In the Treatise Keynes drew a distinction between savings and investment, arguing that where saving exceeded investment, recession would occur. Thus, Keynes reasoned that during a depression the best course of action would be to promote spending and to discourage saving.[1] Keynes most notably clarified his Theory of Money in catty dialogue[2] with other famous economists of the day, such as Friedrich Hayek and Dennis Robertson. Keynes described his rejoinder as such “in my Rejoinder to Mr. D. H. Robertson, Published in the Economic Journal for September, 1931, I have endeavoured to re-state in a clearer way what my own theory actually is.”[3]
In Keynes’ Treatise, he does not agree that booms and busts happen solely because of extrinsic random variables such as “sunspots”. Instead, he believes that economic events emerge when there are discrepancies between savings and investments. According to Keynes, a true measure of a nation's prosperity is not anything of physical value such as gold or silver, but by national income. To him, the most important characteristic of national income is consumption.[4]
In Keynes's Treatise, he explained how recessions could happen, but not long-term depressions. He was able to address this further in The General Theory of Employment, Interest and Money. In his General Theory, Keynes argued against the seesaw theory and said that the economy was more like an elevator that can stop at any level. This is because once the economy reaches the bottom, individuals would have no excess income to save. No savings results in no investment so the economy cannot save itself. Without the savings, there is no pressure to lower interest rates, so there is no incentive for businesses to invest. In his theory on money he asserts that investment is an "undependable drive wheel for the economy," and when no new investment can be found, the economy will begin to falter.[5]
Criticism in the economic community
Keynes and Hayek debated the former's theory of money. Keynes felt that Hayek was splitting hairs with him terminologically and published a public response to the Austrian's criticisms, writing, “Dr Hayek has seriously misapprehended the character of my conclusions. He thinks that my central contention is something different from what it really is”; “It is essential to that theory to deny these propositions which Dr Hayek puts in my mouth.” The meat of their disagreement from Keynes's perspective concerned ancillary points, and semantic differences in definition, leading him to conclude that Hayek was nit-picking: “So long as a problem of this major magnitude is not cleared up between us, what is the use of discussing 'irritating' terminology, which might not bother Dr Hayek at all if he were not, for these excellent other reasons, looking for trouble? Dr Hayek has missed, or at least does not discuss, the critical point at which our arguments part company. Having passed this by, but finding himself being led down strange and distasteful paths, he tries to prevent himself from being dragged along any further by representing the molehills in the pathway as mountains”
Coinage of the term market liquidity
John Hicks stated that the A Treatise on Money was the first economics publication to use the term liquidity, because he had not been able to find the term used in earlier works.[6]
Notes
^"Treatise on Money and the General Theory of Employment, Interest and Money 1927 to 1939". maynardkeynes.org.
^Keynes, J. M.. “The Pure Theory of Money. A Reply to Dr. Hayek”. Economica 34 (1931): 387–397. Web.
^Keynes, J. M.. “[Mr. Keynes' Theory of Money]: A Rejoinder”. The Economic Journal 41.163 (1931): 412–423. Web...
^Erturk, Korkut A. "Why Keynes' A Treatise On Money Might Have Greater Relevance Today Than His General Theory?." Middle East Technical University Studies In Development 35.1 (2008): 101-120. EconLit. Web. 3 Apr. 2016.
^Erturk, Korkut A. "'Asset Prices, Liquidity Preference, And The Business Cycle'." (2002): EconLit. Web. 3 Apr. 2016.
^Hicks, John (1986). A Market Theory of Money. p. 61.
External links
Hayek, F. A. von (August 1931). "Reflections on the Pure Theory of Money of Mr. J. M. Keynes". Economica. 33 (33): 270–295. doi:10.2307/2548035. JSTOR 2548035.
Hayek, F. A. von (February 1932). "Reflections on the Pure Theory of Money of Mr. J. M. Keynes (continued)". Economica. 35 (35): 22–44. doi:10.2307/2548974. JSTOR 2548974.
Keynes, J. M. (November 1931). "The Pure Theory of Money. A Reply to Dr. Hayek". Economica. 34 (34): 387–397. doi:10.2307/2549192. JSTOR 2549192.
March 25, 2023
treatise, money, also, treatise, money, disambiguation, volume, book, english, economist, john, maynard, keynes, published, 1930, authorjohn, maynard, keynescountryunited, kingdomlanguageenglishgenrenonfictionpublication, date1930isbn978, 15000, contents, summ. See also Treatise on money disambiguation A Treatise on Money is a two volume book by English economist John Maynard Keynes published in 1930 A Treatise on MoneyAuthorJohn Maynard KeynesCountryUnited KingdomLanguageEnglishGenreNonfictionPublication date1930ISBN978 0 404 15000 6 Contents 1 Summary of the Work 2 Criticism in the economic community 3 Coinage of the term market liquidity 4 Notes 5 External linksSummary of the Work EditIn the Treatise Keynes drew a distinction between savings and investment arguing that where saving exceeded investment recession would occur Thus Keynes reasoned that during a depression the best course of action would be to promote spending and to discourage saving 1 Keynes most notably clarified his Theory of Money in catty dialogue 2 with other famous economists of the day such as Friedrich Hayek and Dennis Robertson Keynes described his rejoinder as such in my Rejoinder to Mr D H Robertson Published in the Economic Journal for September 1931 I have endeavoured to re state in a clearer way what my own theory actually is 3 In Keynes Treatise he does not agree that booms and busts happen solely because of extrinsic random variables such as sunspots Instead he believes that economic events emerge when there are discrepancies between savings and investments According to Keynes a true measure of a nation s prosperity is not anything of physical value such as gold or silver but by national income To him the most important characteristic of national income is consumption 4 In Keynes s Treatise he explained how recessions could happen but not long term depressions He was able to address this further in The General Theory of Employment Interest and Money In his General Theory Keynes argued against the seesaw theory and said that the economy was more like an elevator that can stop at any level This is because once the economy reaches the bottom individuals would have no excess income to save No savings results in no investment so the economy cannot save itself Without the savings there is no pressure to lower interest rates so there is no incentive for businesses to invest In his theory on money he asserts that investment is an undependable drive wheel for the economy and when no new investment can be found the economy will begin to falter 5 Criticism in the economic community EditKeynes and Hayek debated the former s theory of money Keynes felt that Hayek was splitting hairs with him terminologically and published a public response to the Austrian s criticisms writing Dr Hayek has seriously misapprehended the character of my conclusions He thinks that my central contention is something different from what it really is It is essential to that theory to deny these propositions which Dr Hayek puts in my mouth The meat of their disagreement from Keynes s perspective concerned ancillary points and semantic differences in definition leading him to conclude that Hayek was nit picking So long as a problem of this major magnitude is not cleared up between us what is the use of discussing irritating terminology which might not bother Dr Hayek at all if he were not for these excellent other reasons looking for trouble Dr Hayek has missed or at least does not discuss the critical point at which our arguments part company Having passed this by but finding himself being led down strange and distasteful paths he tries to prevent himself from being dragged along any further by representing the molehills in the pathway as mountains Coinage of the term market liquidity EditJohn Hicks stated that the A Treatise on Money was the first economics publication to use the term liquidity because he had not been able to find the term used in earlier works 6 Notes Edit Treatise on Money and the General Theory of Employment Interest and Money 1927 to 1939 maynardkeynes org Keynes J M The Pure Theory of Money A Reply to Dr Hayek Economica 34 1931 387 397 Web Keynes J M Mr Keynes Theory of Money A Rejoinder The Economic Journal 41 163 1931 412 423 Web Erturk Korkut A Why Keynes A Treatise On Money Might Have Greater Relevance Today Than His General Theory Middle East Technical University Studies In Development 35 1 2008 101 120 EconLit Web 3 Apr 2016 Erturk Korkut A Asset Prices Liquidity Preference And The Business Cycle 2002 EconLit Web 3 Apr 2016 Hicks John 1986 A Market Theory of Money p 61 External links EditHayek F A von August 1931 Reflections on the Pure Theory of Money of Mr J M Keynes Economica 33 33 270 295 doi 10 2307 2548035 JSTOR 2548035 Hayek F A von February 1932 Reflections on the Pure Theory of Money of Mr J M Keynes continued Economica 35 35 22 44 doi 10 2307 2548974 JSTOR 2548974 Keynes J M November 1931 The Pure Theory of Money A Reply to Dr Hayek Economica 34 34 387 397 doi 10 2307 2549192 JSTOR 2549192 Retrieved from https en wikipedia org w index php title A Treatise on Money amp oldid 1135469889, wikipedia, wiki, book, books, library,
