Keynes’s monetary theory: a partial survey

ABSTRACT The title of the paper alerts the reader to the fact that while the role of money in Keynes’s earlier work is alluded to, it is mostly the monetary contribution of the General Theory (to which the author is particularly partial) which is surveyed here. The General Theory represents a breakthrough in monetary theory both broadly and narrowly defined. Money in the General Theory is all-pervasive. It is essential in the sense of Radner and Hahn. Money is also essential in allowing Keynes to break away, more profoundly than before, from equilibrium economics. Monetary theory narrowly defined also represents a breakthrough: speculative demand is a revolutionary concept, driving a wedge between the rate of interest and the rate of profit. The concept is elaborated and compared with Hicks’s treatment. The article ends with a brief section on the finance motive and endogenous money.