----------------- HES POSTING ----------------- There appear to be some distinctive similarities between Paul Douglas' (1934) Theory of Wages and Keynes' General Theory (1936). Among the similarities are: 1. An assault on some of the assumptions of neoclassical marginal productivity theory. Keynes' (1936, chapter two) 'Postulates of Classical Economics' is similar in content and style to Douglas' (1934, chapter III) 'Postulates of the Marginal Productivity Theory'. Douglas (1934, 70) sought to illuminate some of the "unconsciously implicit" neoclassical assumptions. So too did Keynes. Both Douglas (1934, 94) and Keynes (1936, 6, 17) emphasised that they were questioning only some of the assumptions of marginal productivity theory. Douglas (134, 95-6) argued that "the method of the marginal productivity school, as indeed of the entire school of orthodox economists, has described a portion of reality" but "it is dangerous to assume that the neat tidy world of the syllogism is in fact a picture of the real world. This caution is applicable to physical sciences, but it is even more true in economic and social life". Keynes (1936, 16) stated that "the classical theorists resemble Euclidian geometers in a non-Euclidian world … in truth, there is no remedy except to throw over the axiom of parallels and to work out a non-Euclidian geometry. Something similar is required today in economics". 2. The Quantitative Alternative Douglas (1934, 96) specifically recommended quantitative economics as the antidote to this methodological impasse. Keynes argued (1936, 332) that the "excellently complete statistics now available in the United States" were available to illustrate aspects of the theory of the Trade Cycle . Chapter 6 of the unwritten Footnotes to the General Theory, was entitled 'Statistical notes' (JMK XIV [1936], 134). 3. Unemployment Douglas (1934, 70) noted that "One of the more remarkable features about the theoretical work of both the classical and neo-classical schools has been their failure to recognise the possibility of unemployment". Keynes (1936, 15) argued that "classical theory does not admit … the possibility of … 'involuntary' unemployment". Has this been noted in the literature before? Robert Leeson Murdoch University ------------ FOOTER TO HES POSTING ------------ For information, send the message "info HES" to [log in to unmask]