Home » Reading clubs » Humanities » Keynes: General Theory, chapters 4-6

Keynes: General Theory, chapters 4-6

[Summary by Jotun Hein]

It is 35 pages but again is not easy

Chapter 4 “The Choice of Units”

The chapter is quite imprecise but JMK has some amusing formulations like ”To say that net output today is greater, but prize level lower, than then years ago or one year ago, is a proposition of similar character to the statement that Queen Victoria was a better queen but not a happier woman than Queen Elizabeth – a proposition not without meaning and not without interest, but unsuitable for differential calculus”

Chapter 5 “Expectation as Determining Output and Employment”

Keynes presents a very common sensical argumentation for the importance of psychology in economics. He has a distinction between short-term and long-term expectation where the former that is clear, but again very hard to measure exactly.

Chapter 6 “The Definition of Income, Savings and Investment”

Clearly a major concern of the book is how to keep up consumption, but I what you earn but don’t consume is Saving or Investment, but I can’t see the difference between the two. I can see a difference between putting in the bank and under the madras but I am not sure it coincides with this distinction.

Appendix on User Cost

For an outsider it is hard to understand why there is so much contention about seemingly simple concepts. And I haven’t ready anything I would call ingenious. And the lack of mathematics surprises me. And few well chosen examples would really have helped the book. Today we could easily have made a few simulations but this book came out the same year as Turing’s most famous publication and that was not an option.

This book might be much clearer upon 2nd reading if I ever goet so far.

Next time is October 13th 5.30 PM UK time and we will meet at University College, Oxford and we will discuss chapters 7-9 (The Meaning of Savings and Investment + The Propensity to Consume I+II)

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