THE COLLECTED WRITINGS OF JOHN MAYNARD KEYNES VOLUME XIII THE GENERAL THEORY AND AFTER PARTI PREPARATION DONALD MoGGRIDGE ese? MACMILLAN ST. MARTIN'S PRESS ROYAL ECONOMIC SOCIETYshy thar 27 has not much beeing on fy. Hence far praca! rposes we can usually thinkin terms thesimplifed equation N= Lila. “Ths since the functions FF andy depend on the given factors the volume of employment 2V is determined when we [now Othe propensity o spend the rate of intrest andthe areal ficiency ofcapital;—eo the farther definition of which three texms we mst nw proeed “The abot equation is subject, of ours, to the liniation that 1 cannot exceed fall employment, since when tht point is reached me can no longer mate the assumption, id into- deed above, thar she productive peoesses for ceasurpion and fnvestent goods respetvely do not compete with ote another for resouots, tis possible, indeed, thc these process may begin to compete for resources before full employment reached, Nor would it be difiele to make our notation ake ‘comin of his But tis ne nsssary wih cheratic equations uch os the above, the only purpose of whichis to elucidate several ideas. 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Iwecmsier wat as bess ints ls oy, is le, tiny tht thei oe pat she which we il epee point wie stil empbonsed ty Mr Henderon, The 48sPoint i this. Whatever may be the best remedy for povery in Peoty, we must reject al thee alleged remedies which const, in substance, of geting id of the plenty. Te may be tus, fr vious reasons, chat, a8 the potential plenty increases the problem of getting the fui of i distebted tothe gree body ‘of eonsumes wil presen increasing dilfcltice, But i tothe analgeis and olution ofthese diculies that we most ect our rinds To seek an escape by making the productive machine Jess productive must be wrong Toft fn msl in favour of measures ro est ouzput a tmporay palliative oto meet emergency. But the temper of mitd which tans too easly 0 restriction is dangerous. For i his nothing wef to conte to the permanent solution, ‘Buc hiss another way of yng that we mast na gad the condition of supply—that isto say, our sities to prealuer—as being the fondamenal source of our troubles. And, if this is agreed i Seems to allow tht it the conditions of demand ‘which ou diagnosis mast search and probe fe the explanation, Tren, i, Thi etsy the ll he conebutors to these tals meet to hic exent on commen ground. Ifyou wil examine ‘acefily wht they have told yoo, yo wil id that each one of them fiods the major pare of his explanation in some fet hich relates to the enditins of denand. Bu hough we, your rmentns all stst ont in the stne dietio, we soon pat ‘eompany ino two min groups. And even within each group everyone of us has a somewtt difxent explanation of what ‘wrong with demand, and, consequently a different ides of the ght remedy. Between us, perhaps, we shall succeed in giving ‘you fairsample ofthe computing opinions ofthe contemporary ‘weld "ve said that we fil inc ewo min groups. What that ‘makes the clanage which thus divides ws? On the onesie are those who believe thatthe existing economic system i in the Jong an, a seadjusing sytem, though with eek and goss anaes, and interrupted by time lag, outside innerfnence ad 46 mistales, OF chose who adhere, broadly speaking, to this choo) of thought Mr Hendersoa lay tet on the increase difclty of rapid selfadjotmest to change ighly stacking innportance to the greterlss and delay ievaved in «change-over rn one ‘ype of production wo aother—nhen change in technique oc in tastes make this necessirj—iaan environment where population and markes are no longer expanding rapidly; whist Mr Brand stresses the prong teaene) fo outside intesirence to hinder the procsses of slFadjusnent; and Profesor Robbins, to judge for his syllabus, sree the fet of business mistakes ‘under the inuence ofthe unerany and tefl expecntions Aue tothe faults of poatvar monctarysstens. These author tes do ot, of cous, believe ht he aster is automaticaly or immediately sladjasing. But they do believe that it hos a inherent eadancy towards ecleajustment, tf no nerfed ‘with and if the ation of change and chance is not to rap (nthe other side ofthe gulf ae thse who rjct heen that the existing economic system is, in any signiteane sense ele adjusting. They belive tht the fare of efetive demand to reich the fall potentialities of supply, in spite of human payeholoscal demund being immensely Tar Sor stisbed for the vast majority of individual, due 0 mich mone funda ‘mental cases. Dr Dalton stress the great inet of incomes ‘which essa separation between the power to consume ad the deste to consume, Me Hobson bekeves tat the grat esoures a the dispoal ofthe enteprene area ehrnic cause of his setting up past capable of producing moce than the limited resources of the consumer can absorb, Me Orage demanded 9 method of increasing eanrimer power 40 38 ‘overcome the dfs punted out by Dr Dalton and Me Hobson. Mrs Wootton, whois eo concibute to this ses next ‘wetk, eall for planning, although she only balf-zejects the theory of seadjastment, having not yet reached, ene feels 2 symesisstsictory to herself between her intellect theory tnd hor pital bore or