherence of its key concepts and utilising them to tackle employment problems. Nevertheless, the basic implications which variations in the level of effective demand have for total profits are easily deduced, as we have already seen in Chapter 16. These can be extended somewhat by using the work of Robinson.¹ She has very specific views concerning both the limitations of neoclassical economics and the nature of Keynesian theory. However, the models of profit determination which she has developed can be formulated sufficiently broadly as to accommodate alternative perspectives on both these matters.²