Retrospect on Keynes [1963]

Abstract

Keynes is likely to have a permanent place in the history of economic thought as being the first person to develop a fully articulated theory of what we now call macroeconomics. Such theory as is to be found in classical economics is largely implicit, and depends on the proposition that capitalists will always strive to keep their capitals fully employed; the full employment of labor was, through the wages fund theory, a corollary of this. One could, alternatively, at later dates, search for an employment theory in the proposition that there will be a tendency to equate the marginal disutility of work with the marginal utility of its product. But it was not then shown how this tendency worked in practice in relation to the institutional arrangements of actual economies.