On 12/7/2012 5:23 PM, James Ahiakpor wrote:
> [Keynes's] mistaken notion that the savings of the rich are not
> spent (an argument he started from the /Treatise/, namely,
> the paradox of thrift)


 From the GT:
"For a poor community will be prone to consume by far the
greater part of its output, so that a very modest measure of
investment will be sufficient to provide full employment;
whereas a wealthy community will have to discover much
ampler opportunities for investment if the saving
propensities of its wealthier members are to be compatible
with the employment of its poorer members. If in
a potentially wealthy community the inducement to invest is
weak, then, in spite of its potential wealth, the working of
the principle of effective demand will compel it to reduce
its actual output, until, in spite of its potential wealth,
it has become so poor that its surplus over its consumption
is sufficiently diminished to correspond to the weakness of
the inducement to invest."

In other words, temporary equilibrium will be below full
employment, but it still satisfies Say's Identity
(as Blaug denotes it).

It seems to me that when critiquing Keynes one ought to
1. pay attention to what he said, and 2. recognize that
nearly a century of additional theory has show that
his core points can be made coherent.

Naturally their descriptive power is separate question.
(However there is plenty of evidence in favor of that as well.
See for example the CBO estimates of the effectiveness
of "the stimulus".)

Alan Isaac