From A Treatise on Money to the General Theory: John Maynard Keynes' Departure from the Doctrine of Forced Saving

Ho-Po Wong ()

Center for the History of Political Economy Working Paper Series from Center for the History of Political Economy

Abstract: I examine John Maynard Keynes’ struggle with the doctrine of the classical forced saving during the period 1924-1936 from when he worked on A Treatise on Money to the completion of his General Theory. The forced saving notion has been developed as a key mechanism of how monetary expansion results in wealth redistribution and change in production in the classical school. I primarily focus on the role of discussion and criticism in the development of Keynes’ thought. I investigate what led John Maynard Keynes to completely abolish ideas related to forced saving and place his emphasis on effective demand in the General Theory and its process. I provide evidence suggesting that the development of the General Theory is closely linked with the abolition of the forced saving doctrine and argue that such notion is internally inconsistent with Fundamental Equations and subsequent theory of effective demand in the explanation of the problem of unemployment.

Keywords: forced saving; hoarding; lacking; General Theory; Treatise on Money; quantity theory of money; John Maynard Keynes; fundamental equations; production time lag (search for similar items in EconPapers)
Pages: 32
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