Notes
1 Given the almost universally held belief that trend population growth rate had dropped substantially in Britain, Keynes could have argued that if the capital stock grew rapidly over the long run, the labor-to-capital ratio would decline substantially over time, causing the marginal product of capital, and thus the return to physical capital, to fall.
This is an argument he makes, at least by implication, in chapter11.2 His distain would apply equally to the assumption of "rational expectations" in today's macroeconomic orthodoxy.
3 This relation is an identity that, when its variables are confronted with historical data, is subject to substantial measurement error, especially over long historical periods.
4 One reason for this was that it would increase the cost of eliminating excess capacity due to overproduction based on the extrapolation of past trends in industries such as residential housing, business construction and the building of infrastructure. "This creates a pessimistic atmosphere" (CW 14, p. 126).
5 Keep in mind that Y/N is not labor productivity - output per labor hour or per worker - but rather output per person in the entire population, including those too young, too old, or too infirm to be in the labor force. Average growth in output per worker in these data would be higher than 1 percent per year.
15