GENERALINTRODUCTION
ThisnewstandardeditionofTheCollectedWritingsofJohnMaynardKeynesformsthememorialtohimoftheRoyalEconomicSociety。HedevotedaverylargeshareofhisbusylifetotheSociety。In1911，attheageoftwenty-eight，hebecameeditoroftheEconomicJournalinsuccessiontoEdgeworth；twoyearslaterhewasmadesecretaryaswell。
Heheldtheseofficeswithoutintermittenceuntilalmosttheendofhislife。
Edgeworth，itistrue，returnedtohelphimwiththeeditorshipfrom1919to1925；MacGregortookEdgeworth'splaceuntil1934，whenAustinRobinsonsucceededhimandcontinuedtoassistKeynesdownto1945。ButthroughalltheseyearsKeyneshimselfcarriedthemajorresponsibilityandmadetheprincipaldecisionsaboutthearticlesthatweretoappearintheEconomicJournal，withoutanybreaksaveforoneortwoissueswhenhewasseriouslyillin1937。ItwasonlyafewmonthsbeforehisdeathatEaster1946thathewaselectedpresidentandhandedoverhiseditorshiptoRoyHarrodandthesecretaryshiptoAustinRobinson。
InhisdualcapacityofeditorandsecretaryKeynesplayedamajorpartinframingthepoliciesoftheRoyalEconomicSociety。ItwasverylargelyduetohimthatsomeofthemajorpublishingactivitiesoftheSociety¾；Sraffa'seditionofRicardo，Stark'seditionoftheeconomicwritingsofBentham，andGuillebaud'seditionofMarshall，aswellasanumberofearlierpublicationsinthe1930s¾；wereinitiated。
WhenKeynesdiedin1946itwasnaturalthattheRoyalEconomicSocietyshouldwishtocommemoratehim。ItwasperhapsequallynaturalthattheSocietychosetocommemoratehimbyproducinganeditionofhiscollectedworks。
Keyneshimselfhadalwaystakenajoyinfineprinting，andtheSociety，withthehelpofMessrsMacmillanaspublishersandtheCambridgeUniversityPressasprinters，hasbeenanxioustogiveKeynes'swritingsapermanentformthatiswhollyworthyofhim。
Thepresenteditionwillpublishasmuchasispossibleof[Pagex]THE
GENERALTHEORYOFEMPLOYMENT
hisworkinthefieldofeconomics。Itwillnotincludeanyprivateandpersonalcorrespondenceorpublishlettersinthepossessionofhisfamily。Theeditionisconcerned，thatistosay，withKeynesasaneconomist。
Keynes'swritingsfallintofivebroadcategories。First，therearethebookswhichhewroteandpublishedasbooks。Second，therearecollectionsofarticlesandpamphletswhichhehimselfmadeduringhislifetimeEssaysinPersuasionandEssaysinBiography。Third，thereisaveryconsiderablevolumeofpublishedbutuncollectedwritings¾；articleswrittenfornewspapers，letterstonewspapers，articlesinjournalsthathavenotbeenincludedinhistwovolumesofcollections，andvariouspamphlets。
Fourth，thereareafewhithertounpublishedwritings。Fifth，thereiscorrespondencewitheconomistsandconcernedwitheconomicsorpublicaffairs。
ThisserieswillattempttopublishacompleterecordofKeynes'sseriouswritingasaneconomist。Itistheintentiontopublishalmostcompletelythewholeofthefirstfourcategorieslistedabove。TheonlyexceptionsareafewsyndicatedarticleswhereKeyneswrotealmostthesamematerialforpublicationindifferentnewspapersorindifferentcountries，withminorandunimportantvariations。Inthesecases，thisserieswillpublishoneonlyofthevariations，choosingthemostinteresting。
ThepublicationofKeynes'seconomiccorrespondencemustinevitablybeselective。Inthedayofthetypewriterandthefilingcabinetandparticularlyinthecaseofsoactiveandbusyaman，topublisheveryscrapofpaperthathemayhavedictatedaboutsomeunimportantorephemeralmatterisimpossible。Weareaimingtocollectandpublishasmuchaspossible，however，ofthecorrespondenceinwhichKeynesdevelopedhisownideasinargumentwithhisfelloweconomists，aswellasthemoresignificantcorrespondenceattimeswhenKeyneswasinthemiddleofpublicaffairs。
Apartfromhispublishedbooks，themainsourcesavailabletothosepreparingthisserieshavebeentwo。First，KeynesinhiswillmadeRichardKahnhisexecutorandresponsiblefor[Pagexi]GENERAL
INTRODUCTION
hiseconomicpapers。TheyhavebeenplacedintheMarshallLibraryoftheUniversityofCambridgeandhavebeenavailableforthisedition。Until1914Keynesdidnothaveasecretaryandhisearliestpapersareinthemainlimitedtodraftsofimportantlettersthathemadeinhisownhandwritingandretained。Atthatstagemostofthecorrespondencethatwepossessisrepresentedbywhathereceivedratherthanbywhathewrote。Duringtheyears1914-18and1940-46
KeyneswasservingintheTreasury。Withtheopeningofofficialrecords，manyofthepapersthathewrotehavebecomeavailable。From1919onwards，throughouttherestofhislife，Keyneshadthehelpofasecretary¾；formanyyearsMrsStevens。Thusforthelasttwenty-fiveyearsofhisworkinglifewehaveinmostcasesthecarboncopiesofhisownlettersaswellastheoriginalsofthelettersthathereceived。
Therewere，ofcourse，occasionsduringthisperiodonwhichKeyneswrotehimselfinhisownhandwriting。Insomeofthesecases，withthehelpofhiscorrespondents，wehavebeenabletocollectthewholeofbothsidesofsomeimportantinterchangeandwehavebeenanxious，injusticetobothcorrespondents，toseethatbothsidesofthecorrespondencearepublishedinfull。
ThesecondmainsourceofinformationhasbeenagroupofscrapbookskeptoveraverylongperiodofyearsbyKeynes'smother，FlorenceKeynes，wifeofNevilleKeynes。From1919onwardsthesescrapbookscontainalmostthewholeofMaynardKeynes'smoreephemeralwriting，hisletterstonewspapersandagreatdealofmaterialwhichenablesonetoseenotonlywhathewrote，butthereactionofotherstohiswriting。WithouttheseverycarefullykeptscrapbooksthetaskofanyeditororbiographerofKeyneswouldhavebeenimmenselymoredifficult。
Theplanoftheedition，asatpresentintended，isthis。Itwilltotaltwenty-fivevolumes。Ofthese，thefirsteightwillbeKeynes'spublishedbooksfromIndianCurrencyandFinance，in1913，totheGeneralTheoryin1936，withtheadditionofhisTreatiseonProbability。
Therewillnextfollow，asvols。IXandx，EssaysinPersuasionandEssaysinBiography，[Pagexii]THEGENERALTHEORYOFEMPLOYMENT
graphy，representingKeynes'sowncollectionsofarticles。EssaysinPersuasionwilldifferfromtheoriginalprintingintworespects:
itwillcontainthefulltextsofthearticlesorpamphletsincludedinitandnotasintheoriginalprintingabbreviatedversionsofthesearticles，anditwillhaveaddedoneortwolaterarticleswhichareofexactlythesamecharacterasthoseincludedbyKeynesinhisoriginalcollection。InthecaseofEssaysinBiography，weshalladdoneortwootherbiographicalstudiesthatKeyneswrotelaterthan1933。
Therewillfollowfourvolumes，XItoXIV，ofeconomicarticlesandcorrespondence，andonevolumeofsocial，politicalandliterarywritings。
WeshallincludeinthesevolumessuchpartofKeynes'seconomiccorrespondenceasiscloselyassociatedwiththearticlesthatareprintedinthem。
Thefurtherninevolumes，asweestimateatpresent，willdealwithKeynes'sActivitiesduringtheyearsfromthebeginningofhispubliclifein1905untilhisdeath。Ineachoftheperiodsintowhichweproposetodividethismaterial，thevolumeconcernedwillpublishhismoreephemeralwritings，allofithithertouncollected，hiscorrespondencerelatingtotheseactivities，andsuchothermaterialandcorrespondenceasisnecessarytotheunderstandingofKeynes'sactivities。ThesevolumesarebeingeditedbyElizabethJohnsonandDonaldMoggridge，anditistheirtasktotraceandinterpretKeynes'sactivitiessufficientlytomakethematerialfullyintelligibletoalatergeneration。Untilthisworkhasprogressedfurther，itisnotpossibletosaywithexactitudewhetherthismaterialwillbedistributed，aswenowthink，overninevolumes，orwhetheritwillneedtobespreadoverafurthervolumeorvolumes。Therewillbeafinalvolumeofbibliographyandindex。
Thoseresponsibleforthiseditionhavebeen:LordKahn，bothasLordKeynes'sexecutorandasalongandintimatefriendofLordKeynes，abletohelpintheinterpretingofmuchthatwouldotherwisebemisunderstood；
SirRoyHarrodastheauthorofhisbiography；AustinRobinsonasKeynes'sco-editorontheEconomicJournalandsuccessorassecretaryoftheRoyalEconomicSociety。Theinitialeditorial[Pagexiii]GENERALINTRODUCTION
taskswerecarriedbyElizabethJohnson。MorerecentlyshehasbeenjoinedinthisresponsibilitybyDonaldMoggridge。TheyhavebeenassistedatdifferenttimesbyJaneThistlethwaite，MrsMcDonald，whowasoriginallyresponsibleforthesystematicorderingofthefilesoftheKeynespapers；
JudithMasterman，whoformanyyearsworkedwithMrsJohnsononthepapers；
andmorerecentlybySusanWilsher，MargaretButler，andBarbaraLowe。GeneralIntroduction[Pageix]
GENERALINTRODUCTION
ThisnewstandardeditionofTheCollectedWritingsofJohnMaynardKeynesformsthememorialtohimoftheRoyalEconomicSociety。HedevotedaverylargeshareofhisbusylifetotheSociety。In1911，attheageoftwenty-eight，hebecameeditoroftheEconomicJournalinsuccessiontoEdgeworth；twoyearslaterhewasmadesecretaryaswell。
Heheldtheseofficeswithoutintermittenceuntilalmosttheendofhislife。
Edgeworth，itistrue，returnedtohelphimwiththeeditorshipfrom1919to1925；MacGregortookEdgeworth'splaceuntil1934，whenAustinRobinsonsucceededhimandcontinuedtoassistKeynesdownto1945。ButthroughalltheseyearsKeyneshimselfcarriedthemajorresponsibilityandmadetheprincipaldecisionsaboutthearticlesthatweretoappearintheEconomicJournal，withoutanybreaksaveforoneortwoissueswhenhewasseriouslyillin1937。ItwasonlyafewmonthsbeforehisdeathatEaster1946thathewaselectedpresidentandhandedoverhiseditorshiptoRoyHarrodandthesecretaryshiptoAustinRobinson。
InhisdualcapacityofeditorandsecretaryKeynesplayedamajorpartinframingthepoliciesoftheRoyalEconomicSociety。ItwasverylargelyduetohimthatsomeofthemajorpublishingactivitiesoftheSociety¾；Sraffa'seditionofRicardo，Stark'seditionoftheeconomicwritingsofBentham，andGuillebaud'seditionofMarshall，aswellasanumberofearlierpublicationsinthe1930s¾；wereinitiated。
WhenKeynesdiedin1946itwasnaturalthattheRoyalEconomicSocietyshouldwishtocommemoratehim。ItwasperhapsequallynaturalthattheSocietychosetocommemoratehimbyproducinganeditionofhiscollectedworks。
Keyneshimselfhadalwaystakenajoyinfineprinting，andtheSociety，withthehelpofMessrsMacmillanaspublishersandtheCambridgeUniversityPressasprinters，hasbeenanxioustogiveKeynes'swritingsapermanentformthatiswhollyworthyofhim。
Thepresenteditionwillpublishasmuchasispossibleof[Pagex]THE
GENERALTHEORYOFEMPLOYMENT
hisworkinthefieldofeconomics。Itwillnotincludeanyprivateandpersonalcorrespondenceorpublishlettersinthepossessionofhisfamily。Theeditionisconcerned，thatistosay，withKeynesasaneconomist。
Keynes'swritingsfallintofivebroadcategories。First，therearethebookswhichhewroteandpublishedasbooks。Second，therearecollectionsofarticlesandpamphletswhichhehimselfmadeduringhislifetimeEssaysinPersuasionandEssaysinBiography。Third，thereisaveryconsiderablevolumeofpublishedbutuncollectedwritings¾；articleswrittenfornewspapers，letterstonewspapers，articlesinjournalsthathavenotbeenincludedinhistwovolumesofcollections，andvariouspamphlets。
Fourth，thereareafewhithertounpublishedwritings。Fifth，thereiscorrespondencewitheconomistsandconcernedwitheconomicsorpublicaffairs。
ThisserieswillattempttopublishacompleterecordofKeynes'sseriouswritingasaneconomist。Itistheintentiontopublishalmostcompletelythewholeofthefirstfourcategorieslistedabove。TheonlyexceptionsareafewsyndicatedarticleswhereKeyneswrotealmostthesamematerialforpublicationindifferentnewspapersorindifferentcountries，withminorandunimportantvariations。Inthesecases，thisserieswillpublishoneonlyofthevariations，choosingthemostinteresting。
ThepublicationofKeynes'seconomiccorrespondencemustinevitablybeselective。Inthedayofthetypewriterandthefilingcabinetandparticularlyinthecaseofsoactiveandbusyaman，topublisheveryscrapofpaperthathemayhavedictatedaboutsomeunimportantorephemeralmatterisimpossible。Weareaimingtocollectandpublishasmuchaspossible，however，ofthecorrespondenceinwhichKeynesdevelopedhisownideasinargumentwithhisfelloweconomists，aswellasthemoresignificantcorrespondenceattimeswhenKeyneswasinthemiddleofpublicaffairs。
Apartfromhispublishedbooks，themainsourcesavailabletothosepreparingthisserieshavebeentwo。First，KeynesinhiswillmadeRichardKahnhisexecutorandresponsiblefor[Pagexi]GENERAL
INTRODUCTION
hiseconomicpapers。TheyhavebeenplacedintheMarshallLibraryoftheUniversityofCambridgeandhavebeenavailableforthisedition。Until1914Keynesdidnothaveasecretaryandhisearliestpapersareinthemainlimitedtodraftsofimportantlettersthathemadeinhisownhandwritingandretained。Atthatstagemostofthecorrespondencethatwepossessisrepresentedbywhathereceivedratherthanbywhathewrote。Duringtheyears1914-18and1940-46
KeyneswasservingintheTreasury。Withtheopeningofofficialrecords，manyofthepapersthathewrotehavebecomeavailable。From1919onwards，throughouttherestofhislife，Keyneshadthehelpofasecretary¾；formanyyearsMrsStevens。Thusforthelasttwenty-fiveyearsofhisworkinglifewehaveinmostcasesthecarboncopiesofhisownlettersaswellastheoriginalsofthelettersthathereceived。
Therewere，ofcourse，occasionsduringthisperiodonwhichKeyneswrotehimselfinhisownhandwriting。Insomeofthesecases，withthehelpofhiscorrespondents，wehavebeenabletocollectthewholeofbothsidesofsomeimportantinterchangeandwehavebeenanxious，injusticetobothcorrespondents，toseethatbothsidesofthecorrespondencearepublishedinfull。
ThesecondmainsourceofinformationhasbeenagroupofscrapbookskeptoveraverylongperiodofyearsbyKeynes'smother，FlorenceKeynes，wifeofNevilleKeynes。From1919onwardsthesescrapbookscontainalmostthewholeofMaynardKeynes'smoreephemeralwriting，hisletterstonewspapersandagreatdealofmaterialwhichenablesonetoseenotonlywhathewrote，butthereactionofotherstohiswriting。WithouttheseverycarefullykeptscrapbooksthetaskofanyeditororbiographerofKeyneswouldhavebeenimmenselymoredifficult。
Theplanoftheedition，asatpresentintended，isthis。Itwilltotaltwenty-fivevolumes。Ofthese，thefirsteightwillbeKeynes'spublishedbooksfromIndianCurrencyandFinance，in1913，totheGeneralTheoryin1936，withtheadditionofhisTreatiseonProbability。
Therewillnextfollow，asvols。IXandx，EssaysinPersuasionandEssaysinBiography，[Pagexii]THEGENERALTHEORYOFEMPLOYMENT
graphy，representingKeynes'sowncollectionsofarticles。EssaysinPersuasionwilldifferfromtheoriginalprintingintworespects:
itwillcontainthefulltextsofthearticlesorpamphletsincludedinitandnotasintheoriginalprintingabbreviatedversionsofthesearticles，anditwillhaveaddedoneortwolaterarticleswhichareofexactlythesamecharacterasthoseincludedbyKeynesinhisoriginalcollection。InthecaseofEssaysinBiography，weshalladdoneortwootherbiographicalstudiesthatKeyneswrotelaterthan1933。
Therewillfollowfourvolumes，XItoXIV，ofeconomicarticlesandcorrespondence，andonevolumeofsocial，politicalandliterarywritings。
WeshallincludeinthesevolumessuchpartofKeynes'seconomiccorrespondenceasiscloselyassociatedwiththearticlesthatareprintedinthem。
Thefurtherninevolumes，asweestimateatpresent，willdealwithKeynes'sActivitiesduringtheyearsfromthebeginningofhispubliclifein1905untilhisdeath。Ineachoftheperiodsintowhichweproposetodividethismaterial，thevolumeconcernedwillpublishhismoreephemeralwritings，allofithithertouncollected，hiscorrespondencerelatingtotheseactivities，andsuchothermaterialandcorrespondenceasisnecessarytotheunderstandingofKeynes'sactivities。ThesevolumesarebeingeditedbyElizabethJohnsonandDonaldMoggridge，anditistheirtasktotraceandinterpretKeynes'sactivitiessufficientlytomakethematerialfullyintelligibletoalatergeneration。Untilthisworkhasprogressedfurther，itisnotpossibletosaywithexactitudewhetherthismaterialwillbedistributed，aswenowthink，overninevolumes，orwhetheritwillneedtobespreadoverafurthervolumeorvolumes。Therewillbeafinalvolumeofbibliographyandindex。
Thoseresponsibleforthiseditionhavebeen:LordKahn，bothasLordKeynes'sexecutorandasalongandintimatefriendofLordKeynes，abletohelpintheinterpretingofmuchthatwouldotherwisebemisunderstood；
SirRoyHarrodastheauthorofhisbiography；AustinRobinsonasKeynes'sco-editorontheEconomicJournalandsuccessorassecretaryoftheRoyalEconomicSociety。Theinitialeditorial[Pagexiii]GENERALINTRODUCTION
taskswerecarriedbyElizabethJohnson。MorerecentlyshehasbeenjoinedinthisresponsibilitybyDonaldMoggridge。TheyhavebeenassistedatdifferenttimesbyJaneThistlethwaite，MrsMcDonald，whowasoriginallyresponsibleforthesystematicorderingofthefilesoftheKeynespapers；
JudithMasterman，whoformanyyearsworkedwithMrsJohnsononthepapers；
andmorerecentlybySusanWilsher，MargaretButler，andBarbaraLowe。EditorialIntroduction[Pagexv]
EDITORIALINTRODUCTION
'Ihavebeenmuchpre-occupiedwiththecausation，sotospeak，ofmyprogressofmindfromtheclassicalpositiontomypresentviews，¾；withtheorderinwhichtheproblemdevelopedinmymind。WhatsomepeopletreatasanunnecessarilycontroversialtoneisreallyduetotheimportanceinmyownmindofwhatIusedtobelieve，andofthemomentsoftransitionwhichwereformepersonallymomentsofillumination……Youdon'tmentioneffectivedemandor，moreprecisely，thedemandscheduleforoutputasawhole，exceptinsofarasitisimplicitinthemultiplier。Tome，regardedhistorically，themostextraordinarythingisthecompletedisappearanceofthetheoryofdemandandsupplyforoutputasawhole，i。e。thetheoryofemployment，afterithadbeenforaquarterofacenturythemostdiscussedthingineconomics。Oneofthemostimportanttransitionsforme，aftermyTreatiseonMoneyhadbeenpublished，wassuddenlyrealisingthis。ItonlycameafterIhadenunciatedtomyselfthepsychologicallawthat，whenincomeincreases，thegapbetweenincomeandconsumptionwillincrease，¾；aconclusionofvastimportancetomyownthinkingbutnotapparently，expressedjustlikethat，toanyoneelse's。Then，appreciablylater，camethenotionofinterestbeingthemeasureofliquiditypreference，whichbecamequiteclearinmymindthemomentIthoughtofit。Andlastofall，afteranimmenselotofmuddlingandmanydrafts，theproperdefinitionofthemarginalefficiencyofcapitallinkeduponethingwithanother。'
Withthesewords，KeynestoldR。F。Harrodinthesummerof1936thedevelopmentofhisideastowardstheGeneralTheory。'[1]
TheoriginsoftheGeneralTheorylieinKeynes'sdissatisfactionwithhisTreatiseonMoneyevenatthetimeofpublication[2]，intheprolongedinternationalslumpoftheyears[Pagexvi]THEGENERALTHEORYOFEMPLOYMENT
after1929，andinthestimulationthatemanatedfroma'circus'ofyoungCambridgeeconomistswhobeganmeetingsoonafterthepublicationoftheTreatisetodiscussanddissectitstwovolumes。Itwasthediscussionswithinthisgroup，retailedtohimbyRichardKahn，thatprovidedthebasisforthefirsttransitionalstagebetweentheTreatiseandtheGeneralTheory。'[3]
ThisstagewassoonfollowedbyKeynes'sexplicitcommitmenttorevisethetheoreticalfoundationsoftheTreatise，whichhadonlydealtincidentallyintermsofmovementsinoutput。ThusinhisprefaceforJapanesereadersoftheTreatise，datedApril1932，KeynesnotedthatratherthanrevisehisTreatiseheproposed'topublishashortbookofapurelytheoreticalcharacter，extendingandcorrectingthetheoreticalbasisofmyviewsassetforthinBooksIIIandIV'。[4]Thiscommitmentbecameclearerintheautumnof1932，whenKeyneschangedthetitleofhiscourseoflecturesfrom'ThePureTheoryofMoney'，theirtitlesincetheautumnof1929，to'TheMonetaryTheoryofProduction'，thetitletheyweretohaveuntil1934。Theselectureswereconcernedwithmovementsinoutputasawholeandhadthebeginningsoftheconceptofliquiditypreference，althoughitwasnotuntilhislecturesintheautumnof1933thatittooktheformusedintheGeneralTheory。
ThefirstmajorpublishedindicationsofthedirectionKeynes'sthoughtwastakingbetweentheTreatiseandtheGeneralTheorycamein1933intheformofanessay'TheMonetaryTheoryofProduction'，apamphlet'TheMeanstoProsperity'，anarticle'TheMultiplier'whichisincludedintheAmericaneditionof'TheMeanstoProsperity'，andabiographicalsketchofT。R。Malthus，[5]allofwhicharecastintermsofmovementsofoutputasawholeandreflecteddissatisfactionwithacceptedtheory。
ThusthemajorbuildingblocksoftheGeneralTheoryhad[Pagexvii]EDITORIALINTRODUCTION
beensteadilyaccumulatingeversince1931。Bythespringof1934，infact，allofthemwereinplace，exceptfortheideaofthemarginalefficiencyofcapital，asisclearfromdraftsfromthatperiodandaworkingpaperKeynespreparedduringhisVisittoAmericainMayandJune。[6]Itwasonlyduringthesummerof1934，however，thatthefinalpiecefellintoplace，andbytheautumnKeyneswasdeliveringhislectures，nowentitled'TheGeneralTheoryofEmployment'fromproofsheets。
However，beforepublicationtherewastobeanotheryearofintensediscussionandredrafting。KeynescirculatedproofsofthebooktoR。F。
Kahn，JoanRobinson，R。F。Harrod，D。H。RobertsonandR。G。Hawtreyandtookcarefulnoteoftheircommentsandsuggestedimprovements，statingclearlyhispointsofdisagreementwhenhedidnotadoptthem。[7]ThusitwasafteralmostfiveyearsofintensepreparationthatthebookappearedinFebruary1936atapriceof5shillingstoencouragealargesaleamongstudents。
Afterpublicationtherewasstillfurtherdiscussionand，occasionally，controversy。Keyneshimselfencouragedthisdiscussion，for，asheputit[8]
IammoreattachedtothecomparativelysimplefundamentalideaswhichunderliemytheorythantotheparticularformsinwhichIhaveembodiedthem，andhavenodesirethatthelattershouldbecrystallizedatthepresentstageofthedebate。Ifthesimplebasicideascanbecomefamiliarandacceptable，timeandexperienceandthecollaborationofanumberofmindswilldiscoverthebestwayofexpressingthem。
Inthisspirit，Keynesenteredintoconsiderablecorrespondencewithcritics，expositorsandextendersofhisideas。[9]Moreover，asthedebateprogressed，hisownideaswerechangingandbyAugust1936hewaswritingtoR。G。Hawtrey[10]
[Pagexviii]THEGENERALTHEORYOFEMPLOYMENT
ImaymentionthatIamthinkingofproducinginthecourseofthenextyearorsowhatmightbecalledfootnotestomypreviousbook，dealingwithvariouscriticismsandvariouspointswhichwantcarryingfurther。
Ofcourse，infact，thewholebookwantsre-writingandrecasting。ButIamstillnotinasufficientlychangedstateofmindasyettobeinthepositiontodothat。OntheotherhandIcandealwithspecificpoints。
Fromthisperiod，wehaveonedrafttableofcontentstoabookentitledFootnotestoTheGeneralTheoryofEmploymentInterestandMoney，atitlethatechoeshisfirstdrafttableofcontentsafterEconomicConsequencesofthePeace。[11]HealsousedthistitleforthelectureshedeliveredinCambridgeinthespringof1937，fromwhichdraftsoftwolecturessurvive。[12]InfactheseemstohavebeenmakingconsiderableprogresstowardssteppingoutsidetheGeneralTheorybythattime，forhetoldJoanRobinsoninApril1937[13]
Iamgraduallygettingmyselfintoanoutsidepositiontowardsthebook，andamfeelingmywaytonewlinesofexposition。PerhapsyouwillseewhatIhaveinmindinmyforthcominglectures。
Unfortunately，theproposed'footnotes'nevergotbeyondthelectures，forKeynessufferedasevereheartattackintheearlysummerof1937andwasneverabletoworkatanythingnearhisoldpaceuntilwarcamein1939¾；andthenhisenergiesweredirectedinotherdirections。HowhewouldhaverevisedtheGeneralTheoryifhehadremainedingoodhealthisimpossibletoguess。Onecanonlybecertainthathewouldhaverevisedit。
SinceitspublicationinBritaininFebruary1936，theGeneralTheoryhasbeenpublishedintheUnitedStatesoriginallyfromsheetsprintedinEnglandandtranslatedintoGerman，Japanese，French，Spanish，Czech，Italian，Serbo-Croat，Hindi，Finnish，Roumanian，HungarianandRussian。
TheGerman，FrenchandJapaneseeditionsallcarriedspecialadditionalprefaceswhichfollowedtheoriginalEnglishpreface。Theseadditionalprefacesareprintedbelow。
[Pagexix]EDITORIALINTRODUCTION
ThiseditionfollowsthereprintedEnglishfirstedition，whichdiffersfromthefirstEnglishprintinginthatacorrectiontolines23-5
ofpage123wasmovedfromanerratumnotefollowingtheindexintothetextandcorrectionsweremadetopages44，113，176，357。InAppendixIwehaveintroducedalistofminortextualcorrectionsfromthereprintedfirstedition。Inaddition，inAppendices2and3wereprintKeynes'sarticles'FluctuationsinNetInvestmentintheUnitedStates'and'RelativeMovementsofRealWagesandOutput'whichdealwitherrorsonpages103-4
and9-10respectivelyofthetextitself。ForfurtherdiscussionoftheGeneralTheoryanditsgenesis，thereaderisreferredtovolumesxiiiandxiv。
Inprintingthisvolumewehavemadeitourfirstobjectivetofollowaspreciselyaspossiblethepaginationoftheoriginaledition。Animmenseliteratureofdetailedcriticismandanalysishasgrownuparoundthetextoftheoriginaleditionandwehavebeenanxiousthatreferencesinthatliteratureshouldapplyequallytothisnewedition。Thishasmeantthatwehavebeenunabletofollowpreciselythestandardtypographyoftheothervolumesintheseries。Thegainofreadyreference，inourview，justifiesthiscourse。Asinothervolumesoftheseries，wehavereducedtheexcessivecapitalisationfavouredbyKeynes'soriginalprinters，butirritatingtoamoderneye。
Preface[Pagexxi]
PREFACE
Thisbookischieflyaddressedtomyfelloweconomists。Ihopethatitwillbeintelligibletoothers。Butitsmainpurposeistodealwithdifficultquestionsoftheory，andonlyinthesecondplacewiththeapplicationsofthistheorytopractice。Foriforthodoxeconomicsisatfault，theerroristobefoundnotinthesuperstructure，whichhasbeenerectedwithgreatcareforlogicalconsistency，butinalackofclearnessandofgeneralityinthepremisses。ThusIcannotachievemyobjectofpersuadingeconomiststore-examinecriticallycertainoftheirbasicassumptionsexceptbyahighlyabstractargumentandalsobymuchcontroversy。Iwishtherecouldhavebeenlessofthelatter。ButIhavethoughtitimportant，notonlytoexplainmyownpointofview，butalsotoshowinwhatrespectsitdepartsfromtheprevailingtheory。Those，whoarestronglyweddedtowhatIshallcall'theclassicaltheory'，willfluctuate，Iexpect，betweenabeliefthatIamquitewrongandabeliefthatIamsayingnothingnew。
Itisforotherstodetermineifeitheroftheseorthethirdalternativeisright。Mycontroversialpassagesareaimedatprovidingsomematerialforananswer；andImustaskforgivenessIf，inthepursuitofsharpdistinctions，mycontroversyisitselftookeen。ImyselfheldwithconvictionformanyyearsthetheorieswhichInowattack，andIamnot，Ithink，ignorantoftheirstrongpoints。
Themattersatissueareofanimportancewhichcannotbeexaggerated。
But，ifmyexplanationsareright，itismyfelloweconomists，notthegeneralpublic，whomImustfirstconvince。Atthisstageoftheargumentthegeneralpublic，thoughwelcomeatthedebate，areonlyeavesdroppersatanattemptbyaneconomisttobringtoanissuethedeepdivergencesofopinionbetweenfelloweconomistswhichhaveforthetimebeingalmostdestroyedthepracticalinfluenceofeconomictheory，andwill，untiltheyareresolved，continuetodoso。
TherelationbetweenthisbookandmyTreatiseonMoney[Pagexxii]THEGENERALTHEORYOFEMPLOYMENT
[JMKvols。vandvi]，whichIpublishedfiveyearsago，isprobablyclearertomyselfthanitwillbetoothers；andwhatinmyownmindisanaturalevolutioninalineofthoughtwhichIhavebeenpursuingforseveralyears，maysometimesstrikethereaderasaconfusingchangeofview。ThisdifficultyisnotmadelessbycertainchangesinterminologywhichIhavefeltcompelledtomake。ThesechangesoflanguageIhavepointedoutinthecourseofthefollowingpages；butthegeneralrelationshipbetweenthetwobookscanbeexpressedbrieflyasfollows。WhenIbegantowritemyTreatiseonMoneyIwasstillmovingalongthetraditionallinesofregardingtheinfluenceofmoneyassomethingsotospeakseparatefromthegeneraltheoryofsupplyanddemand。WhenIfinishedit，Ihadmadesomeprogresstowardspushingmonetarytheorybacktobecomingatheoryofoutputasawhole。Butmylackofemancipationfrompreconceivedideasshoweditselfinwhatnowseemstometobetheoutstandingfaultofthetheoreticalpartsofthatworknamely，BooksIIIandIV，thatIfailedtodealthoroughlywiththeeffectsofchangesinthelevelofoutput。
Myso-called'fundamentalequationswereaninstantaneouspicturetakenontheassumptionofagivenoutput。Theyattemptedtoshowhow，assumingthegivenoutput，forcescoulddevelopwhichinvolvedaprofit-disequilibrium，andthusrequiredachangeinthelevelofoutput。Butthedynamicdevelopment，asdistinctfromtheinstantaneouspicture，wasleftincompleteandextremelyconfused。Thisbook，ontheotherhand，hasevolvedintowhatisprimarilyastudyoftheforceswhichdeterminechangesinthescaleofoutputandemploymentasawhole；and，whilstitisfoundthatmoneyentersintotheeconomicschemeinanessentialandpeculiarmanner，technicalmonetarydetailfallsintothebackground。Amonetaryeconomy，weshallfind，isessentiallyoneinwhichchangingviewsaboutthefuturearecapableofinfluencingthequantityofemploymentandnotmerelyitsdirection。Butourmethodofanalysingtheeconomicbehaviourofthepresentundertheinfluenceofchangingideasaboutthefutureisonewhichdependsontheinteractionofsupplyanddemand，andisin[Pagexxiii]PREFACE
thiswaylinkedupwithourfundamentaltheoryofvalue。Wearethusledtoamoregeneraltheory，whichincludestheclassicaltheorywithwhichwearefamiliar，asaspecialcase。
Thewriterofabooksuchasthis，treadingalongunfamiliarpaths，isextremelydependentoncriticismandconversationifheistoavoidanundueproportionofmistakes。Itisastonishingwhatfoolishthingsonecantemporarilybelieveifonethinkstoolongalone，particularlyineconomicsalongwiththeothermoralsciences，whereitisoftenimpossibletobringone'sideastoaconclusivetesteitherformalorexperimental。
Inthisbook，evenmoreperhapsthaninwritingmyTreatiseonMoney，IhavedependedontheconstantadviceandconstructivecriticismofMrR。F。Kahn。Thereisagreatdealinthisbookwhichwouldnothavetakentheshapeithasexceptathissuggestion。IhavealsohadmuchhelpfromMrsJoanRobinson，MrR。G。HawtreyandMrR。F。Harrod，whohavereadthewholeoftheproof-sheets。TheindexhasbeencompiledbyMrD。M。Bensusan-ButtofKing'sCollege，Cambridge。
Thecompositionofthisbookhasbeenfortheauthoralongstruggleofescape，andsomustthereadingofitbeformostreadersiftheauthor'sassaultuponthemistobesuccessful，¾；astruggleofescapefromhabitualmodesofthoughtandexpression。Theideaswhicharehereexpressedsolaboriouslyareextremelysimpleandshouldbeobvious。Thedifficultylies，notinthenewideas，butinescapingfromtheoldones，whichramify，forthosebroughtupasmostofushavebeen，intoeverycornerofourminds。
J。M。KEYNES
13December1935
PrefacetoJapaneseEdition[Pagexxix]
PREFACETOTHEJAPANESEEDITION
AlfredMarshall，onwhosePrinciplesofEconomicsallcontemporaryEnglisheconomistshavebeenbroughtup，wasatparticularpainstoemphasisethecontinuityofhisthoughtwithRicardo's。HisworklargelyconsistedingraftingthemarginalprincipleandtheprincipleofsubstitutionontotheRicardiantradition；andhistheoryofoutputandconsumptionasawhole，asdistinctfromhistheoryoftheproductionanddistributionofagivenoutput，wasneverseparatelyexpounded。Whetherhehimselffelttheneedofsuchatheory，Iamnotsure。Buthisimmediatesuccessorsandfollowershavecertainlydispensedwithitandhavenot，apparently，feltthelackofit。ItwasinthisatmospherethatIwasbroughtup。I
taughtthesedoctrinesmyselfanditisonlywithinthelastdecadethatIhavebeenconsciousoftheirinsufficiency。Inmyownthoughtanddevelopment，therefore，thisbookrepresentsareaction，atransitionawayfromtheEnglishclassicalororthodoxtradition。MyemphasisuponthisinthefollowingpagesanduponthepointsofmydivergencefromreceiveddoctrinehasbeenregardedinsomequartersinEnglandasundulycontroversial。
ButhowcanonebroughtupinEnglisheconomicorthodoxy，indeedapriestofthatfaithatonetime，avoidsomecontroversialemphasis，whenhefirstbecomesaProtestant？
PerhapsJapanesereaders，however，willneitherrequirenorresistmyassaultsagainsttheEnglishtradition。WearewellawareofthelargescaleonwhichEnglisheconomicwritingsarereadinJapan，butwearenotsowellinformedastohowJapaneseopinionsregardthem。TherecentpraiseworthyenterpriseonthepartoftheInternationalEconomicCircleofTokyoinreprintingMalthus's'PrinciplesofPoliticalEconomy'asthefirstvolumeintheTokyoSeriesofReprintsencouragesmetothinkthatabookwhichtracesitsdescentfromMalthusratherthanRicardomaybereceivedwithsympathyinsomequartersatleast。
[Pagexxx]THEGENERALTHEORYOFEMPLOYMENT
AtanyrateIamgratefultotheOrientalEconomistformakingitpossibleformetoapproachJapanesereaderswithouttheextrahandicapofaforeignlanguage。
J。M。KEYNES
4December1936
PrefacetoGermanEdition[Pagexxv]
PREFACETOTHEGERMANEDITION
AlfredMarshall，onwhosePrinciplesofEconomicsallcontemporaryEnglisheconomistshavebeenbroughtup，wasatparticularpainstoemphasisethecontinuityofhisthoughtwithRicardo's。HisworklargelyconsistedingraftingthemarginalprincipleandtheprincipleofsubstitutionontotheRicardiantradition；andhistheoryofoutputandconsumptionasawhole，asdistinctfromhistheoryoftheproductionanddistributionofagivenoutput，wasneverseparatelyexpounded。Whetherhehimselffelttheneedofsuchatheory，Iamnotsure。Buthisimmediatesuccessorsandfollowershavecertainlydispensedwithitandhavenot，apparently，feltthelackofit。ItwasinthisatmospherethatIwasbroughtup。I
taughtthesedoctrinesmyselfanditisonlywithinthelastdecadethatIhavebeenconsciousoftheirinsufficiency。Inmyownthoughtanddevelopment，therefore，thisbookrepresentsareaction，atransitionawayfromtheEnglishclassicalororthodoxtradition。MyemphasisuponthisinthefollowingpagesanduponthepointsofmydivergencefromreceiveddoctrinehasbeenregardedinsomequartersinEnglandasundulycontroversial。
ButhowcanonebroughtupaCatholicinEnglisheconomics，indeedapriestofthatfaith，avoidsomecontroversialemphasis，whenhefirstbecomesaProtestant？
ButIfancythatallthismayimpressGermanreaderssomewhatdifferently。
Theorthodoxtradition，whichruledinnineteenthcenturyEngland，nevertooksofirmaholdofGermanthought。TherehavealwaysexistedimportantschoolsofeconomistsinGermanywhohavestronglydisputedtheadequacyoftheclassicaltheoryfortheanalysisofcontemporaryevents。TheManchesterSchoolandMarxismbothderiveultimatelyfromRicardo，¾；aconclusionwhichisonlysuperficiallysurprising。ButinGermanytherehasalwaysexistedalargesectionofopinionwhichhasadheredneithertotheonenortotheother。
Itcanscarcelybeclaimed，however，thatthisschoolof[Pagexxvi]THEGENERALTHEORYOFEMPLOYMENT
thoughthaserectedarivaltheoreticalconstruction；orhasevenattemptedtodoso。Ithasbeensceptical，realistic，contentwithhistoricalandempiricalmethodsandresults，whichdiscardformalanalysis。ThemostimportantunorthodoxdiscussionontheoreticallineswasthatofWicksell。
HisbookswereavailableinGermanastheywerenot，untillately，inEnglish；indeedoneofthemostimportantofthemwaswritteninGerman。
ButhisfollowerswerechieflySwedesandAustrians，thelatterof。whomcombinedhisideaswithspecificallyAustriantheorysoastobringthemineffect，backagaintowardstheclassicaltradition。ThusGermany，quitecontrarytoherhabitinmostofthesciences，hasbeencontentforawholecenturytodowithoutanyformaltheoryofeconomicswhichwaspredominantandgenerallyaccepted。
Perhaps，therefore，ImayexpectlessresistancefromGerman，thanfromEnglish，readersinofferingatheoryofemploymentandoutputasawhole，whichdepartsinimportantrespectsfromtheorthodoxtradition。ButcanIhopetoovercomeGermany'seconomicagnosticism？CanIpersuadeGermaneconomiststhatmethodsofformalanalysishavesomethingimportanttocontributetotheinterpretationofcontemporaryeventsandtothemouldingofcontemporarypolicy？Afterall，itisGermantolikeatheory。HowhungryandthirstyGermaneconomistsmustfeelafterhavinglivedalltheseyearswithoutone！Certainly，itisworthwhileformetomaketheattempt。AndifIcancontributesomestraymorselstowardsthepreparationbyGermaneconomistsofafullrepastoftheorydesignedtomeetspecificallyGermanconditions，Ishallbecontent。ForIconfessthatmuchofthefollowingbookisillustratedandexpoundedmainlywithreferencetotheconditionsexistingintheAnglo-Saxoncountries。
Neverthelessthetheoryofoutputasawhole，whichiswhatthefollowingbookpurportstoprovide，ismuchmoreeasilyadaptedtotheconditionsofatotalitarianstate，thanisthetheoryoftheproductionanddistributionofagivenoutputproducedunderconditionsoffreecompetitionandalargemeasureoflaissez-faire。Thetheoryofthepsychologi-
[Pagexxvii]PREFACETOTHEGERMANEDITION
callawsrelatingconsumptionandsaving，theinfluenceofloanexpenditureonpricesandrealwages，thepartplayedbytherateofinterest¾；theseremainasnecessaryingredientsinourschemeofthought。
ItakethisopportunitytoacknowledgemyindebtednesstotheexcellentworkofmytranslatorHerrWaegerIhopehisvocabularyattheendofthisvolume[14]mayproveusefulbeyonditsimmediatepurposeandtomypublishers，MessrsDunckerandHumblot，whoseenterprise，fromthedaysnowsixteenyearsagowhentheypublishedmyEconomicConsequencesofthePeace，hasenabledmetomaintaincontactwithGermanreaders。
J。M。KEYNES
7September1936
PrefacetoJapaneseEdition[Pagexxix]
PREFACETOTHEJAPANESEEDITION
AlfredMarshall，onwhosePrinciplesofEconomicsallcontemporaryEnglisheconomistshavebeenbroughtup，wasatparticularpainstoemphasisethecontinuityofhisthoughtwithRicardo's。HisworklargelyconsistedingraftingthemarginalprincipleandtheprincipleofsubstitutionontotheRicardiantradition；andhistheoryofoutputandconsumptionasawhole，asdistinctfromhistheoryoftheproductionanddistributionofagivenoutput，wasneverseparatelyexpounded。Whetherhehimselffelttheneedofsuchatheory，Iamnotsure。Buthisimmediatesuccessorsandfollowershavecertainlydispensedwithitandhavenot，apparently，feltthelackofit。ItwasinthisatmospherethatIwasbroughtup。I
taughtthesedoctrinesmyselfanditisonlywithinthelastdecadethatIhavebeenconsciousoftheirinsufficiency。Inmyownthoughtanddevelopment，therefore，thisbookrepresentsareaction，atransitionawayfromtheEnglishclassicalororthodoxtradition。MyemphasisuponthisinthefollowingpagesanduponthepointsofmydivergencefromreceiveddoctrinehasbeenregardedinsomequartersinEnglandasundulycontroversial。
ButhowcanonebroughtupinEnglisheconomicorthodoxy，indeedapriestofthatfaithatonetime，avoidsomecontroversialemphasis，whenhefirstbecomesaProtestant？
PerhapsJapanesereaders，however，willneitherrequirenorresistmyassaultsagainsttheEnglishtradition。WearewellawareofthelargescaleonwhichEnglisheconomicwritingsarereadinJapan，butwearenotsowellinformedastohowJapaneseopinionsregardthem。TherecentpraiseworthyenterpriseonthepartoftheInternationalEconomicCircleofTokyoinreprintingMalthus's'PrinciplesofPoliticalEconomy'asthefirstvolumeintheTokyoSeriesofReprintsencouragesmetothinkthatabookwhichtracesitsdescentfromMalthusratherthanRicardomaybereceivedwithsympathyinsomequartersatleast。
[Pagexxx]THEGENERALTHEORYOFEMPLOYMENT
AtanyrateIamgratefultotheOrientalEconomistformakingitpossibleformetoapproachJapanesereaderswithouttheextrahandicapofaforeignlanguage。
J。M。KEYNES
4December1936
PrefacetoFrenchEdition[Pagexxxi]
PREFACETOTHEFRENCHEDITION
Forahundredyearsorlonger，EnglishPoliticalEconomyhasbeendominatedbyanorthodoxy。Thatisnottosaythatanunchangingdoctrinehasprevailed。
Onthecontrary。Therehasbeenaprogressiveevolutionofthedoctrine。
Butitspresuppositions，itsatmosphere，itsmethodhaveremainedsurprisinglythesame，andaremarkablecontinuityhasbeenobservablethroughallthechanges。Inthatorthodoxy，inthatcontinuoustransition，Iwasbroughtup。Ilearntit，Itaughtit，Iwroteit。TothoselookingfromoutsideIprobablystillbelongtoit。Subsequenthistoriansofdoctrinewillregardthisbookasinessentiallythesametradition。ButImyselfinwritingit，andinotherrecentworkwhichhasleduptoit，havefeltmyselftobebreakingawayfromthisorthodoxy，tobeinstrongreactionagainstit，tobeescapingfromsomething，tobegaininganemancipation。Andthisstateofmindonmypartistheexplanationofcertainfaultsinthebook，inparticularitscontroversialnoteinsomepassages，anditsairofbeingaddressedtoomuchtotheholdersofaparticularpointofviewandtoolittleadurbemetorbem。Iwaswantingtoconvincemyownenvironmentanddidnotaddressmyselfwithsufficientdirectnesstooutsideopinion。
Nowthreeyearslater，havinggrownaccustomedtomynewskinandhavingalmostforgottenthesmellofmyoldone，Ishould，ifIwerewritingafresh，endeavourtofreemyselffromthisfaultandstatemyownpositioninamoreclear-cutmanner。
Isayallthis，partlytoexplainandpartlytoexcuse，myselftoFrenchreaders。ForinFrancetherehasbeennoorthodoxtraditionwiththesameauthorityovercontemporaryopinionasinmyowncountry。IntheUnitedStatesthepositionhasbeenmuchthesameasinEngland。ButinFrance，asintherestofEurope，therehasbeennosuchdominantschoolsincetheexpiryoftheschoolofFrenchLiberaleconomistswhowereintheirprimetwentyyearsagothoughtheylivedtosogreatanage，longaftertheirinfluencehadpassedaway，[Pagexxxii]THEGENERALTHEORYOFEMPLOYMENT
thatitfelltomyduty，whenIfirstbecameayouthfuleditoroftheEconomicJournaltowritetheobituariesofmanyofthem¾；Levasseur，Molinari，Leroy-Beaulieu。IfCharlesGidehadattainedtothesameinfluenceandauthorityasAlfredMarshall，yourpositionwouldhavebornemoreresemblancetoours。Asitis，youreconomistsareeclectic，toomuchwesometimesthinkwithoutdeeprootsinsystematicthought。PerhapsthismaymakethemmoreeasilyaccessibletowhatIhavetosay。ButitmayalsohavetheresultthatmyreaderswillsometimeswonderwhatIamtalkingaboutwhenIspeak，withwhatsomeofmyEnglishcriticsconsideramisuseoflanguage，ofthe'classical'schoolofthoughtand'classical'economists。
Itmay，therefore，behelpfultomyFrenchreadersifIattempttoindicateverybrieflywhatIregardasthemaindifferentiaeofmyapproach。
Ihavecalledmytheoryageneraltheory。ImeanbythisthatIamchieflyconcernedwiththebehaviouroftheeconomicsystemasawhole，¾；withaggregateincomes，aggregateprofits，aggregateoutput，aggregateemployment，aggregateinvestment，aggregatesavingratherthanwiththeincomes，profits，output，employment，investmentandsavingofparticularindustries，firmsorindividuals。AndIarguethatimportantmistakeshavebeenmadethroughextendingtothesystemasawholeconclusionswhichhavebeencorrectlyarrivedatinrespectofapartofittakeninisolation。
LetmegiveexamplesofwhatImean。Mycontentionthatforthesystemasawholetheamountofincomewhichissaved，inthesensethatitisnotspentoncurrentconsumption，isandmustnecessarilybeexactlyequaltotheamountofnetnewinvestmenthasbeenconsideredaparadoxandhasbeentheoccasionofwidespreadcontroversy。Theexplanationofthisisundoubtedlytobefoundinthefactthatthisrelationshipofequalitybetweensavingandinvestment，whichnecessarilyholdsgoodforthesystemasawhole，doesnotholdgoodatallforaparticularindividual。ThereisnoreasonwhateverwhythenewinvestmentforwhichIamresponsibleshouldbearanyrelationwhatevertotheamountofmyownsavings。Qutelegitimatelyweregardanindi-
[Pagexxxiii]PREFACETOTHEFRENCHEDITION
vidual'sincomeasindependentofwhathehimselfconsumesandinvests。
Butthis，Ihavetopointout，shouldnothaveledustooverlookthefactthatthedemandarisingoutoftheconsumptionandinvestmentofoneindividualisthesourceoftheincomesofotherindividuals，sothatincomesingeneralarenotindependent，quitethecontrary，ofthedispositionofindividualstospendandinvest；andsinceinturnthereadinessofindividualstospendandinvestdependsontheirincomes，arelationshipissetupbetweenaggregatesavingsandaggregateinvestmentwhichcanbeveryeasilyshown，beyondanypossibilityofreasonabledispute，tobeoneofexactandnecessaryequality。Rightlyregardedthisisabanaleconclusion。Butitsetsinmotionatrainofthoughtfromwhichmoresubstantialmattersfollow。Itisshownthat，generallyspeaking，theactuallevelofoutputandemploymentdepends，notonthecapacitytoproduceoronthepre-existinglevelofincomes，butonthecurrentdecisionstoproducewhichdependinturnoncurrentdecisionstoinvestandonpresentexpectationsofcurrentandprospectiveconsumption。Moreover，assoonasweknowthepropensitytoconsumeandtosaveasIcallit，thatistosaytheresultforthecommunityasawholeoftheindividualpsychologicalinclinationsastohowtodisposeofgivenincomes，wecancalculatewhatlevelofincomes，andthereforewhatlevelofoutputandemployment，isinprofit-equilibriumwithagivenlevelofnewinvestment；outofwhichdevelopsthedoctrineoftheMultiplier。
Oragain，itbecomesevidentthatanincreasedpropensitytosavewillceterisparibuscontractincomesandoutput；whilstanincreasedinducementtoinvestwillexpandthem。Wearethusabletoanalysethefactorswhichdeterminetheincomeandoutputofthesystemasawhole；¾；wehave，inthemostexactsense，atheoryofemployment。Conclusionsemergefromthisreasoningwhichareparticularlyrelevanttotheproblemsofpublicfinanceandpublicpolicygenerallyandofthetradecycle。
Anotherfeature，speciallycharacteristicofthisbook，isthetheoryoftherateofinterest。Inrecenttimesithasbeenheldbymanyeconomiststhattherateofcurrentsavingdetermined[Pagexxxiv]THEGENERALTHEORYOFEMPLOYMENT
thesupplyoffreecapital，thattherateofcurrentinvestmentgovernedthedemandforit，andthattherateofinterestwas，sotospeak，theequilibratingprice-factordeterminedbythepointofintersectionofthesupplycurveofsavingsandthedemandcurveofinvestment。Butifaggregatesavingisnecessarilyandinallcircumstancesexactlyequaltoaggregateinvestment，itisevidentthatthisexplanationcollapses。Wehavetosearchelsewhereforthesolution。Ifinditintheideathatitisthefunctionoftherateofinteresttopreserveequilibrium，notbetweenthedemandandthesupplyofnewcapitalgoods，butbetweenthedemandandthesupplyofmoney，thatistosaybetweenthedemandforliquidityandthemeansofsatisfyingthisdemand。Iamherereturningtothedoctrineoftheolder，pre-nineteenthcenturyeconomists。Montesquieu，forexample，sawthistruthwithconsiderableclarity，[15]¾；MontesquieuwhowastherealFrenchequivalentofAdamSmith，thegreatestofyoureconomists，headandshouldersabovethephysiocratsinpenetration，clear-headednessandgoodsensewhicharethequalitiesaneconomistshouldhave。ButImustleaveittothetextofthisbooktoshowhowindetailallthisworksout。
IhavecalledthisbooktheGeneralTheoryofEmployment，InterestandMoney；andthethirdfeaturetowhichImaycallattentionisthetreatmentofmoneyandprices。ThefollowinganalysisregistersmyfinalescapefromtheconfusionsoftheQuantityTheory，whichonceentangledme。Iregardthepricelevelasawholeasbeingdeterminedinpreciselythesamewayasindividualprices；thatistosay，undertheinfluenceofsupplyanddemand。Technicalconditions，thelevelofwages，theextentofunusedcapacityofplantandlabour，andthestateofmarketsandcompetitiondeterminethesupplyconditionsofindividualproductsandofproductsasawhole。Thedecisionsofentrepreneurs，whichprovidetheincomesofindividualproducersandthedecisionsofthoseindividualsastothedispositionofsuchincomesdeterminethedemandconditions。Andprices¾；bothindividualpricesandtheprice-level¾；emergeastheresultantofthesetwo[Pagexxxv]PREFACETOTHEFRENCHEDITION
factors。Money，andthequantityofmoney，arenotdirectinfluencesatthisstageoftheproceedings。Theyhavedonetheirworkatanearlierstageoftheanalysis。Thequantityofmoneydeterminesthesupplyofliquidresources，andhencetherateofinterest，andinconjunctionwithotherfactorsparticularlythatofconfidencetheinducementtoinvest，whichinturnfixestheequilibriumlevelofincomes，outputandemploymentandateachstageinconjunctionwithotherfactorstheprice-levelasawholethroughtheinfluencesofsupplyanddemandthusestablished。
Ibelievethateconomicseverywhereuptorecenttimeshasbeendominated，muchmorethanhasbeenunderstood，bythedoctrinesassociatedwiththenameofJ-B。Say。Itistruethathis'lawofmarkets'hasbeenlongabandonedbymosteconomists；buttheyhavenotextricatedthemselvesfromhisbasicassumptionsandparticularlyfromhisfallacythatdemandiscreatedbysupply。Saywasimplicitlyassumingthattheeconomicsystemwasalwaysoperatinguptoitsfullcapacity，sothatanewactivitywasalwaysinsubstitutionfor，andneverinadditionto，someotheractivity。Nearlyallsubsequenteconomictheoryhasdependedon，inthesensethatithasrequired，thissameassumption。Yetatheorysobasedisclearlyincompetenttotackletheproblemsofunemploymentandofthetradecycle。PerhapsIcanbestexpresstoFrenchreaderswhatIclaimforthisbookbysayingthatinthetheoryofproductionitisafinalbreak-awayfromthedoctrinesofJ-B。SayandthatinthetheoryofinterestitisareturntothedoctrinesofMontesquieu。
J。M。KEYNES
20February1939
King'sCollegeCambridgeTheGeneralTheory[Page3]
Chapter1
THEGENERALTHEORY
IhavecalledthisbooktheGeneralTheoryofEmployment，InterestandMoney，placingtheemphasisontheprefixgeneral。Theobjectofsuchatitleistocontrastthecharacterofmyargumentsandconclusionswiththoseoftheclassical[16]theoryofthesubject，uponwhichIwasbroughtupandwhichdominatestheeconomicthought，bothpracticalandtheoretical，ofthegoverningandacademicclassesofthisgeneration，asithasforahundredyearspast。Ishallarguethatthepostulatesoftheclassicaltheoryareapplicabletoaspecialcaseonlyandnottothegeneralcase，thesituationwhichitassumesbeingalimitingpointofthepossiblepositionsofequilibrium。Moreover，thecharacteristicsofthespecialcaseassumedbytheclassicaltheoryhappennottobethoseoftheeconomicsocietyinwhichweactuallylive，withtheresultthatitsteachingismisleadinganddisastrousifweattempttoapplyittothefactsofexperience。
PostulatesofClassicalEconomics[Page4]
Chapter2
THEPOSTULATESOFTHECLASSICALECONOMICS
Mosttreatisesonthetheoryofvalueandproductionareprimarilyconcernedwiththedistributionofagivenvolumeofemployedresourcesbetweendifferentusesandwiththeconditionswhich，assumingtheemploymentofthisquantityofresources，determinetheirrelativerewardsandtherelativevaluesoftheirproducts。[17]
Thequestion，also，ofthevolumeoftheavailableresources，inthesenseofthesizeoftheemployablepopulation，theextentofnaturalwealthandtheaccumulatedcapitalequipment，hasoftenbeentreateddescriptively。
Butthepuretheoryofwhatdeterminestheactualemploymentoftheavailableresourceshasseldombeenexaminedingreatdetail。Tosaythatithasnotbeenexaminedatallwould，ofcourse，beabsurd。Foreverydiscussionconcerningfluctuationsofemployment，ofwhichtherehavebeenmany，hasbeenconcernedwithit。Imean，notthatthetopichasbeenoverlooked，butthatthefundamentaltheory[Page5]POSTULATES
OFTHECLASSICALECONOMICS
underlyingithasbeendeemedsosimpleandobviousthatithasreceived，atthemost，abaremention。[18]
Theclassicaltheoryofemployment¾；supposedlysimpleandobvious¾；hasbeenbased，I
think，ontwofundamentalpostulates，thoughpracticallywithoutdiscussion，namely:
I。ThewageisequaltothemarginalproductoflabourThatistosay，thewageofanemployedpersonisequaltothevaluewhichwouldbelostifemploymentweretobereducedbyoneunitafterdeductinganyothercostswhichthisreductionofoutputwouldavoid；
subject，however，tothequalificationthattheequalitymaybedisturbed，inaccordancewithcertainprinciples，ifcompetitionandmarketsareimperfect。
II。Theutilityofthewagewhenagivenvolumeoflabourisemployedisequaltothemarginaldisutilityofthatamountofemployment。
Thatistosay，therealwageofanemployedpersonisthatwhichisjustsufficientintheestimationoftheemployedpersonsthemselves
toinducethevolumeoflabouractuallyemployedtobeforthcoming；subjecttothequalificationthattheequalityforeachindividualunitoflabourmaybedisturbedbycombinationbetweenemployableunitsanalogoustotheimperfections[Page6]THEGENERAL
THEORYOFEMPLOYMENT
ofcompetitionwhichqualifythefirstpostulate。Disutilitymustbehereunderstoodtocovereverykindofreasonwhichmightleadaman，orabodyofmen，towithholdtheirlabourratherthanacceptawagewhichhadtothemautilitybelowacertainminimum。
Thispostulateiscompatiblewithwhatmaybecalled'frictional'unemployment。
Forarealisticinterpretationofitlegitimatelyallowsforvariousinexactnessesofadjustmentwhichstandinthewayofcontinuousfullemployment:forexample，unemploymentduetoatemporarywantofbalancebetweentherelativequantitiesofspecialisedresourcesasaresultofmiscalculationorintermittentdemand；ortotime-lagsconsequentonunforeseenchanges；ortothefactthatthechange-overfromoneemploymenttoanothercannotbeeffectedwithoutacertaindelay，sothattherewillalwaysexistinanon-staticsocietyaproportionofresourcesunemployed'betweenjobs'。Inadditionto'frictional'unemployment，thepostulateisalsocompatiblewith'voluntary'
unemploymentduetotherefusalorinabilityofaunitoflabour，asaresultoflegislationorsocialpracticesorofcombinationforcollectivebargainingorofslowresponsetochangeorofmerehumanobstinacy，toacceptarewardcorrespondingtothevalueoftheproductattributabletoitsmarginalproductivity。Butthesetwocategoriesof'frictional'
unemploymentand'voluntary'unemploymentarecomprehensive。Theclassicalpostulatesdonotadmitofthepossibilityofthethirdcategory，whichIshalldefinebelowas'involuntary'unemployment。
Subjecttothesequalifications，thevolumeofemployedresourcesisdulydetermined，accordingtotheclassicaltheory，bythetwopostulates。
Thefirstgivesusthedemandscheduleforemployment，thesecondgivesusthesupplyschedule；andtheamountofemploymentisfixedatthepointwheretheutilityofthemarginalproductbalancesthedisutilityofthemarginalemployment。
[Page7]POSTULATES
OFTHECLASSICALECONOMICS
Itwouldfollowfromthisthatthereareonlyfourpossiblemeansofincreasingemployment:
aAnimprovementinorganisationorinforesightwhichdiminishes'frictional'unemployment；
badecreaseinthemarginaldisutilityoflabour，asexpressedbytherealwageforwhichadditionallabourisavailable，soastodiminish'voluntary'unemployment；
canincreaseinthemarginalphysicalproductivityoflabourinthewage-goodsindustriestouseProfessorPigou'sconvenienttermforgoodsuponthepriceofwhichtheutilityofthemoney-wagedepends；
ordanincreaseinthepriceofnon-wage-goodscomparedwiththepriceofwage-goods，associatedwithashiftintheexpenditureofnon-wage-earnersfromwage-goodstonon-wage-goods。
This，tothebestofmyunderstanding，isthesubstanceofProfessorPigou'sTheoryofUnemployment¾；theonlydetailedaccountoftheclassicaltheoryofemploymentwhichexists。
[19]
II
Isittruethattheabovecategoriesarecomprehensiveinviewofthefactthatthepopulationgenerallyisseldomdoingasmuchworkasitwouldliketodoonthebasisofthecurrentwage？For，admittedly，morelabourwould，asarule，beforthcomingattheexistingmoney-wageifitweredemanded。[20]Theclassicalschoolreconcilethisphenomenonwiththeirsecondpostulatebyarguingthat，whilethedemandforlabour[Page8]THEGENERAL
THEORYOFEMPLOYMENT
attheexistingmoney-wagemaybesatisfiedbeforeeveryonewillingtoworkatthiswageisemployed，thissituationisduetoanopenortacitagreementamongstworkersnottoworkforless，andthatiflabourasawholewouldagreetoareductionofmoney-wagesmoreemploymentwouldbeforthcoming。Ifthisisthecase，suchunemployment，thoughapparentlyinvoluntary，isnotstrictlyso，andoughttobeincludedundertheabovecategoryof'voluntary'unemploymentduetotheeffectsofcollectivebargaining，etc。
Thiscallsfortwoobservations，thefirstofwhichrelatestotheactualattitudeofworkerstowardsrealwagesandmoney-wagesrespectivelyandisnottheoreticallyfundamental，butthesecondofwhichisfundamental。
Letusassume，forthemoment，thatlabourisnotpreparedtoworkforalowermoney-wageandthatareductionintheexistinglevelofmoney-wageswouldlead，throughstrikesorotherwise，toawithdrawalfromthelabourmarketoflabourwhichisnowemployed。Doesitfollowfromthisthattheexistinglevelofrealwagesaccuratelymeasuresthemarginaldisutilityoflabour？Notnecessarily。For，althoughareductionintheexistingmoney-wagewouldleadtoawithdrawaloflabour，itdoesnotfollowthatafallinthevalueoftheexistingmoney-wageintermsofwage-goodswoulddoso，ifitwereduetoariseinthepriceofthelatter。Inotherwords，itmaybethecasethatwithinacertainrangethedemandoflabourisforaminimummoney-wageandnotforaminimumrealwage。Theclassicalschoolhavetacitlyassumedthatthiswouldinvolvenosignificantchangeintheirtheory。Butthisisnotso。Forifthesupplyoflabourisnotafunctionofrealwagesasitssolevariable，theirargumentbreaksdownentirelyandleavesthequestionofwhattheactualemploymentwillbequiteindeterminate。
[21]Theydonotseemtohaverealisedthat，unlessthesupplyoflabourisafunctionofrealwagesalone，[Page9]POSTULATES
OFTHECLASSICALECONOMICS
theirsupplycurveforlabourwillshiftbodilywitheverymovementofprices。Thustheirmethodistiedupwiththeirveryspecialassumptions，andcannotbeadaptedtodealwiththemoregeneralcase。
Nowordinaryexperiencetellsus，beyonddoubt，thatasituationwherelabourstipulateswithinlimitsforamoney-wageratherthanarealwage，sofarfrombeingamerepossibility，isthenormalcase。Whilstworkerswillusuallyresistareductionofmoney-wages，itisnottheirpracticetowithdrawtheirlabourwheneverthereisariseinthepriceofwage-goods。
Itissometimessaidthatitwouldbeillogicalforlabourtoresistareductionofmoney-wagesbutnottoresistareductionofrealwages。Forreasonsgivenbelowp。14，thismightnotbesoillogicalasitappearsatfirst；and，asweshallseelater，fortunatelyso。But，whetherlogicalorillogical，experienceshowsthatthisishowlabourinfactbehaves。
Moreover，thecontentionthattheunemploymentwhichcharacterisesadepressionisduetoarefusalbylabourtoacceptareductionofmoney-wagesisnotclearlysupportedbythefacts。ItisnotveryplausibletoassertthatunemploymentintheUnitedStatesin1932wasdueeithertolabourobstinatelyrefusingtoacceptareductionofmoney-wagesortoitsobstinatelydemandingarealwagebeyondwhattheproductivityoftheeconomicmachinewascapableoffurnishing。Widevariationsareexperiencedinthevolumeofemploymentwithoutanyapparentchangeeitherintheminimumrealdemandsoflabourorinitsproductivity。Labourisnotmoretruculentinthedepressionthanintheboom¾；farfromit。Norisitsphysicalproductivityless。Thesefactsfromexperienceareaprimafaciegroundforquestioningtheadequacyoftheclassicalanalysis。
It[22]wouldbeinterestingtoseetheresultsofastatisticalenquiryintotheactualrelationshipbetween[Page10]THEGENERAL