Notes

1 The British historian Sidney Pollard said that a "large share of industry and transport was, even in the 1920s, not controlled by private enterprise at all, but by various types of public or non-profit-making organisations, and their growth is one of the most significant aspects of the period" (Pollard 1983, pp.

2 Keynes added: "It has nothing whatever to do with deficit financing."

3 Keynes's 1919 book on post-WWI economic prospects in Europe, The Economic Consequences of the Peace (discussed in the next chapter), did express concern that war in Europe might break out again in the intermediate future. But he believed this would bring economic disaster, not prosperity.

4 When the economy approached the point of capital saturation, Keynes wanted to use progressive redistributive tax changes to raise the mpc and thereby increase the investment "multiplier." This would raise AD or total spending at all levels of investment.

5 Apologies to J.R. Hicks for borrowing the title of his influential 1937 publication.

6 In the preface to The General Theory, Keynes described this struggle to free him­self from classical ideas: "The composition of this book has been for the author a long struggle of escape... from habitual modes of thought and expression... The difficulty lies, not in the new ideas, but in escaping from the old ones, which ramify, for those brought up as most of us have been, into every corner of our minds" (CW 7, p. xxiii).

7 If AS = C + S and AD = C + I (where C = consumption, S = savings, and I = investment), when AD is less than AS, S must be smaller than I.

8 In the standard neoclassical Walrasian General Equilibrium model, prices actually rise when AD is less than AS, an empirically repugnant proposition that ensures that real wages will decline.

9 New Keynesian theory relies on various market imperfections to explain wage and price rigidities.

10 Both investment and consumption are assumed to be positive functions of income and negative functions of the interest rate.

11 See Crotty (1994) for a detailed analysis of this issue. See also Chapters 17 and 18 of this book and chapters11-15 and 22 of The General Theory.

12 In New Classical theory, the agent is assumed to know the true distributions of future outcomes and future outcomes are assumed to be unaffected by current agent choice, assumptions that are literally absurd. In neoclassical theory, agents generate distributions of expected future outcomes through a "subjective" process that agents understand cannot lead to knowledge of the "truth" about future economic outcomes. The assumed rational agents in this theory are then assumed to make their choices as if their subjective expectations of future economic outcomes were the truth about the future. These two assumptions are logically incompatible.

13 Keynes enthusiastically supported the vast expansion of Britain's postwar social welfare system proposed by Sir William Beveridge during WWII (see Chapter 22). In other words, his view of Liberal Socialism incorporated a gen­erous social welfare system.

14 See, for example, Gordon (2016).

15 The book was first published in 1919, but all quotations used here are from the 1920 version.