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> On p. 40 of the General Theory Keynes wrote: 
> 
> "To say that net output to-day is greater, but the price-level lower, 
> than ten years ago or one year ago, is a proposition of a similar 
> character to the statement that Queen Victoria was a better queen but not 
> a happier woman than Queen Elizabeth -- a proposition not without meaning 
> and not without interest, but unsuitable as material for the differential 
> calculus.  Our precision will be a mock precision if we try to use such 
> partly vague and non-quantitative concepts as the basis of a quantitative 
> analysis." 
> 
> Am I missing something, or is this a rejection of the concept of the price 
> level as a theoretically useful tool?  Isn't the price level still an 
> important concept in macrotheory?  Has Keynes been refuted or has this 
> view been seriously discussed in the Keynes literature? 
 
There is an immense literature on this, for Keynes's choice of "the 
wage unit" has gotten tied to a textbook  belief that Keynes based his theory 
on wage rigidity. For an alternative line, the argument has been made 
that the General Theory relaxed the assumption of a fixed wage unit 
in Book V, Money-Wages and Prices, and particularly in Chapter 19, 
"Changes in Money-Wages".  This Post Keynesian line was developed by 
Sidney Weintraub in  _An Approach to the Theory of Income 
Distribution_  (1958; based on EJ, 1957) in Chapters 2 and 4, and has 
been the basis of several Post Keynesian literatures. 
 
 
E. Roy Weintraub, Professor of Economics 
Director, Center for Social and Historical Studies of Science 
Duke University, Box 90097 
Durham, North Carolina 27708-0097 
 
Phone and voicemail: (919) 660-1838 
Fax: (919) 684-8974 
E-mail: [log in to unmask] 
URL: http://www.econ.duke.edu/~erw/erw.homepage.html 
 
 
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