================= HES POSTING ================= Because of the passions that are stirred even by the mildest criticisms of John Maynard Keynes I am somewhat reluctant to buy into the question on the failure to cite but it does seem to me that Keynes in his General Theory is a clear case in point. There are two examples, one large and one of a lesser magnitude, but both are completely in character. In terms of documentation, both are discussed in my "Say's Law and the Keynesian Revolution" published last year by Elgar's. The large issue is in regard to the origin of Keynes's interest in Say's Law. The standard story, which Keynes not only never took the trouble to correct but in fact seemed to promote, was that he had come up with the idea to attack Say's Law on his own and then only afterwards discovered that others, most notably Malthus, had had the same idea before him. However, given the timing of his work on Malthus for the "Essays in Biography" - late 1932 - and his sudden interest in effective demand - early 1933 - it seems far more plausible that it was precisely because he had been reading Malthus that he then decided to refute Say's Law. I can, to some extent, see that Keynes would have felt genuine concern that writing a book openly in defence of the universally condemned notion of overproduction might have gone a long way towards discrediting his arguments in the eyes of fellow economists. But I think the more important reason was that he had a deep desire for originality and would not have wanted it understood that he had taken the central idea for his magnum opus from someone else. The second example of a failure to cite is in regard to the American economist, Harlan McCracken who had published "Value Theory and Business Cycles" in 1933. In a draft of Chapter 2 of the "General Theory", Keynes makes the following footnote statement in reference to a discussion of Marx: "Cf. H.L. McCracken, Value Theory and Business Cycles, [New York, 1933] p. 46, where this part of Marx's theory is cited in relation to modern theory." (CW XXIX: 81n) Compare the McCracken of "Value Theory and Business Cycles" to the Keynes of the General Theory. The following may be McCracken, but the sentiments are entirely Keynes's: "Could there be a General Overproduction? To this question Ricardo's logic gives an emphatic 'NO!'... According to Ricardo the only source of demand for goods consisted of a supply of other goods. If everyone had an abundance of supply, then exchange would be easy, and society would revel in opulence.... A temporary maladjustment might be conceivable - a temporary shortage of certain goods - but never a general overproduction.... Ricardo could not conceive total demand and total supply out of proportion. In fact he took little notice of demand.... A business cycle positively could not happen in Ricardo's assumed economic world." (McCracken 1933: 10-11) McCracken contrasted Ricardo with Malthus in a manner which is today quite familiar, but which was very unusual for the early 1930s: "Ricardo assumed demand, stating that due to the insatiable nature of human wants, demand was always present when the individual possessed a supply.... Malthus, on the other hand, was careful to point out that such was not the case. Exchange value might decrease even though supply increased, due to a failure in demand. And demand might fail either because of a voluntary failure of demand on the part of the rich who might prefer saving to spending, or from an involuntary failure of demand on the part of the poor who had keen wants but no purchasing power. To create exchange value or increase wealth there must be an increase in effective demand as well as in supply." (Ibid.: 122) McCracken would also have alerted Keynes to the significance of providing a refutation of Say's Law. In a footnote dealing with Aftalion, McCracken emphasised how revolutionary such a refutation would be: "If Aftalion has succeeded in establishing the possibility of a voluntary failure of demand by those who have purchasing power but insufficient keenness of desire when facing expanded production under the influence of the principle of diminishing utility, then it constitutes one of the greatest contributions to economic theory in a generation. Say's Law of Markets, according to which production financed consumption and supply generated adequate demand is in serious need of modification." (Ibid.: 149n) To achieve "one of the greatest contributions to economic theory in a generation" would have been a powerful incentive to Keynes. It seems to me that the parallels between McCracken's "Value Theory and Business Cycles" and the "General Theory" are more than coincidence. Since we know that Keynes read McCracken during the period in which he was writing the early drafts of the "General Theory" and since the attitudes taken by the two are remarkably alike, I find it a near certainty that Keynes learned a good deal from McCracken. In my view, McCracken provides a crucial link between Keynes's personal discovery of Say's Law and the attitude he ultimately took to classical economics. McCracken is likely to have shaped the final polemical style of the General Theory, and in this way helped to create the intellectual environment which facilitated the Keynesian Revolution. I just find it interesting that when discussing Marx in the draft, Keynes provided McCracken as a footnote reference but not in his discussion of Malthus and Ricardo. That there is a profound intellectual debt, however, I have little doubt. Dr Steven Kates [log in to unmask] ============ FOOTER TO HES POSTING ============ For information, send the message "info HES" to [log in to unmask]