The General Theory
by John Maynard Keynes (1936)
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INDEX
A - K
(Go to Index L - Z)
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A B C
D E F G H I J K
L M N O P Q R S T U VW, X Y, Z
A
Abstinence, see Saving
Accumulation in a wealthy community, 219-20 , see also Capital accumulation
'Administered prices', 268 , 270
Aggregate Investment, Saving, Supply
function, Demand function, see
Investment , Saving ,
Supply
function , Demand
function
Agriculture and the trade cycle, 314 , 329-32
Australia, wage policy in, 269-70
Austrian school, 76 , 329
Authoritarian States, 380 , 381
Available
resources and actual employment, 4
B
Balance of trade and changes in money-wages, 262-3
and future policy, 382
Bank deposits, 81 , 167 n , 194-5
Bank money, in nineteenth century, 308
and Gesell's proposals, 357-8
Bank rate, 'effectiveness' of; 206
the technique, 339
and creation of credit, 81-5
and rate of interest, 208
and future of investment, 378
its conditions of lending, 200
a suggested reform in, 205-6
and wage policy, 267
See also Money, quantity of ; and Monetary policy
Basic supplementary cost, see Supplementary cost
Bavaria, Soviet cabinet in, and Gesell, 354
'Bearishness, state of', in Treatise on Money, 173-4
'Bears' and rate of interest, 170-1
Bentham, J., on 'forced saving', 80 ;
on usury, 352-3
Böhm-Bawerk, E. von, 176 n , 183 n , 214 n
Budgetary deficit, 98 , 128-30
Buenos Aires, Gesell's activities in, 354
Bull, John, old nineteenth-century saying about, 309 n
'Bull-bear position' in the Treatise on Money, 169 n
'Bulls', and the rate of interest, 170-1
Business-motive to liquidity, 195-6 , see Liquidity
C
cost of production of; 315 , 317
demand curve for, in classical theory, 175-85
diminishing returns from, 42 , 81 , 114 , 289 , 305-6
durability of; and the trade cycle, 318
'productivity' of; 213-17
stock of¾assumed given, 245 ;
and investment, 62-3 ;
and user cost, 66 ;
and depreciation, 99-106 ;
and expected yield, 147 ;
and rate of interest, 217-20 ;
supply price of; 135 , 248 , 252
unforeseen increase in output of; 122-5
Capital, marginal efficiency of¾
defined, 135-6
discussed, 135-64
an independent variable, 245-9
and commodity standards, 224-5
in crises, 207
and price of equities, 151 and n,
and rate of interest, 111-12 , 136-7 , 142-6 , 165 , 218-20
and money- and own-rates of interest, 222-3 , 228
and interest policy, 375
and liquidity-preference, 170
and money, 173-4 , 224-5 , 234 , 298
and public works, 120
and the trade cycle, 313-20 , 323-4
and wages, 232-3 , 260-5 , 269-70
in nineteenth century, 307-8
to-day, 308-9
in economic doctrine, 139-41
and Fisher's theory, 140-2
and Gesell's theory, 355-6
Marshall on, 139-40
in von Mises, Hayek and Robbins, 192-3
and Ricardo's theory, 192
and usury laws, 351-2
Capital, schedule of marginal efficiency of¾
defined, 136
and classical theory, 178
and propensity to consume, 112 , 349
and liquidity premium on land, 241-2
in wealthy community, 31 , 219-20 , 335 , 348
and Gesell's theory, 355
Hobson on, 367-8
Marshall on, 242
and Mercantilist thought, 344
'Capital consumption', 76 , 329
and investment, 75
and the trade cycle, 319
and user cost, 73
Capital formation, gross and net, in United States, Kuznets on, 102-4
Capital, instrumental, characteristics of, 226
Capital, liquid, and expectation, 50
and user cost, 73
Hawtrey on, 75-6
Capital profits, taxes on, 94-5
and expectation, 49-50
and investrnent, 75
and reduction of wages, 262
and prime cost, 273 n
and the trade cycle, 318-19
Capitalism, future trends in, 221 , 309 , 372-83
Carrying-cost, defined, 225
and land, 241
and surplus stocks, 317-18
Gesell on, 355-7
Carver, T. N., on interest, 176 and n
Cassel, G., on interest, 176 , 182 , 188
Pigou on, 188
Central bank, 206 , 235 , see also Banking system , Monetary policy
on investment in Great Britain, 102
Classical theory, its limitations, 378
postulates of; 4-22 , 34 , 304
and marginal efficiency of capital, 139-41
and effective demand, 32-4
and interest and investment, 93 , 165-6 , 175-93 , 351 , 356
and Mercantilism, 333-5 , 339 , 348-9
and reduction of money-wages, 257-60
Hobson on, 366
Closed system, 11 , 265
wage policy in, 270
Commodity-rates of interest, see Interest, own rates of
imperfect, 5 ,
the degree of, 245
the Mercantilists on excessive, 345-6
the State of; 148-9 , 161 , 248
and public works, 120
and reduction of money-wages, 264
in the nineteenth century, 307
and the trade cycle, 317
and Hobson's theory, 367
defined, 90
the objective factors, 89-106
the subjective factors, 107-12
its place in the General Theory, 27-31 , 245 , 247 , 249
and propensity to save, 65
and windfall changes in capital values, 92
and accumulation, 335 , 337 , 373 , 375
and employment, 211
and employment in wealthy community, 31 , 219
and employment function, 281
and rate of interest, 93 , 178 , 184
and the trade cycle, 313-14 , 319-21 , 324-9
and money-wages, 239 , 260 , 262-3
in nineteenth century, 307
and classical theory of interest, 178 , 184
and Pigou, 279
and Hobson, 370
Consume, marginal propensity to¾
defined, 115
discussed, 113-31
and the multiplier, 115
and reduction of money-wages, 261-2
defined, 61
in the General Theory, 27 , 248 , 250-2
and nature of capital, 214-17
and propensity to consume, 89-90 , 92 , 96 , 98
and 'sound finance', 104-6
and rate of interest, 166
and New Deal, 332
and saving and investment, 61-5 , 74 , 82
and nature of saving, 21 , 64-5 , 210-13
and the trade cycle, 327 , 330 , 332
and changes in money-wages, 261-3
and Robertson's definition of income, 78
Hobson on, 367-9
Pigou on, 273
their period of production, 287
Consumption, under-, see Under-consumption
Convention and Stock Exchange valuations, 152-3
and the rate of interest, 203-4
Cost¾
carrying, see Carrying cost
factor, see Factor cost
long period, 68-9
prime, see Prime cost
supplementary, see Supplementary cost
basic supplementary, see Supplementary cost
current supplementary, see Supplementary cost
user, see User cost
wage, see Wage cost
Cost of bringing lender and borrower together, 208 , 219 , 309
Cost-unit, defined, 302 , 303 , 309 , 328
Costs, level of domestic, and foreign investment, 336-8
Credit, see Money, quantity of
the state of, 158
Crises, and the trade cycle, 314-20
Cycles, Trade, see Trade cycles , Fluctuations
Cyclical movements and a zero
rate of interest, 218
D
Death duties, 95 , 372-3
Debts and money, the distinction between, 167 n
Child on, 342
Deficit, budgetary, 98 , 128-30
Deflation, apparent asymmetry between inflation and, 291
and reduction of stocks, 331-2
Demand curve, see Demand schedule
Demand, aggregate, 104 , 123 , 258 , 279
the principle of, 23-34
and demand schedules, 259
elasticity of, 305
and employment, 260-1
and employment function, 280-91
and entrepreneurs, 380-1
and expectation, 147
and financial prudence, 100
and income, 55
in long run, 307
and processes of production, 215
and individual saving, 211-13
and stability, 251-2
and user cost, 69 n
in wealthy communities, 31 , 220
in classical economics, 25-6 , 32-4
and Gesell, 358
and Hawtrey's theory, 76
and Mercantilist thought, 358
and Treatise on Money, 78-9
Demand function, the aggregate¾
Demand function for labour, the real, see Labour, Pigou's real demand function for
Demand schedule for employment in classical theory, 6
for investment, see Investment demand schedule
Demand schedules, the nature and assumptions of; 258-60 , 281
Deposit, bank, see Bank deposits
and user cost, 69
on houses, 99-102
in the United States, 102-3
in short period, 81 , 83 , 91-2 , 114 , 121-2 , 289 , 302 , 305-6 , 328
Disinvestment, 67 , 75 , 105 , 318 , 329
and user cost, 67
Dis-saving, 82 , see also Saving, negative
Disutility of labour, of employment, marginal, see Labour, marginal disutility of
Dividend, National, and choice of units, 379
See also Income
Division of labour, international, 333 , 338 , 381
E
Economics, the divisions of, 292-4
Classical, see Classical theory
Edgeworth, F. Y., 3 n , 19 , 32 , 186 ,
Effective demand, see Demand, effective
Efficiency, marginal, of capital, see Capital, marginal efficiency of
Efficiency and length of processes, 214-17
Egypt, Ancient, wealth of, 131
Elasticity of effective demand, see Demand, effective
of employment, see Employment
of money-wages, see Wages, money
of output, see Output, elasticity of
of production, see Production
of production of money, see Money
of substitution, see Substitution
of substitution of money, see Money
theory of; summarised, 27-32 , 247-9 ;
restated, 245-54
a dependent variable, 245-7
marginal disutility of, see Labour, marginal disutility of
its units, 41
and aggregate demand and supply functions, 48 , 89
and employment function, 89 , 281 , 286
and rate of interest, 217-20 , 222 , 242-3 , 349
and investment, 98
and quantity of money, 171
and the multiplier, 113-14 , 122
and saving and investment, 77-8
and individual saving, 211
its stability, 250-4
and the trade cycle, 97 , 315-16 , 318 , 320 , 325 , 327-8
and money-wages, 257-71
and rigid real wage, 269-70
in poor and wealthy communities, 31 , 219-20
in nineteenth century, 307-8
the problem to-day, 308-9
Employment, elasticity of, 243 , 284 , 286-8
for industry as a whole, defined, 282
for a single industry, 282
its rarity, 250-2
and future policy, 372-3 , 375 , 377-9 , 381-2
assumed in classical theory, 12 , 191
and the rate of interest, 112 , 203-4 , 327
and own-rates of interest, 236
and the quantity theory of money, 209
in the absence of money, 235
and 'forced saving', 80
and 'over-investment', 320-3
and under-consumption, 325-6
and an apparent asymmetry, 304
and Hobson's theory, 367
Employment function, 89-90 , 246 , 280-91
defined, 280
See also Employment, elasticity of
Employment multiplier, defined, 115 , 248 , 273
Employment, primary, defined, 113 , 115-16 , 118 , 277
Employment, under-, 289 , 324 , 365 , 381 .
See also Unemployment
distinguished from speculation, 158-9
income of, see Income
and elasticity of employment, 257-8
and full employment, 289-90
and production of money, 230
and a zero rate of interest, 217-18
and reduction of money-wages, 261-2 , 264
and definition of marginal wage cost, 273
and the Stock Exchange, 151 , 316 n
and future policy, 376-7
and bank rate, 339
and employment, 249
and elasticity of employment, 287-8
and full employment, 289-91
and fluctuating exchanges, 270
and the rate of interest, 217-20 , 242-4
of money and assets, 227
of money and interest, 199-201
and prices, 64
and supply price, 68-9
Equities, ownership of, dissociated from management, 153
Euclidean geometers, classical economists compared with, 16
Europe, post-war trade restrictions in, 338
fluctuating, and wage policy, 270
rigid, and British foreign investment, 339
Expectation, 46-51 , 147-64 , 293-4
and the productivity of capital, 138
and present and future consumption, 210
of changes in present and future income, 95
and liquidity, 197-9 , 201-2 , 205
and changes in value of money and output, 141-2 , 237-9
and quantity of money, 298
and the trade cycle, 315 , 320-2 , 327
and money-wages, 69 n , 238 , 263-5 , 305
of future yield, 136 , 147 , 247
F
Fable of the Bees, Mandeville's, 106 , 359-62
average, 69-70
Financial provision, see Supplementary cost
Financial prudence, 100-1 , 105 , 109
and liquidity, 155
and the propensity to consume, 94-5
and wage policy, 263
Fisher, Irving, 140-3 , 355 , 357
'Flight from the currency', 207 , 306 , 329
Fluctuations, 97 , 250-4 , 307 , see Trade cycles
Flux, A. W., on Interest, 176
'Forced frugality', Bentham on, 80
Forced saving, see Saving
Foreign investment, see Investment, foreign
Foreign trade in classical economics, 333
in future, 382
and mercantilism, 333-50
and the multiplier, 120
Fortrey, S., 344 , 359
Free Trade, 333-4 , 350
Hobson on, 368
Frictional unemployment, see Unemployment, frictional
Full employment, see Employment, full
Fullarton, J., On the Regulation of Currencies, 364 n
'Future' and 'spot'
prices, 222-4
G
George, Henry, 354 , 355 , 365
Gesell, Silvio, 32 , 353-8 , 375 , 379
Gold, suitability of, as money, 236
own-rate of interest of, 229
Gold standard, and the production of money, 230-1
and balance of trade, 337-8 , 349
and the Mercantilists, 348-9
and war, 381-2
Government, see State
Central Bank control in, 206
employment and the rate of interest in, 219-20
full employment in, 323-4
employment and foreign trade in pre-war years in, 337 , 348
employment and bank rate in, 339
Free Trade in nineteenth century in, 338
redistribution of income in, 372
Clarke's estimate of investment in, 102
post-war investment and sinking funds in, 101-2
contemporary mercantilism in, 333
opinion and the monetary system in, 172
the multiplier in, 122
real and money wages in, 276
H
Hales, Discourse of the Common Weal, 345
Hansen, Alvin, Economic Reconstruction, 193
Hawtrey, R. G., 51 n , 72 n , 75-6 , 79 n
Hayek, F. von, 39 n , 59-60 , 79 , 80 , 192
Heckscher, E., Mercantilism, 341-50 , 358
Hoard, propensity to, 208-9 , see Liquidity function
Hoarding and liquidity, 160-1 , 174
Hoards, the Mercantilists on, 344-5
I
Imports, restriction of, 338-9
Improvement, motive of, 109 , see Consume, propensity to
defined, 53-4
preliminary definition, 23-4
definition discussed, 52-61
and savings and investment, 63 , 74
and user cost, 67
Robertson's definition, 78-9
Marshall's definition, 59
and propensity to consume, 91-2 , 94 , 96-7 , 248
and investment, 117 , 180-2 , 248
and classical theory of interest, 178-9
and leisure, to-day, 326
and liquidity, 171-2 , 196-7 , 199
and money in long run, 306-9
and quantity theory of money, 208-9
statistics of, and the multiplier, 127-8
and ordinary supply and demand curves, 281-2
a dependent variable, 245-7
and Hobson's theory, 369
defined, 57
discussed, 57-61
and propensity to consume, 92 , 98
and definition of investment, 75
defined, 53
discussed, 53-4
and elasticity of employment, 287
in Treatise on Money, 60-1
defined, 57
and user cost, 68-90
and change in money-wages, 262-3
Income-motive, see Liquidity-preference
and propensity to consume, 94
and inequality of wealth, 372
and liquidity, 309
Income-velocity of money, see Money, income-velocity of
India, liquidity and wealth in, 337
Individualism, virtues of, 379-80
demand schedules and, 258-9
and employment function, 280 , 285
the place in economics of the study of, 293
and the rate of interest, 202
apparent asymmetry with deflation, 285
post-war, in Central Europe, 207
absolute, 305
semi-, defined, 305
Inheritance, inequalities of, 374
theory of, 165-74
properties of, 222-44
an independent variable, 245-9
and accumulation, 219-20 , 335-7 , 349
and propensity to consume, 93-5 , 110-12
complex of rates, 28 , 137 n , 143 , 167 n , 168-9 , 205-6
and marginal efficiency of capital, 28 , 136-7 , 143 , 145-6 , 220-1
and confidence, 149
in crises, 207
and price of equities, 151 n
and gold mining, 130
and hoarding, 174
and liquidity, 197-209
and quantity of money, 79 , 167-8 , 171-3 , 197-209 , 298 , 306-9
and value of money, 142-3
obstacles to a low, 202 , 207-8 , 309
and monetary policy, 205-8
and future policy, 375-6
a psychological and conventional phenomenon, 202-4
and processes of production, 214-17
and public works, 119-20
and individual saving, 210-11
and stability, 250-3
and the trade cycle, 315-16 , 320-9
and money-wages, 260-6 , 269-70
in wealthy communities, 31 , 219-21
in nineteenth century, 307-8
to-day, 308-9
in classical theory, 93 , 165-6 , 175-93 , 351
Cassel on, 176
Carver on, 176
Flux on, 176
Gesell on, 355-8
Hayek on, 192
and Hobson's theory, 367 , 369-70
Locke on, 342-4
the Mercantilists on, 340-4 , 347
von Mises on, 192-3
Pigou on, 186 , 188-90 , 274 , 278
Ricardo on, 190-2
Robbins on, 192
Taussig on, 176
and usury laws, 351-3
Interest, equilibrium rate of, 183 , 325
and liquidity, 202
and monetary policy, 202-4 , 206-7
and wage policy, 266
Interest, 'natural' rate of, 183 , 242-4
Interest, 'neutral' rate of, 183
a definition, 243
Interest, 'optimum' rate of, defined, 243
Interest, own-rate of, defined, 223 ; 223-31 , 235 , 236 , 240
Interest, 'pure' rate of, 68 , 145 , 182 , 208 , 221
Interest, short-term rate of, and policy, 203 , 208
International Labour Office, 349 n
International division of labour, 333 , 338 ,
in classical economics, 333
future of, 382
and Mercantilism, 333-50
and multiplier, 120
'Inventories', 332 ,
Invest, inducement to, 27 , 137 , 239 , 335 , 347-8 , 351 , 353 , 358
Investment, aggregate or current
defined, 62
foreshadowed, 54
discussed, 60-4
in summary of General Theory, 27-31 , 248-53
and marginal efficiency of capital, 136-7 , 147 , 149
and propensity to consume, 90 , 98-106 , 110
and elasticity of employment, 287-8
and expectation, 149-51
unexpected increase in, 123-5
its future, 375-7
and rates of interest, 236
and liquidity-premium on land, 241-2
and the multiplier, 126-8
and risk, 144-5
and individual saving, 210-11
and stability, 250-3
and the State, 106 , 164 , 220-1 , 320 , 325 , 335 , 349 , 351 , 376-7 , 380
in British and American Statistics, 102-4 ,
and the trade cycle, 314-32
and user cost, 66
and money-wages, 260-5
and classical theory, 180-5
Fisher on, 140-2
Marshall on, 139-40 , 178 , 186-8
and Mercantilism, 335-40
Investment, saving and, 60-5 , 74-85 , 183-5 , 328
and classical school, 177-9
Investment demand schedule, defined, 136
and propensity to consume, 110-11
and rate of interest, 136-7
and value of money, 142
and accumulation, 335-6 , 339 , 348-9
in Australia, 270
its future, 381-2
Investment, home, and unemployment,
Kahn on, 113
Investment-income, Hayek on, 59
Investment markets, see Stock Exchange
Investment, misdirected, 321 , 323 , 327
and quantity of money, 298-9
in United States, 127
Investment, negative, see Disinvestment
defined 63
discussed, 62-5
its vagueness, 60
and the multiplier, 113
Investment, over-, 320-4 , 370
Investment, public, 106 , 163-4 , see also State
Investors, professional, 154-64 , 316
Involuntary unemployment, defined, 22 , see Unemployment, involuntary
J
Jevons, W. S., on the trade cycle, 329-32
Johnson, Dr, and Mandeville's Fable
of the Bees, 359
K
Kahn, R. F., 113 , 115 , 119 , 121 ,
Essays in Biography, 362
Treatise on Money, 49 , 60 , 70 , 74 , 77-9 , 124 , 151 n , 167 n , 169 n , 173 , 194-5 , 242 , 287 n , 319 n
Treatise on Probability, 148 n
in The Nation and the Athenaeum on Protection, 334
Knight, F. H., on Interest, 176 n
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