[Summary by Jotun Hein]
It is 37 pages in a very large font. In principle it should be easy but there was a lot of high level description of the Classical Theory that I didn’t understand too well. This seems like an ideal book for this kind of intense discussion groups and a lot of issues became clear as we went through the pages. I am sure even more would dawn upon us by reading it a send time. But it is also a very tough read where we read single sentences aloud for each other and had quite a discussion of them.
the general theory is 1 page and explains the word GENERAL and that his book is in contrast to CLASSICAL theory. I am surprised the JMK can describe it as one thing. Not that I know much about it, but there are Smith, Malthus, Richardo, Mills, Marx, Veblen, Marshall,….
The postulates of the classical theory is 19 pages and starts with 2 tenets that JMK says characterize the CLASSICAL:
“I. The wage is equal to the marginal product of labour
II. The utility of the wage when a given volume of labour is employed is equal to the marginal disutility of that amount of employment.”
We would like to have had 2 illustrations here, showing how this defined two equilibrium points. JMK asserts that CLASSICAL does not allow for involuntary unemployment, but does have frictional [due to a shift in production from say potatoes to bananas] and voluntary when a worker prefers not work since salary too low. I think JMK then show that certain empiricial consequences of I-II above [basically how the equlibrium point shifts] are generally violated.
There are lots of fun and interesting comments, like that Richardo asserted that political economy could make no statement about absolute level of production, but only about value distribution. An interesting discussion about value-wage versus money-wage. JMK uses a Prof. Pigiu to illustrate all that is wrong with CLASSICAL. JMK say the CLASSICAL are as foolish as a Euclidian Geometer that faced with non-Euclidian Geometry would yell at the lines for not be being parallel in the right way.
The principle of Effective Demand is 12 pages devoted to a preview of the whole book and the first simple equations appear. JMK defines aggregate supply and demand function defines a series of properties of the system. We were a bit tired at this point and i should read it again.
More enjoyable sentences like ” It could only live on furtively, below the surface, in the underworlds of Karl Marx, Silvio Gesell or Major Douglas.”
September 22nd time we take Book II [Definitions and Ideas] chapter 4-6 which is about 29 pages. I said we would be done by X-mas and somebody said that what the generals said in 1914 about WWI. But I hope this JMK wont last 4 years and have a similar loss of life.