Expectations and the Links Between the Economic Future and the Present [1963]

Abstract

In choosing a group of topics out of the multitude covered in Keynes’ General Theory, I have sought one to which Keynes himself attributed great importance, one which is theoretically interesting and which has not been fully explored already. I have been attracted to the group concerned with the links between the economic future and the present, because Keynes clearly believed that it was in the treatment of these links that orthodox theory was particularly defective. He wrote: “The fact that the assumptions of the static state often underlie present-day economic theory, imports into it a large element of unreality. But the introduction of the concepts of user cost and of the marginal efficiency of capital, as defined above, will have the effect, I think, of bringing it back to reality, whilst reducing to a minimum the necessary degree of adaptation. It is by means of the existence of durable equipment that the economic future is linked to the present.”¹

Thou art no sabbath-drawler of old saws,

Distill’d from some worm-cankered homily;

But spurr’d at heart with fieriest energy

To embattail and to wall about thy cause

With iron-worded proof…

…I will stand and mark.

Early Sonnet to J. M. K. (John Mitchell Kemble) by Tennyson.