Index

References to notes are given as the page reference followed by the letter "n" and the note number.

"abnormal" times 143, 247, 252,

271-272, 280 abstraction 72, 82 AD (aggregate demand) 10, 13, 14,

46, 166, 178, 210, 223, 304, 372; and deflation 210, 213, 215; falling with AS, in destabilizing bond markets 224-226; Modern Keynesian IS/LM and AD/AS analysis 272-276; and multiplier concept 50-51; negative shock to 14, 222, 223, 257; Tract on Monetary Reform 39 agent choice theory 13, 168, 231, 240;

rational agent choice, classical/ neoclassical theories 258-259 aggregate demand (AD) see AD

(aggregate demand) aggregate supply (AS) see AS

(aggregate supply) Aldcroft, D.H.

disequilibrium processes in the bond market 222, 223; falling with AD, in destabilizing bond markets 224-226; Modern Keynesian IS/LM and AD/AS analysis 272-276 assets: capital 95, 96, 100, 128-129, 184,

266, 284; collateral 217; durable 189; financial 13, 14, 137, 139, 144, 200n9, 235, 294, 370, 377; "insane" financial markets of the 1920s∕1930s, US 139, 141, 145; interest-bearing 236, 237n7; liquid 28, 193-194, 217, 226, 294; real

193-199, 256, 284; risky 142, 194, 232; secular stagnation 180, 182, 184, 194 autarky 155

Bagehot, W. 186-187 balance of trade surpluses 9 balance sheets 142

Baldwin, S. 61n9

bank failures 141

Bank of England 9, 38, 59, 92, 118, 302, 315; nationalization of 297, 361, 375

bankruptcy: of classical/neoclassical theories of rational agent choice 258-259; indebted firms 91; of the less efficient 72

"Bastard Keynesianism" 70; see also

Mainstream Keynesian theory "bear" market 136, 137, 265

Beckert, S. 170n5

Beveridge, W.

Beveridge Plan 332-335; Beveridge

Report 337

Bevin, E. 116, 120

Board of National Investment 6, 129, 198, 320, 329, 339, 368; capital accumulation, regulation 96, 99, 102-104, 106, 109

bonds 14, 28, 54, 169; Dead-weight

Debt, National Investment

Bonds 105; disequilibrium processes in bond market 221-238; interest rates 222, 223, 225, 226-232; Keynes's theory of potentially destabilizing bond markets 224-232; liquidity preference theory 229, 231, 233-234, 236, 237n12, 280; Mainstream Keynesian theory 169; prices 12-14, 229; and stock markets 221, 237n6; temporary excess demand for 12-13; and uncertainty 221, 226-232

booms: boom and bust 168, 233; construction industry 148; financial see financial/stock market booms; housing 102; railway 52, 57

Brand, Robert 97, 102 Bretton Woods arrangements 363n1 Britain: Bank of England 9, 38, 59,

92, 118, 302, 315; coal industry see coal industry, Britain; cotton industry 82n2, 89, 90, 92, 167, 170n5, 212; deflation see deflation; disequilibrium, deflationary 64-69; economy seen as rigid and inflexible 150n2; export industries 48, 55, 59, 63, 85, 89, 99, 181, 337, 356; financial panic of 1930s, not involved in 144; interwar period, economic problems in 98, 116, 119, 121, 123, 169-170; investment stagnation, interwar period 27; Labour Party see Labour Party, Britain; Liberal Party see Liberal Party, Britain; "New Jerusalem," creating 104, 329, 330; nineteenth-century vs interwar capitalism 164; population growth, fall in 147; postwar social welfare system 21n13, 331; pre-WWI dominance in international trade, evaporation of 33n4; public corporations see public corporations; railways 52; rentier class 9, 10, 42, 43, 62n17, 78, 297; ruling elites 373; social welfare system 21n13, 331; stagnation suffered by 52; Trade Facilities Act 61n8, 105, 114n4; unemployment rates 138; "way of life" 80; working classes 1, 33n2, 68 Britain's Industrial Future (BIF), Liberal

Party manifesto 4, 82, 84, 93, 95-135, 138, 295, 309n3; Book 2 100, 104, 107; Book 4 100, 104; Chapter VI, Section 2 102; macro dimensions of policy proposals 100; radical policies of Keynes, attempts to gain support for 116-135; see also Liberal Party, Britain

British Union of Fascists 122 brokerage charges 169, 295 brokers' loans 233, 238n15, 255, 286 bubbles 14, 146; bond market, disequilibrium processes 233-234; expectations, long-term 255, 257, 260; financial 162, 288; speculative bubble of 1919-1920 93n2

Building Societies 102 "bull" market 136, 137, 265 business cycle theory 148, 168, 233,

264-268, 294; intermediate-run model of 15, 165, 269

Camerer, C.F.

composition 175; development

110, 131; flight of 54, 153, 156; marginal efficiency of see marginal efficiency of capital; marginal product of 200n3, 208n1, 219n7; movement of 2, 61n9, 63, 157; physical 248; products 183; rate of profit on 8, 9, 62n13, 179-180, 183, 200n3, 270, 287, 297, 304; regulation of 87; resources 100; scarcity value 9, 180; stocks of 176, 180, 181, 183; zero rate 297 capital accumulation 26, 40, 44,

176, 207, 340; domestic 102, 118; foreign 102; and full employment 78; long-term 52, 78; process 53, 125; public investment and state planning 53, 56, 60, 62n13; public/ semi-public 152, 344; real 90; regulation of 95-115 capital assets: business cycle

theory 266; capital accumulation, regulation 95, 96, 100; IS/LM model 284; radical policy views of Keynes 128-129; secular stagnation 184; see also assets; capital accumulation; capital controls; capital expenditure/investment; capital saturation; capitalism capital controls 8-9, 10, 114, 118, 300;

and relevance of Keynes's work for modern economic problems 377-378; support for 153-154 capital expenditure/investment 6-7,

42, 58, 100, 121, 250; endogenously generated movement 286; instability of long-term expectations determining 247-257; large-scale 309n3, 376; rate of profit on see rate of profit; and relevance of Keynes's work for modern economic problems 375, 376; state planning, in Liberal Socialism 2, 3, 6, 8, 48-62; see also capitalism; investment;

Liberal Socialism; public investment; state, the

capital, flights of 54 capital saturation 8, 20n4 capitalism 2, 368; of the 1920s

155-156; big-government 289;

British 368; capitalist economies, required research methodology 369-371; crises tendencies of modern capitalism 192-199; and endogenously generated movement 285-286; free-market 218, 367; and full employment 217-218; "glorious nineteenth century" 163, 167; Golden Age of modern capitalism 19, 191, 200n8, 289, 371; Great Depression 155; Keynes's opposition to 1-21, 30, 45, 155-156; laissez-faire see laissez-faire policies; low unemployment under 8; managed 108; mass movements against 17; methodology required to study capitalist economies 369-391; modern, crisis tendencies 142; nineteenth-century vs interwar Britain 164; replacement with Liberal Socialism, Keynes's hopes for 2, 3-4, 11, 16, 276, 288, 368; slow long-term growth 26-27; structural dysfunctions 8; Tract on Monetary Reform 39; traditional definition 11, 302; see also capital; capital accumulation; capital assets; capital controls; capital expenditure/ investment; capital saturation capital-safety preference see liquidity preference theory Carlstrom, C.T.

casino" financial markets, US Catholic Church 367 central planning 126 Chandler, A. 250 Churchill, W. 4, 5, 57 Civil Works Administration

program 133 classical economic theory: agent choice

theory 13, 168, 258-259; competition concept 72-74; as conventional

wisdom 189; equilibrium 11, 163; "glorious nineteenth century" 163, 167; ideological function 164; interest rates 221, 222; Keynes on see classical economic theory, Keynes's opposition to; Mainstream Keynesian theory compared 14-15; methodology and ideology 169; and Modern Keynesianism 11-17; New Classical theory 20n12; out-of-equilibrium dynamic processes assumed 14, 162, 223; positivist methodology 71, 82n3; roots 163, 164; see also Mainstream Keynesian theory classical economic theory, Keynes's opposition to 1, 5, 45, 64, 71; disequilibrium processes in the bond market 221-238; methodology and ideology 161-171; and Modern Keynesianism 11-17; Say's Law 11; secular stagnation thesis 202; wage and price deflation 12, 209-220 coal industry, Britain: capital

accumulation, regulation 107; deflation 212, 218; gold standard, return to (1925) 66-68; lockout (1926) 218; new economic role of the state 84, 87-89, 92; public investment and state planning 56, 58; stagnation/secular stagnation 172 collateral assets 217

Collected Writings of John Maynard

Keynes (CW) 1, 116; Volume 19 84; Volume 20 116

Committee of Economists 121 Committee on Finance and

Industry 116 Committee on Industry and Trade

64-65, 69n1 Committee on National Debt and

Taxation 57 Committee on Post-War Internal

Economic Problems 327, 330 Commons, J.R. 81 comparative static analysis 162,

170n2, 183, 194; exercises 209, 216; and exogenous shocks 281-285; legitimacy 276-281; see also economics; static models competition theory 72-74, 84, 114n6;

destructive competition 90, 92, 172, 173, 212, 219n6; "free" competition 85, 113; perfect competition 71, 93, 211-212; see also cartels; monopolies; oligopolies

"Concluding Notes on the Social Philosophy towards Which the General Theory Might Lead" 300-301

confidence: evaporation of expectations in 1930s 247-257; expectations, role in truth content 230, 245-247, 258, 269; loss of in "insane" financial markets 143 Conservative Party, Britain 96, 114 consumption spending see household spending, low

corporatism 76

cotton industry 56, 82n2, 84, 92, 107; Britain 82n2, 89, 90, 167, 170n5, 212; global 189

Cotton Yarn Association,

Britain 89, 92 countercyclical macroeconomic policy

17, 18, 169-170, 339, 350 Crotty, J.

Darity, S. 301 Darwinian theory 72, 74 debt: Committee on National Debt

and Taxation 57; National Debt 105; productive/unproductive 57; public 51; war 34, 58, 62n16, 139 deflation: and AD theory 210,

213, 215; in Britain 149; dangers of according to Keynes 12, 15, 30, 33n7, 34, 36-37, 39, 43-44, 64, 65, 139-140, 210; disequilibrium/ destructive disequilibrium 64, 140, 165; and exports 98; financial fragility thesis 145, 210, 216, 219; gold standard, return to (1925) 64, 65; high unemployment 235, 271; and inflation 33n7; inflation­deflation cycle 43, 44, 45; interest rates, deflation-adjusted 139, 142; Keynes's theory vs classical and Mainstream Keynesian theory 165; marginal product of labor (MPL) 210, 212, 213, 219n2, 219n7, 220n13; post World War I 34, 35-36; and poverty 43-44; radical policy views of Keynes 132; secular stagnation 197; see also inflation; price deflation; wage deflation

democratic socialism 11, 124, 190, 303, 318, 378n1

depression, cumulative 173 disequilibrium/destructive disequilibrium 37, 74, 269; bond market, disequilibrium processes see bonds; deflation 64, 140, 165; instability 188; Keynes's theory vs classical and Mainstream Keynesian theory 14, 162, 165; problems in Britain 64-69; sources 264; stock market 221, 237n6; wage and price deflation 15-16, 47n12, 64, 67, 138, 269, 271, 289; see also equilibrium "Does Unemployment Need a Drastic Remedy?" 48, 70, 109

dollar, and pound 59 "A Drastic Remedy for

Unemployment" (1924) 54

DSGE (dynamic stochastic general equilibrium) models 171n8

durable assets 189

Eady, W. 344, 350

Economic Advisory Council 121 "The Economic Consequences of Mr.

Churchill" 33n5, 50, 59, 62n14, 63 The Economic Consequences of the Peace 20, 25, 31, 32, 34, 40, 109, 185, 372; Chapter 2 166; methodology and ideology 166, 167

The Economic Journal 15, 145, 324n4 Economic Section, War Cabinet 327, 334, 341, 342, 350, 352 economics: applied models 165-166, 168, 169; capitalist economies, required research methodology 369-371; classical economic theory see classical economic theory; classical economic theory, Keynes's opposition to; economic policy agenda in Liberal Socialism 6-11; government postwar economic planning for Liberal Socialism 4, 326-365; laissez-faire see laissez- faire policies; long-run economic outlook for Europe 8; neoclassical theories 258-259; new economic role of the state 84-94; proper economic role of the state 70-83; relevance of Keynes's work for modern problems 366-378; and society, Keynes's "vision" of appropriate relation between 366-369; static models

see comparative static analysis, static models; see also macroeconomics economy-society nexus 367 Eichengreen, B.

270, 276

Engineering, Metal and Shipbuilding Unions 49

equilibrium: classical economic theory 11, 163; under-employment equilibriums 161; endogenous disruption 162; fixed-equilibrium model 137; full employment 13, 14, 117, 222, 257, 370; general see general equilibrium; high-employment long-run 192; high-unemployment long-run equilibrium see stagnation/ secular stagnation; market­clearing 117; out-of-equilibrium processes 14, 162, 223, 274; short-term high unemployment 15, 269; stability 12, 15, 188, 209; temporary 49; Walrasian general equilibrium model 20n8, 82n5, 224, 289n2; see also disequilibrium/ destructive disequilibrium

Essays in Persuasion 70, 93 evolution of Keynes's ideas, writings on: from 1919 to early 1920s 25-47; Liberal Socialism (1931-1932) 124-134; National Self-Sufficiency (1933) 2-3, 4, 46n4, 138, 152-158; new economic role of the state (1927-1928) 84-94; prior to World War II (1936-1939) 313-325; proper economic role of the state (1925-1926) 70-83; public investment and state planning (1924) 48-62; relevance of Keynes's work to current economic problems 366-378; return to gold (1925) 63-69; stagnation/secular stagnation (1937) 201-208; in World War II (1939-1945) 326-365; see also writings

exchange rates: fixed (gold standard) 29, 300; flexible 37-38, 44, 45; fluctuations 46n3, 55, 58; and gold standard 29, 45, 68, 300; stable 26, 195

exogenous shocks: bond market, disequilibrium processes 224-225;

endogenously generated movement 15, 285-287; reliance on comparative statics to analyze 284-285; stability and comparative statics 281-284 expectations/expectation formation:

agent choice theory 231; confidence, role in truth content of 230, 245-247, 258, 269; conventional expectations formation 41, 221, 286; instability 42, 247-257; long-term 239, 247-257; profit rate, expected 40, 175, 178, 186, 187, 223-224, 235, 247, 252, 264, 270, 277, 282, 290n4, 290n7, 296, 374; radical uncertainty and long-term expectation formation 241-245; rational expectations model 195, 208; security-price, endogeneity 137; short-to intermediate-term 194-195; see also mec (marginal efficiency of capital) exports/export industries 319, 328;

British 48, 55, 59, 63, 85, 89, 99, 181, 337, 356; and deflation 98; depression/shrinking of traditional sectors 48, 50, 57, 63, 65, 85, 89, 99, 100; export-oriented firms 61n8; growth/stimulation 9, 145, 328; markets 37, 57, 173; new equilibrium 93; permanent erosion of traditional export markets 57; public investment and state planning 48, 50, 54, 55, 57-58; and return to gold standard 58, 63, 64; role of the state 71; staple industries 71, 74; traditional sectors 36, 48, 50, 56, 57, 60n2, 63, 65, 84, 85, 89, 99, 100; unemployment 66, 99; wage cuts 218

Fazzari, S. 280

Federation of Master Cotton Spinners,

Britain 89

financial assets 13, 14, 200n9, 235, 294; "insane" financial markets of the 1920s/1930s, US 137, 139, 144; relevance of Keynes's work for modern problems 370, 377; see also assets; capital assets financial fragility thesis 28, 39, 365n18;

bond market, disequilibrium processes 233, 236; business cycle theory 168; deflation 145, 210, 216, 219; endogenous creation 260; The General Theory (Chapter 12) 240, 255, 256, 260; "insane gambling casino" financial markets, US 139, 145; methodology and ideology 168; radical policy views 132, 298, 299; stagnation/secular stagnation 172, 176

financial markets: casino analogy see "insane gambling casino" financial markets, US; collapse of in the United States (from 1929) 12, 116, 136-139, 141, 169, 234, 264, 269, 365n18;

efficiency 370, 378n2; financial market cycles theory 136-137; volatility 136, 137, 269, 294, 295, 298, 365n18; see also financial fragility thesis; financial/ stock market booms

financial/stock market booms 139, 171n8, 172, 232, 299, 370, 376; IS/LM model 286, 288, 290n5; in the United States (late 1920s) 136, 138, 187, 260, 264, 267, 278, 298 free trade 153, 158 Friedman, M. 82n3, 163 Fuerst, T.S. 219n3 full employment: achieving 50;

aggregate demand (AD) 11; and capital accumulation 78; and capitalism 217-218; defining 49, 60n3; equilibrium 13, 14, 117, 222, 257, 370; institutions used to regulate capital accumulation in pursuit of 95-115; and Liberal Socialism 2; "Long-Term Problem of Full Employment" 340; permanent 10; and public investment 302; radical policy program designed to achieve 3; required policies 302; savings levels 340-341; and war 17, 324n4

Galbraith, J. 301 Galton Lecture (1937) 8, 28, 202,

242, 270 Garside, W.R. 60 Geddes, E. 61n10 Geddes Axe 54, 61n10 general equilibrium 164; dynamic

stochastic models 171n8; exogenous shock to AD 210; high-employment long-run equilibrium 192; Pareto- optimal 367; Walrasian model 20n8, 82n5, 224, 289n2; see also equilibrium General Strike (May, 1926) 88, 214, 218 General Theory of Employment, Interest

and Money (The General Theory): Chapter 2 12, 36, 148, 185, 192, 269; Chapter 3 176, 192; Chapter 5 192; Chapter 7 170n4; Chapter 8 170n4, 177; Chapter 10 277, 284, 293; Chapter 11 220n11, 240; Chapter 12 136, 143, 146, 192, 216, 221, 230, 239-263, 271, 278, 279, 293-294, 298; Chapter 13 136, 192, 271, 286; Chapter 14 12, 192, 221; Chapter 15 136, 192, 199, 271, 286; Chapter 16 8, 179, 270, 296; Chapter 17 175, 183, 192-199, 270, 296; Chapter 19 12, 36, 148, 162, 170n2, 184-185, 192, 269, 279; Chapter 22 136, 168, 187, 192, 233, 264-267, 268n1, 269-271, 279, 313-314; Chapter 23 187; Chapter 24 206, 300, 352; concrete historical facts 172-174; contradictions in 308; crises tendencies of modern capitalism (Chapter 17) 192-199; determination of "general" 165-170; exogenous shocks 281-285; expectations, long­term 239-263; five models 15-16, 269, 272-276; IS/LM interpretation see IS/LM model; Keynes's support of Liberal Socialism in 6, 170; Keynes's views on 266, 291; and Mainstream Keynesian Theory 5; objectives 1-2, 190; opening page 71; priority of stagnation/ secular stagnation in 174-190; purpose of writing 1-2, 302; radical policy views in 291-309, 374-378; stability properties and legitimacy of comparative static macro-policy analysis 276-281; stagnation/secular stagnation 138; see also Liberal Socialism

global depression 93n1 global financial crisis (1930s) 138, 139, 144

global financial crisis (2008) 13, 15, 18, 191

gold standard, return to (1925) 8, 29, 33n5, 62n14, 62n16, 63-69, 170n6; critique by Keynes 33n5; and mining industry 67-68; at prewar par 35-37, 57-59, 63, 64, 66, 67, 69, 70, 74, 80, 88, 98, 173, 218; run-up to 62n14

Gordon, R. 19, 191 government funding 51 Great Depression 1, 9, 30, 155, 191, 212-213, 264, 269, 294, 326; prior to 288-289

Hansen, A. 8, 192 Harrod, R.F 96, 152 Hayek, F.A. 361, 365n21 Henderson, H. 122, 134n3, 141, 330, 340, 344, 350, 356, 357, 363n4

Hicks, J.R. 20n5, 32-33, 237n10; critique of LM curve 279, 289n4; IS/LM model created by 14, 165, 273, 274, 275

high unemployment 17; deflation 218, 235, 271; with stable equilibrium 12, 15, 269; sustained, long-term model see stagnation/secular stagnation; see also IS/LM model; "Keynesian Cross"; unemployment

Hilton, J. 112

Hitler, A. 153, 313 Hobsbawm, E. 5-6, 30-31, 167 Hopkins, R. 335 household spending, low 167-168, 183 housing 147

How to Pay for the War (Keynes) 326 Hume, David 188 hypotheses: truth content 163; validity and assumption set 162-165

imports 9, 66, 89; capital accumulation, regulation 110, 117; immediate prewar period 314, 319; radical policy views, obtaining support for 120, 130; restricting 145, 173, 356; during World War II 356, 358 "The Inducement to Invest" 239 Industrial Inquiry, Liberal Party (1928) 95-97, 115n8, 309n3; Executive Committee 96; postwar economic planning 320-321, 363n2 industrial policy 50, 187, 315; capital accumulation, regulation 98, 107; new economic role the state 84, 89 Industrial Revolution 30-31 industry rationalization movement 89, 113, 114

inflation 41, 43-45; and deflation 33n7; high 200n11; inflation-deflation cycle 43, 44, 45; and interest rates 226; moderate 200n11; and postwar economic planning 315, 327, 328, 330, 355; redistribution of wealth 30; war-generated 28-30, 34 "insane gambling casino" financial markets, US 15, 18, 136-146, 365n18, 373; bond market, disequilibrium processes 226, 231, 234; capital investment, long-term expectations 247; construction industry 147-148; and economic stagnation 146-149; innovation, lack of 147; investment volatility 293-294; methodology and ideology 168, 169; and Schumpeter 273; and secular stagnation 172, 176, 191, 253; short-term speculation 240; stock markets 221, 253; volatility 136, 137; see also United States

instability: disequilibrium/destructive disequilibrium 188; endogenously generated movement 15, 165, 270, 285-287; extreme, short-run quasi­model of periods of 15, 269, 271; interest rates 226-232; and long-term expectations 247-257; substantial price 41; wage and price deflation, rapid 12

institutions: appropriate institutional forms, in a democracy 75; regulation of capital accumulation 95-115 interest elasticity of consumption 225 interest rates: autonomous 300; bonds 54, 222, 223, 225, 226-232; classical economic theory 221, 222; deflation- adjusted 139, 142; determination of 228; falling 8, 9, 11; high 59, 118; and inflation 226; instability 226-232; liquidity preference 220n11, 233-234; in London 58; long-term 8, 9, 118, 142, 158n2, 167, 181-182, 241; low see low interest rates; moderate 27; negative shocks to AD 14; nominal and real long-term 13; and return to gold standard 36; rising 38, 234; risk-adjusted long-term 8, 9, 158n2; volatility 192, 231; zero 302

International Clearing Union 349 International Monetary Fund

(IMF) 9

interwar period 2, 16, 27, 29, 60, 71, 377; Britain's economic problems 98, 116, 119, 121, 123, 169-170; "facts" 167; secular stagnation of see stagnation/secular stagnation; writings of 1936 to 1939 313-325 investment: capital see capital expenditure/investment; domestic demand 56-57; investment-savings, liquidity-money model see IS/ LM model; irreversibility 90, 92; low rates of expenditure on 27, 69n2, 167, 207, 316, 374; low spending on 204-205; public see public investment; volatility 248, 256, 263n3, 293

irreversibility: investment 90, 92;

labor 92, 99 IS curve 277, 278 IS/LM model 16-17, 165; adopted

by Modern Keynesians 16; compatibility with General Theory models 269-270; creation by John Hicks 14, 165, 273, 274, 275; falling interest rates 14; Keynes's five models and Modern Keynesian IS/ LM and AD/AS analysis 15-16, 269, 272-276; and multiplier concept 270, 281; short-run nature of 15, 16, 32-33, 269; stability 274, 276-281; underemployment equilibriums 161

Journal of Economic Literature 2

Kalecki, M. 10, 365n19 "Keynes effect" 217 Keynes, J.M.: advisor to Lloyd

George 25; chief representative of British Treasury Department 25; commitment to socialism 4, 52-53, 125; comparison with Churchill 4; death (1946) 25, 30; influence of 1; "Keynes Plan" 337, 338; negotiations with the US 8-9; opposition to capitalism 1-21, 30, 45, 155-156; "vision" of 1919 31, 32; visit to the US 138, 149; writings see General Theory of Employment, Interest and Money (The General Theory) "Keynesian Cross" 161, 165, 269 Keynesian revolution, real 50, 70, 361 Keynes-Minsky model 233, 240, 377 Krugman, P. 19, 191, 270 Kuznets, S. 293

labor: full employment 96; irreversibility

92, 99; labor movement/transfer

68, 98-99; labor-management­state relations 87-88; markets see labor markets; redundant 100; unemployment 104; see also full employment; high unemployment; unemployment labor markets 11, 57, 64, 210,

213, 219n4; labor market policy 49, 87

labor unions 49, 60n2, 214, 316

Labour Party, Britain 6, 53, 62n15, 80, 86, 292, 323; Annual Conference 128; "doctrinaire State Socialism" 77, 101, 125

laissez-faire policies 1, 2, 5, 7-8, 17, 81, 108, 163, 188, 299, 319; proper economic role of the state 72­75; public investment and state planning 55, 61n11

Lancashire cotton 89, 90 laws of motion 239 Lenin, V. 29-30 Leninism 83n9

Liberal Industrial Inquiry (1928) 95-97, 115n8, 309n3, 320-321, 363n2

Liberal Party, Britain 80-81, 97, 292; Industrial Inquiry (1928) see Liberal Industrial Inquiry (1928); and Keynes 84-85, 87, 115n7; Liberal Industrial Committee 87; "Liberalism and Industry" speech to (1927) 84-85; The Nation and Athenaeum 48, 122, 134n3; Orange Book 110; Summer School 134n3, 295; trusts and combinations, attitudes to 86-87; "Yellow Book" see Britain's Industrial Future (BIF), Liberal Party manifesto

Liberal Socialism 1-21, 33, 82, 198, 207, 324, 350, 374; anti-capitalist dimensions 9; economic policy agenda 6-11; essays from 1931 to 1932 124-134; government postwar economic planning for 4, 326-365; and inequality 300; investment planning, by state 2, 3, 6, 8, 48-62; Keynes's support for in The General Theory 170; Labour Party policies contrasted 6; and Mainstream Keynesian Theory 17-20; origins of Keynes's ideas 4; pursuit of full employment under 95-115; radical policy views of Keynes 300, 307; replacement of capitalism with, Keynes's hopes for 2, 3-4, 11, 16, 276, 288, 368; Soviet Union polices contrasted 6; sustained prosperity resulting from, belief in 16; and US postwar political economy 18; see also socialism

"Liberalism and Labour" (1926) 80, 86 liquid assets 28, 193-194, 217, 226, 294 liquid stock market, "dilemma" created by 260-262 liquidity preference theory: and behavior of US interest rates in the late 1920s∕early 1930s 233-234, 236; bond market, disequilibrium processes 229, 231, 233-234, 236, 237n12, 280; and endogenously generated movement 286; impact on interest rates 220n11; "insane gambling casino" financial markets, US 136, 137, 142; radical policy views of Keynes 296; secular stagnation 184, 186, 194

liquidity premium 193, 194, 199 liquidity trap 198 Lloyd George, D. 25, 60, 82, 87, 88, 95,

96, 104 LM curve 217, 266; bond market,

disequilibrium processes 228, 238n13; critique by Hicks 279, 289n4; and IS/LM model 273-276, 279, 281, 282, 283; vertical 276

Local Loans Fund 105, 114n3 "Long-Term Problem of Full

Employment" 340 low interest rates 6, 375; bond market,

disequilibrium processes 228; business cycle theory 267; capital accumulation, regulation 102, 105; immediate prewar period 313, 314, 315; "insane gambling casino" financial markets, US 142; IS/LM model, compatibility of Keynes's theories with 275; methodology and ideology 170; and radical policy views of Keynes 130, 132, 292, 297, 302, 303, 309n1; self-sufficiency 156; stagnation/secular stagnation 198, 200n4, 207; during World War II 358, 360; see also interest rates Lowenstein, G. 259 Lucas, R. 213, 259

MacDonald, R. 48, 149 Macmillan, H. 114, 130 Macmillan Committee 119, 162;

Report 158n1 macro planning 315 macroeconomics 84, 171n8, 291, 339;

countercyclical policy 17, 18, 169-170; macroeconomic stimulus 49, 98-99; outcomes 40, 203; policy 17, 100; public investment and state planning 49, 50; relevance of Keynes's work for modern problems 370, 372; stagnation/ secular stagnation 205, 208n2; see also economics

macro-policy analysis, comparative static 276-281

Mainstream Keynesian theory

11, 12, 371; agent choice theory omitted 13; classical economic theory compared 14-15; growth models 17; and Keynes's theory 12; and Liberal Socialism 17-20; methodology and ideology 169; need for restoring key omitted aspects 371-374; out-of-equilibrium dynamic processes assumed 14, 162; policy perspective 5; positivism 71, 82n3, 163, 169; and relevance of Keynes's work for modern economic problems 372, 373; see also classical economic theory; Modern Keynesian theory managed capitalism 108 managed trade 9 marginal cost 93, 211, 212 marginal efficiency of capital see mec

(marginal efficiency of capital) marginal product of labor (MPL) see

MPL (marginal product of labor) marginal propensity to consume

see mpc (marginal propensity to consume) marginal propensity to save (mps)

177, 270 Martin, K. 321, 322, 323-324 Marx, K. 10, 26, 81, 174, 212, 219n6,

268n2, 366 Meade, J. 327, 334-340, 343-351, 353 "The Means to Prosperity" 131 mec (marginal efficiency of

capital) 7, 9; behaviorally determined variables 220n11; business cycle theory 267; Chapter 12 of The General Theory 240, 244-246, 256, 257, 262n3; collapsing 266, 283; confidence-adjusted 298; declining 138, 179, 180, 182-183, 200n3, 208n1, 219n7, 268n1, 299, 309; and deflation 216, 220n11; expectations, long-term 251, 262n3; falling 167, 175-176, 179, 180, 183, 196, 199, 315; formal definition 262n3; high 185; and long­term interest rates 181-182, 241; low 181, 183, 186; methodology and ideology 166; secular stagnation 173, 175-177, 179, 180, 185-187, 193, 195, 201; zero-rated 300; see also capital; mpc (marginal propensity to consume); mps (marginal propensity to save)

mercantilism 187-188 methodology and ideology 72;

assumption set 71, 162-165; classical economic theory, Keynes's opposition to 161-171; realism and completeness of assumption set 162-165; required to study capitalist economies 369-391; validity of derived hypotheses 162-165 micro theory see agent choice theory mining industry 67-68 Minsky, H. 14, 28, 39, 142, 168, 194,

200n8, 287, 289, 370, 373; Keynes- Minsky model 233, 240, 377 Modern Keynesian theory 16, 17, 163,

262n3, 284; and classical economic theory 11-17; IS/LM and AD/AS analysis 272-276

Moggridge, D.E. 83n7, 96, 97, 116, 123 monetary policy 35-38, 45, 58,

313, 358; expansionary 48, 53, 190; fluctuations 238n19; objectives 38; optimal 53; postwar 358; radical policy views 297, 298, 300; relevance of Keynes's work for modern problems 374, 375; tightening 267 "money": defining 235-236, 237n7;

"money illusion" 12, 215; risk-free 262

money wages 12, 36-37, 43, 47n12,

64, 199; cutting, falling or reducing

67, 68; and deflation 64, 211, 212, 214-216, 218; gold standard, return to (1925) 64, 67, 68; see also nominal wages; real wages; wage deflation monopolies 56, 322; capital accumulation, regulation 101, 107; and combination 73, 113; economic role of the state 74, 83n7, 84;

natural 61n7; private 112; see also oligopolies

morbid psychology 142, 143 Mosley, O. 60; Manifesto 122-123 mpc (marginal propensity to consume)

20n4, 170n4, 216; declining 175, 176, 199, 283, 377; high 293; increasing 204, 299, 374; low 168, 175, 186; methodology and ideology 166; and multiplier concept 186, 204, 293, 371, 374, 377; stagnation/secular stagnation 173, 175, 176, 177, 186; variable 293; see also mec (marginal efficiency of capital); mps (marginal propensity to save); multiplier, investment

MPL (marginal product of labor) 210, 212, 213, 219n2, 219n7, 220n13 mps (marginal propensity to save)

177, 270; see also mec (marginal efficiency of capital); mpc (marginal propensity to consume)

Muir, Ramsey 96 multiplier, investment 20n4, 61n5,

110, 319; and AD theory 50-51; formalization of 131; IS/LM model 270, 281; low value 168; methodology and ideology 168;

and mpc 186, 204, 293, 371, 374, 377; postwar economic planning 336, 354; public investment 293; radical policy views of Keynes 117, 121, 133, 135n5, 293; stagnation/secular stagnation 175, 177, 181, 183, 185, 186, 204, 207

Mussolini, B. 153

Napoleonic Wars 28, 40

The Nation 53, 54, 56

The Nation and Athenaeum 48,

122, 134n3

National Debt 105

"National Income and Expenditure

After the War" (Keynes and

Stone) 330

National Investment Board see Board of National Investment, proposed "National Self-Sufficiency" 2-3, 4, 46n4, 138, 152-158, 377; radical policy views of Keynes 305, 306 nationalization 9, 76, 316, 317, 365n20;

of Bank of England 297, 361, 375 natural monopolies 61n7 negative shocks 14, 222, 223, 257 neoclassical theories 90, 163,

173, 200n3; agent choice theory

13, 168, 258-259; see also classical economic theory; classical economic theory, Keynes's opposition to neoliberalism, Keynes's

opposition to 19

New Deal, US 17, 316

New School for Social Research, New

York 139-140

New Statesman, The 2

nominal wages 11-12, 36, 55, 215, 217; in the United States 148, 211; see also real wages; wage deflation

"Notes on Mercantilism, Etc," 187

O'Donnell, R., "Keynes's

Socialism" 3-4

old order, dissolution 25-26, 33 oligarchies 375

oligopolies: capital accumulation, regulation 101, 107, 108; economic role of the state 73, 74, 84, 86­87; public investment and state planning 56; see also monopolies orthodox theory 11, 53, 72-74, 208n2, 291, 367; see also classical economic theory; classical economic theory, Keynes's opposition to out-of-equilibrium processes 14, 162, 223; IS/LM model 274, 276; see also disequilibrium/destructive disequilibrium; equilibrium

Paris Peace Conference (1919) 25 Parliamentary Companies 102-103 perfect competition 71, 93, 211-212 Piketty, T. 33n6, 200n5 planning: investment 2, 3, 6, 8, 48-62; postwar economic planning 326-365

The Political Quarterly 124

Pollard, S. 20n1, 59, 110-113; The Development of the British Economy 110

positivism 71, 82n3, 163, 169 postwar economic planning 4, 18, 326-365; construction spending 329; income and employment 330-331, 363n5; Keynes's proposals in 1945 359-360; long-term 329; public investment 328; reconstruction 328; Steering Committee "Post-War Employment Policy" report (1944) 353, 354; War Cabinet, Economic Section 327, 334, 341, 342, 350, 352; "White Paper on Employment Policy" (1944) 356

pound: overvalued 29, 59, 64, 170n6; parity with dollar 59; rise in value of 65, 66

Prescott, E. 213

price deflation 12, 15-16, 64, 197; from 1919 to early 1920s 45, 47n12; asset price 12; disequilibrium/

destructive disequilibrium 15-16, 36, 64, 67, 138, 269, 271, 289; effects 209-220; falling bond prices 14; "insane gambling casino" financial markets, US 138; low prices 35, 91; methodology and ideology 162, 165; rapid 12; and unemployment/high unemployment 215, 235, 271 prices: bonds 12-14, 229; deflation

see price deflation; financial assets 14; market liquidity and price volatility 170n7; price-adjusted wage 12; rise in 14; security 137, 138, 254-255, 290n5; substantial instability 41; unexpected changes 42; volatility 143, 170n7, 194, 226

principle of effective demand 176 production-employment cycle 43 profit rates 296 profitability 52, 63, 175, 179, 185, 207,

251, 287, 321 profits: constraints on 56; expected flows 262n3, 263n3; future/ prospective 11, 26, 245, 248, 256, 274, 277; immediate 249; long-term expectations 247, 252; non-profit organizations 20, 77, 95; normal 91-93; private motive 77, 101, 102, 108, 179; for-profit industries 96; rates of see rate of profit;

subsidies 88; windfall 41 "Properties of Interest and

Money" 183 prosperity, cumulative 50, 52, 54, 173 "The Public and the Private Concern"

(1927) 95 public concerns 102, 105-106, 107 public corporations 6, 111-112, 128,

324n3, 368; capital accumulation, regulation 107, 110-114, 114n5; proper economic role of the state 75-77

public debt 51 public investment: and aggregate

demand (AD) 10; debt-financed 149; defense of effectiveness 209-210; expenditure 118; and full employment 302; large-scale 56-58, 132; Liberal Socialism 2, 3, 6, 8, 48-62; multiplier 293; postwar economic planning 328, 360; preferred economic policy of Keynes 182-183; secular trend 342; semi-public 6, 8, 129, 324n3, 360; size 129; state control/planning 48-62, 99

public utilities 76, 130, 204, 226, 297; capital accumulation, regulation 103, 111; and immediate prewar period 314, 324n3; "insane gambling casino" financial markets and secular stagnation, US 142, 146; and public investment 6, 53, 61n7; and relevance of Keynes's work for modern problems 375, 376

public works 3, 51, 55, 61n6, 293, 344, 346

Public Works Administration program 133

Quantity Theory of Money 223, 227 Quarterly Journal of Economics (QJE) 136, 229, 266, 278, 286; "insane" financial markets of the 1920s∕1930s, US 241-243, 245; Keynes's defense of The General Theory (1937) 266; long­term expectations 242, 243; secular stagnation 192, 198

radical policy views of Keynes 3, 44-45; efforts to gain support for 116-135; financial fragility thesis 132, 298, 299; in The General Theory 291-310; and low interest rates 130, 132, 292, 297, 302, 303, 309n1; monetary policy 297, 298, 300; and multiplier concept 117, 121, 133, 135n5, 293; "National Self-Sufficiency" lecture (1933) 152; relevance for current economies 374-378

radical uncertainty 13, 15, 372; and long-term expectation formation 241-245

rate of profit 69n2, 175, 177-182, 185, 186, 221; actual 187, 264, 265, 278; on capital/capital accumulation 8, 9, 62n13, 118, 167, 172, 179-180, 183, 200n3, 270, 287, 297, 304; decline in 167, 183, 188, 202, 265, 266, 268n1, 270, 282, 341, 360, 374; expected 40, 175, 178, 186, 187, 223-224, 235, 264, 270, 277, 282, 290n4, 290n7, 296, 374; high 167; investments 27, 52, 53, 56, 57, 119, 179, 189, 201, 239, 240, 253, 286, 297, 341, 360, 364n11, 369; low, on capital 8, 118, 172; rise in 264, 286, 336; zero 180-182, 187, 237n2, 297, 302, 329, 340, 360; see also profitability; profits

rational agent choice, classical/ neoclassical theories 13, 168, 258-259 real assets 193-199, 256, 284 real money supply, rising 217 real wages 12, 47n12, 69, 229n10;

deflation 212, 215; fall in 13, 20n8, 36, 55, 64, 148, 210-214, 218, 219n2, 219n8, 220n17, 222; high 154; rising 212, 219n7; see also money wages; nominal wages; wage deflation "regime of money contract" 139, 140 rentier class 9, 10, 42, 43, 78, 297;

"euthanasia of the rentier" 62n17 Ricardo, D. 164, 308 Robbins, L. 122 Robin Hood tax 295 Robinson, A. 358 Robinson, J. 70, 245 Roosevelt, F.D. 17, 133, 316, 317, 332-333

ruling elites 29, 33n6, 63, 74, 373 Russia see Soviet Union

Sargent, T. 213

Say's Law 11, 46n8, 215, 219n6, 223, 224, 301

Schumpeter, J. 4-5, 16, 31-32, 82n4, 91, 114n6; creative destruction 219n6; and "insane gambling casino" financial markets, US 136, 145; and models in The General Theory compared with IS/LM model 272, 273; pre-analytic vision 164, 273 Second World War see World War II secular stagnation see stagnation/ secular stagnation

security prices 138, 254-255, 290; security-price volatility theory 137 semi-autonomy 75 semi-public investment projects 6, 8, 129, 324n3, 360

Shaw, G.B. 291

Shocks see exogenous shocks; negative shocks

Sidney Ball Lecture, Oxford (1924) 70 sinking funds 51, 105, 177 Skidelsky, R. 36-39, 44-45, 48,

58, 79, 97, 327, 334-335, 363n4, 364n9, 364n13

slump, financial 147 social class 69, 307; working classes 1, 33n2, 68, 313 social welfare system 21n13, 331 socialism 2, 5, 18, 19, 38; in Britain 123;

democratic 11, 124, 190, 303, 318, 378n1; goal of 4, 125; Keynes's commitment to 4, 52-53, 125; practical 123; State socialism 60, 77, 101, 322; "true socialism of the future" 52-53, 130; see also Liberal Socialism; State socialism

Society for Socialist Inquiry 124

Soviet Union 6, 157-158, 191; Five-Year Plan 126, 128; Soviet-style planning 38, 62n15, 103, 125, 127

Spanish Civil War 313 specialization, international 155 speculation 37, 42, 46n3, 97, 146,

150n3, 257; in Britain 295; defining 256; in the late 1920s and 1930s 248; short-term 240; speculative bubble of 1919-1920 93n2; in the United States 255, 295 stability: equilibrium 12, 15, 188, 209; exchange rates 26, 195; exogenous shocks and comparative statics 281-284; in The General Theory 276-281; in IS/LM model 274, 276-281; and legitimacy of comparative static macro-policy analysis 276-281; long-term, of employment 364n14; long-term expectations and instability 247-257; stable equilibrium with high unemployment 12, 15, 269; see also instability stagnation/secular stagnation

15-17, 26, 31, 138, 172-208, 324n6; evaluating accuracy of Keynesian theory 190-192; Galton Lecture (1937) 8, 28, 202, 242, 270; Keynes's views on 8, 138, 166, 201-208; link with casino financial markets 172, 176, 191, 253; long-term 16, 20, 25, 147, 166, 186, 188, 190, 270, 272, 276, 371, 372; low interest rates 198, 200n4, 207; mec (marginal efficiency of capital) 173, 175-177, 179, 180, 187, 201; methodology and ideology 165, 171n9; model in The General Theory 270; and multiplier concept 175, 177, 181, 183, 185, 186, 204, 207; priority of in The General Theory 172-200; in United States 146-149

"The State and Industry" 125

State socialism 60, 101, 322; Labour

Party 77, 101, 103, 125 state, the: institutions used to regulate

capital accumulation 95-115; investment planning, in Liberal Socialism 2, 3, 6, 8, 48-62; new economic role 84-94; peacetime economic role, postwar increase 18; proper economic role 70-83; semi­autonomy within 75 static models 198, 199, 270, 272, 275;

comparative static analysis 162, 170n2, 183, 194, 209, 216, 276-285; exercises, comparative static analysis 209, 216; exogenous shocks and comparative statics 281-285; legitimacy of comparative static macro-policy analysis 276-281 sterling see pound stock markets: bond market,

disequilibrium processes 221, 237n6; as "gambling casinos" 221, 253; liquid stock market, "dilemma" created by 260-262; volatile price movements 252

Stone, R. 330 structural unemployment 49, 50,

54, 348 subsidies 88, 314 Summers, L. 19, 170n8, 191, 270 "Sundry Observations on the Nature of Capital" 179-180

takeovers 250 tariffs 89, 120, 154 taxation policies 6, 10, 17, 20n4,

41-42, 117, 190, 237n1, 354; cutting tax 338-340; "death" tax 299, 302;

direct tax 302; economic role of the state 96; and full employment 109; gold standard, return to (1925) 68-69; income tax 299, 301, 342, 361; indirect 354; inheritance tax 302; personal tax rates 339; progressive 10, 190, 303, 374, 375; raising tax 131, 301, 314, 339, 340; rates of tax 299, 339; substantial financial transactions 295; surtax 301; tax system 335, 342, 353; transfer tax 295; wealth tax 29, 36, 361

time series data 204-205 Tobin, J. 250 Tobin tax 295

Tobin's q theory of investment

262, 263n6 totalitarianism 128, 318 Tract on Monetary Reform 30, 35, 37,

39-46, 59, 61n4, 91, 210, 218 Trade Facilities Act, Britain 61n8,

105, 114n4 trade unions 49, 60n2, 214, 316 transaction costs, low 193, 232, 248,

261, 262 Treatise on Money 136-137, 154,

237n6, 364n12 Treatise on Probability 73 Treaty of Versailles 25, 154 Trump, D. 19 uncertainty: and bonds 221, 226-232;

fundamental 73, 240, 243, 258-259; and interest rate instability 226-232; radical see radical uncertainty unemployment 8, 60n2, 104; chronic nature 324n6; export industries 66, 99; of 5 percent or less 330-331; high-unemployment long-run equilibrium see stagnation/secular stagnation; low 8, 17, 49, 267, 293; rates of 18, 130, 138, 150n1, 330-331; "reserve army" of unemployed workers, elimination of 10, 174, 212; stable equilibrium with high unemployment 12, 15; structural 49, 50, 54, 348; in the United States 17, 149; wage and price deflation 12 United Kingdom see Britain United States: armed forces 17; boom of late 1920s 136, 138, 187, 260, 264, 267, 278, 298; business cycle theory 168; capitalism in 1; collapse of stock market and subsequent crisis (from 1929) 12, 116, 136-139, 141, 169, 234, 264, 269, 288, 365n18; economic stagnation in 146-149, 177-178; financial structure 140;

"insane gambling casinos," financial markets seen as see "insane gambling casino" financial markets, US; interest rates and liquidity preference theory (late 1920s∕early 1930s) 233-234; Keynes's preferred policies for 316-317; Keynes's visit to 138, 149; managerial firm 250; McCarthyism 371; negotiations with Keynes 8-9; New Deal 17, 316; New School for Social Research, New York 139-140; nominal wages in 148, 211; population growth, fall in 147; postwar political economy 18; security prices 138; stock market 221; Trumanism 371; unemployment rates 17, 149

volatility 171n8, 240, 256, 271; financial markets 136, 137, 269, 294, 295, 298, 365n18; "insane gambling casino" financial markets, US 136, 137; interest rates 192, 231; investment 248, 256, 263n3, 293; prices 143, 170n7, 194, 226

wage deflation 11-12, 16, 140, 165, 209-220; cuts 218; disequilibrium/ destructive disequilibrium 15-16, 36, 47n12, 64, 67, 269, 271, 289; raising AS 15; rapid 12; real wages 13, 20n8, 36, 55, 64, 148, 210-214, 218, 219n2, 219n8, 220n17, 222; and unemployment/high unemployment 215, 235, 271 wages see money wages; nominal wages; real wages; wage deflation

"Wall Street" 246

Walrasian general equilibrium model 20n8, 82n5, 224, 289n2

War Cabinet, Economic Section 327, 334, 341, 342, 350, 352

war debt/finance 34, 58, 62n16, 139, 320

White, H.D. 8-9, 365n19

"White Paper on Employment Policy" (1944) 356

working classes 1, 33n2, 68, 313 World Economic Conference 152 World War II: and full employment

17, 324n4; Keynes's writings prior to 313-325; postwar economic planning during (1939-1945) 326-365; postwar economic structure 18; war debt/ finance 34, 58, 62n16

writings: "Am I A Liberal?" 80, 82n1, 212; Collected Writings of John Maynard Kaynes (CW) 1, 84, 116; "Concluding Notes on the Social Philosophy towards Which the General Theory Might Lead" 300-301; "Does Unemployment Need a Drastic Remedy?" 48, 70, 109; "A Drastic Remedy for

Unemployment" 54; "The Economic Consequences of Mr. Churchill" 33n5, 50, 59, 62n14, 63; The Economic Consequences of the Peace 20, 25, 31, 32, 34, 40, 109, 166, 167, 185, 372; Essays in Persuasion 70, 93; General Theory of Employment, Interest and Money (The General Theory) see General Theory of Employment, Interest and Money (The General Theory); How to Pay for the War 326; "The Inducement to Invest" 239; "Liberalism and Industry" 84-85; "Liberalism and Labour" 80, 86; "Long-Term Problem of Full Employment" 340; "The Means

Index 397 to Prosperity" 131; "National Income and Expenditure After the War" (Keynes and Stone) 330; "National Self-Sufficiency" 2-3, 4, 46n4, 152-158, 305, 306, 377; "Notes on Mercantilism, Etc" (The General Theory) 187; "Properties of Interest and Money" (The General Theory) 183; "Sundry Observations on the Nature of Capital" (The General Theory) 179-180; Tract on Monetary Reform 30, 35, 37, 39-46, 59, 61n4, 91, 218; Treatise on Money 136-137, 154, 237n6, 364n12; Treatise on Probability 73; see also evolution of Keynes's ideas, writings on