‘THE COLLECTED WRITIN a JOHN MAYNARD KEYNES |, i VOLUME XIII THE GENERAL THEORY e | AND AFTER i PART 1 PREPARATION DONALD MOGGRIDGE eae MACMILLAN ST. MARTIN’S PRESS ROYAL ECONOMIC SOCIETYhe eno 4 ony haya tation scot a pled gmt ring ig} Kes mover ro the Trae tothe Gawal Thy. Keyes Nel erly made omcing of che ahninaerasshedowtlteensbasntos Fond ores [Spat he slp Fo eS den fragt ‘i ae Sea 1 ny opin the ala aan wy the probe of ss teed rat yey tery so neta Tefal nthe i of what ight betel manny ety ini Ti dicion which is normay nade betes «biter ‘economy and a monetary economy depends upon the employ= tnt ef moey vo cnr me of ting eager San intromet of pat comesioce, ba Husky sd etal efit ered ae ak ewe th hd wh, o bene the ops Mur spent on Bing the hn nde daar spent on rvesng he ap Fee ot ‘Sppored io flr the acne tie of the eesinn fo ‘bin he minds ofthe lig oe een el ig rt oti he motes sd des of the pars wf Mone a to sy, employed a era Bg sone tse el "Tha, hover, 8 not he inion which 1 have nnd when Ty ta ve ck neney ces of pediclon An Tennyson bt cela ea Bervecn nuns sl hing an el ucts and dss ot Al ete to me or corn, ight beak fc a a tte mimea nalcange sono. "The Bary SENT dente wed dn omaincon oi wi Ineconoyin ich mone lps pr a ov and 3s mot an dean en atone of he ope fis the stunt, tt th ours of vet cnet Be +8 | procter in the long pid or in the short, without a Ienowiedge ofthe behaviour of money beewean the firs ate and ‘the last And itis this which we cag wo mean when we speak of A monetary ecomomy. ‘Most testes on the principles of economies sre concerned mails if noe enrely, with a reab-exchange economy and— ‘which is mare peclit—the same thing i alo agsly ue of ‘most treatises on the theory of money In parca, Marshalls Principles of Ezouonics 's avowedly concerned wth 4 ral exchange coonony and 5, Ichi, By fr the grater par of the tetiss of Profesor Pigou—to nae those Frglish works fon which I have been brought up and with which Iam most familar. But the same ching is alo tue of the dominant systematic wens in eter guages and countries, ‘Marsal expresy states (Priacpe pp 61, 62) that he is Aen with rela exchange values. The proposn thatthe ccs of ton oflead and atom of in are 1s and {go meas no ‘more to hie inthis conte than that the vale of tn of tin in ‘erms of lead is six tons (long with 2 number of exh silar proposition). We may throughout this vole’, he explain, Fhlece posible changes in the general purchasing pone of smoney, Thus the price of anything willbe taken as representative ofits exchange ale reaively to ingen general” (ay ais). He quotes Cournot tothe eft tit “ne get the sane sort of ‘convenience om assuming the exence of a stindard of uniform purchasing poner by which to measure value, hat sstronomtrs do by asuming that there faa "mean son” hich ‘rose the meridian at ofr interval, that the clock can ep pec with ity wheres the actual sun crosses the mecdian sometimes before and. somedines after noon at shown by the ‘lok’ In shot though money is peseat snd is made se of for ‘convenience itmay be considered to eae ot fg the purposes ‘ef mast ofthe genral conclusions ofthe Pini, Orif we tun to the writings of Profssur Pgoa, the assumptions of a eal- ‘exchange economy ppt ast eharacteitialyin his ang as ”‘is normal case hit in which che shape ofthe supply schedule of Inbour in terms of rel wages ip virally independent of Changes a the vale of mony. ‘The divergence between the veal-exchange economics and my ested: monetary economics is, however, monet marked and perhips mos important when we come to the discon of the rae of ingest and to the elation between the volume of output sd the amount of expenditure. Everyone would, of course, agree that itis in a monetary ‘conony in my sease ofthe tr tht we actly ive Profesor Pigoa Knows aswell s anyone that wages ace infact atihy in terms of money. Marshal was perfectly aware thatthe existence of debts gvesa high degree of practical importance tshangesin the vee of money. Nevertheless i is my belief atthe (ar reaching and in ome respects fundamental ditfereees between the eonlasions of monetary economy and those ofthe more ‘implied cealexchange economy have been greatly underet= ‘mated by the exponents ofthe traditional cmos, with the result that the machinery of thought with which real-xchange ‘conomicshaseuipped the minds of practitioners nthe world of airs, and aso of economists themselves, has led in practice ‘many exroneous conclusions and polices, The idea that ie is comparatively easy to adapt the hypothe conchions of eal wage economics othe el world of monetary conan isa aise. tis extaoedinarily dealer make the aptstion, and perhaps imposible without the aid of @ developed theory of ‘monetary ecznomics. (One of the chit causes of confision His in the ft that the assumptions of the eal-exchange economy have bon ait, and you wl earch treatises on zealexchange eamomics in ain for ny expres stem ofthe simplifications introduced or forthe relationship ofits hypocheicl eaalsions wo the fits of the real world, Weare not told what conditions have tobe filled ‘fmoney is tobe neutral. Nori it easy to supply the gup. Now ‘he eonitions required for the "neatel” of money, in the 40 sense ia which this ese agin to take this ook a & Jeading examploMarballs Priniplr of Ezoonicy ary 1 suspect, precisely che same hose which wl insure that xs sto not acer, 1 this is tru, the real-exchange economics, on ‘which mos of us ave heen brought wp snd-with the eolusons cof which our minds are deply impregnated, though 4 valuable stration in self and perfectly veld ax an intellectual co ception, & 2 singularly blunt weapon for deling with the problem of booms and depressions, Fort has assumed ay the ‘eey matter tinder investigton ‘Even if the above i in come respects an overstatement, consis, I believe the cae to our difiales. This fs no the Same tings to sy that the problem of booms and depresons isa purely monetary problem, For this statement i feeclly seantto imply thats complet slition sta be fad in banking policy Tam sng tat booms and depressions are peomena peculi to an essnomy in which—in some significant sense which Tam not attempting t define precisely in thie pace money isnot neue ‘Accordingly I blive shat che mex tsk sto work oti some euil« monetary theory of productian, to supplement ther exchange theories which we aleady pests. At any rite thei {he task on which Fam now occupying myelin some conkdence ‘hat Fam not wasting ny tne, Kaye ln emp scence we ei hoane fhe cacna try pT Mee Tay Or tess eng he SL el ed ly Te Frc Thay ay Inn rece hc ion Oat tops Rays el ra ecg of le yee ESET wna jig ene book "em ot ee Gi tg et ty a ‘Shetland pe nape 7