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http://www.jstor.org Sat Dec 8 10:52:48 2007
MR. KEYNES AND T H E"CLASSICS";
A SUGGESTED INTERPRETATION1
ITWILL BE ADMITTED by the least charitable reader that the entertainment value of Mr. Keynes' General Theory of Employment is considerably enhanced by its satiric aspect. But it is also clear that many readers have been left very bewildered by this Dunciad. Even if they are convinced by Mr. Keynes' arguments and humbly acknowledge themselves to have been"classical economists" in the past, they find it hard to remember that they believed in their unregenerate days the things Mr. Keynes says they believed. And there are no doubt others who find their historic doubts a stumbling block, which prevents them from getting as much illumination from the positive theory as they might otherwise have got. One of the main reasons for this situation isundoubtedly to be found in the fact that Mr. Keynes takes as typical of "Classical economics" the later writings of Professor Pigou, particularly T h e Theory of Unemployment. Now T h e Theory of Unemployment is a fairly new book, and an exceedingly difficult book; so that it is safe to say that it has not yet made much impression on the ordinary teaching of economics. To most people its doctrines seemquite as strange and novel as the doctrines of Mr. Keynes himself; so that to be told that he has believed these things himself leaves the ordinary economist quite bewildered. For example, Professor Pigou's theory runs, to a quite amazing extent, in real terms. Not only is his theory a theory of real wages and unemployment; but numbers of problems which anyone else would have preferred toinvestigate in money terms are investigated by Professor Pigou in terms of "wage-goods." The ordinary classical economist has no part in this tour de force. But if, on behalf of the ordinary classical economist, we declare that he would have preferred to investigate many of those problems in money terms, Mr. Keynes will reply that there is no classical theory of money wages and employment. It is quite truethat such a theory cannot easily be found in the textbooks: But this is only because most of the textbooks were written at a time when general changes in money wages in a closed system did not present an important problem. There can be little doubt that most economists have thought that they had
1 Based on a paper which was read a t the Oxford meeting of the Econometric Society (September,...