Confrontations with Keynes

Nahid Aslanbeigui and Guy Oakes
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Nahid Aslanbeigui: Monmouth University
Guy Oakes: Monmouth University

Chapter 7 in Arthur Cecil Pigou, 2015, pp 193-241 from Palgrave Macmillan

Abstract: Abstract In 1924, Pigou instructed the Colwyn Committee on the National Debt and Taxation that the rate of unemployment is the ‘best single index’ of national prosperity (5/5/1924, in HMSO 1927, 44). If there is a dominant leitmotif of his thought, it is the analysis of the causes and consequences of unemployment and policies for containing it. These issues appear as early as his contributions to the tariff reform controversy. Wealth and Welfare, which he traced to his vision of an ambitious study of unemployment, explores them in a more comprehensive fashion. The same holds for his examination of business cycles in the first edition of The Economics of Welfare. Between 1903 and 1913, he constructed an analytical framework — systematized, at least in outline, in Unemployment (1913h) — from which he never deviated. Its fundamental premise is the distinction between short-term and long-term unemployment. Routine short-term unemployment in a free market is a brute fact. Although fluctuations of long duration could be expected, from an historical perspective they are transient. In the long run, the immanent dynamic of the economy tends to restore full employment, a state consistent with a positive rate of unemployment determined by wage policy.

Keywords: Interest Rate; Business Cycle; Real Wage; Labour Demand; Full Employment (search for similar items in EconPapers)
Date: 2015
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DOI: 10.1057/9781137314505_7

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