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Keynes on the Sources of Economic Growth

Published online by Cambridge University Press:  11 May 2010

Vincent J. Tarascio
Vincent J. Tarascio
Affiliation:
University of North Carolina
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Extract

The major purpose of this paper is to call attention to an article by Keynes (1937) published in Eugenics Review the year following the publication of the General Theory, and which has been neglected in the literature on Keynes. The emphasis in the General Theory is on the short-run with given resources and a given state of technology. In his Eugenics Review article, Keynes examined the effects of a changing population upon savings and investment and the level of income and employment. He was thereby led on to an approach nearer to what might be regarded as growth theory than that of the General Theory. In this sense, Keynes' 1937 article may be viewed as supplementing the General Theory.

Type
Articles
Information
The Journal of Economic History , Volume 31 , Issue 2 , June 1971 , pp. 429 - 444
Copyright
Copyright © The Economic History Association 1971

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References

1 Although Keynes' article in Eugenics Review appears in the bibliography on Keynes, to my knowledge, no author has systematically analyzed his thoughts on population and employment In his Presidential Address, Professor Hansen cites Keynes' article only in connection with real capital formation in England: “… Keynes thinks that real capital formation in England may have very slightly exceeded the rise in real income in the period 1860 to the World War.” Hansen, Alvin, “Economic Progress and Declining Population Growth,” American Economic Review, XXIX (Mar. 1939), 6Google Scholar.

2 Keynes, J. M., The General Theory of Employment, Interest and Money (New York: Harcourt, Brace and Co., 1936), p. 245Google Scholar.

3 Ibid., p. 245.

4 Ibid., p. 245. The relationship between population change and the marginal efficiency of capital will be discussed in a later part of this paper.

5 Ibid., p. 245.

6 Keynes, J. M., “Some Economic Consequences of a Declining Population,” Eugenics Review, XXIX (Apr. 1937), 14Google Scholar.

7 Ibid., p. 14.

8 Ibid., p. 14.

9 Ibid., p. 14.

10 Ibid., pp. 14–15.

11 Of course, Keynes also discusses “subjective factors,” which he treats as given. He also treats as given the size distribution of income (Keynes, The General Theory …, p. 245).

12 Keynes, “Some Economic Consequences …,” p. 17.

13 Ibid., p. 15.

14 Ibid., p. 15.

15 Ibid., p. 15.

16 Ibid., p. 15.

17 Ibid., p. 15.

18 Ibid., p. 15.

19 Ibid., p. 15.

20 Ibid., p. 15.

21 Ibid., p. 16.

22 Ibid., p. 16.

23 Ibid., p. 16.

24 Ibid., p. 16.

25 Keynes, The General Theory …, p. 173.

26 In the General Theory, Keynes did discuss the effect of a more equal income distribution on consumption (and savings), but he did not seem to consider income redistribution as an important policy for increasing the level of employment (Keynes, The General Theory …. p. 95).

27 Ibid., pp. 315–16.

28 Keynes, “Some Economic Consequences …,” p. 14.

29 Ibid., p. 16.

30 Keynes, The General Theory …, pp. 17–30.

31 In other words, the supply of labor is fixed at the full employment level.

32 Since for the period 1860–1913, then the term is eliminated.

33 As will be falling. Also as will be rising. The limit state is where For purposes of comparison Keynes assumed a limit state, and this is why is not included in expression (19).

34 Of course, it is assumed that a second condition also obtains, namely, Y = Y°.