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Lectures on John Maynard Keynes’ General Theory of Employment, Interest and Money (5): Chapter 6, The Definition of Income, Saving and Investment; Appendix to Chapter 6, Appendix on User Cost; Chapter 7, The Meaning of Saving and Investment Further Considered

Brian Ferguson

No 1310, Working Papers from University of Guelph, Department of Economics and Finance

Abstract: Chapter Six and its Appendix deal in some detail with the way Keynes is defining income, savings and investment in the General Theory while the appendix to Chapter 6 goes into detail on user cost. His concept of user cost at one point sparked a certain amount of controversy among Keynesians but has since virtually been forgotten. It is of interest to us because user cost is the place where Keynes sees firms taking account of the future consequences of their current production decisions. The General Theory is a theory of the short run, but firms’ cost curves, which are key to many short run decisions, contain a forward looking element. Chapter 7 returns to the concepts of saving and investment, relates Keynes’ definitions to those used by others (including his own from the Treatise) and relates aggregate investment, which refers to additions to physical capital stock, to the way the term is often used at the micro level, in the sense of investment in financial assets.

Keywords: Keynes; General Theory; Keynesian Economics; Savings; Investment; User Cost; Prime Costs; Keynes’ Abominable Footnote; Keynes’ Slip of the Pen. (search for similar items in EconPapers)
JEL-codes: B10 B12 B13 B22 B31 E12 N12 N14 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-hpe and nep-mac
Date: 2013
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