On the relevance of The General Theory at 80: economic change and economic theory

Victoria Chick

Chapter 1 in The General Theory and Keynes for the 21st Century, 2018, pp 1-15 from Edward Elgar Publishing

Abstract: Economic theory that is relevant to the real world is always a product of its time, taking for granted the institutions and behaviours that characterise that time. Old books, like Keynes’s General Theory, present a conundrum: how much is still pertinent today and what revisions are necessary to bring the theory into line with changes in the economic system since the book was written. This chapter attempts an answer to that question. It is argued that the principle of effective demand and liquidity preference is almost unchanged, but that globalisation and changes to the banks’ behaviour pose serious questions for the theory, as does our new awareness of resource constraints and climate change. The underlying methodology remains the best on offer and should be retained in any revision.

Keywords: Economics and Finance (search for similar items in EconPapers)
Date: 2018
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