Keynes's Lectures, 1932-35: Notes of a Representative Student |  | Author: Thomas K. Rymes
Publisher: University of Michigan Press
Category: Book
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Avg. Customer Rating:  1 reviews
Sales Rank: 3364584
Media: Hardcover
Number Of Items: 1
Pages: 212
Shipping Weight (lbs): 0.8
Dimensions (in): 9 x 5.8 x 0.8
ISBN: 0472101315
Dewey Decimal Number: 330.156
EAN: 9780472101313
ASIN: 0472101315
Publication Date: March 1, 1990
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Product Description
A record of the path by which Keynes reached the views that have had such an impact on economic policy
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Student notes do not lead to Keynes's General Theory February 9, 2005
2 out of 2 found this review helpful
Rymes's(R)book is a collective aggregation of the notes of nine students who attended Keynes's economics lectures from 1932 through 1935,either wholly or in part.It was during this time period that Keynes was writing his General Theory(1936).The justification for this enterprise is that a study of all of the student's notes will enlighten the reader of this book about how Keynes gradually put his General Theory together from start to finish.Unfortunately,a study of these different notes reveals that the students did not have the necessary mathematical training or understanding of differential calculus to be able to follow either Keynes's very watered down lecture presentations or the technical analysis of the mathematical model of Pigou that Keynes was attempting to demonstrate was only a special model of his more general model of multiple equilibria that was specified in Keynes's theory of effective demand by the aggregate supply curve, a locus of the entire set of all D=Z intersections.The reader should note Rymes's claim that"Keynes,of course,did not deal with the possibility of multiple equilibria..."(Rymes,pp.32-33.ft.10.)is simply false.On October 23,1933,in the second lecture(Rymes,pp.90-91) Keynes explicitly identifies precisely where Pigou's special mathematical model was located .Pigou's special model was developed in chapters 8-10 of Part II of The Theory of Unemployment,(1933).The apex of Pigou's theoretical analysis was the proof supplied by Pigou on page 102 and directly pointed out to the students at the very end of the first lecture of October 16,1933 by Keynes.The foundation for this argument is that there is only one point of equilibrium in the macroeconomy.That equilibrium is given by w/p=mpl,where w= the money wage,p equals the price level,w/p equals the real wage,and mpl equals the marginal product of labor in the aggregate.Keynes showed that ,in fact ,there is not just one macroeconomic equilibrium possible,but many equilibria,only one of which will be a global equilibrium.This set of possible equilibria is given by the condition w/p=mpl/(mpc +mpi),where mpc equals the marginal propensity to spend on consumption goods and mpi represents the marginal propensity to spend on investment(capital) goods.Only in the special case of mpc+mpi =1 will Pigou's argument hold.There is no evidence that any of these students had any grasp of what Keynes told them in the clearest way possible on these two lecture dates.On the other hand,since no economist since 1936 has been able to figure out what the missing equation in Pigou's model was either(mpc+mpi<=1,which means that the commodity market determines the labor market),no one can blame the students.Keynes made it crystal clear in the appendix to chapter 19 that Pigou's model was one equation short.No economist has ever been able to figure out the missing equation since they have all been looking for it on the supply side.Neither could any of Keynes's students.It is a simple matter to "generalize" this result by incorporating government,export,and import sectors ,as well as adding in imperfect competition.Letting mpg equal the marginal propensity to spend on public goods,mpm equal the marginal propensity to spend on imported goods,and mpe the marginal propensity to spend on exports,we obtain w/p=mpl/(mpc+mpi+mpg+mpe-mpm).If we multiply the LHS by [1/(1+Es)],where Es is the elasticity of supply and multiply the RHS by [1/(1-Ed)],where Ed is the elasticity of demand,then Joan Robinson,Austin Robinson,and Richard Kahn can finally rest in peace knowing that imperfect competition can be explicitly integrated into the general theory.
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