Essays on economic stability and growth

These papers, which reflect the intellectual revolution brought about by publication of Keynes' General Theory in 1936, were written between 1937 and 1957 and include some of the author's most important contributions to the development of macroeconomic theory.
The first group, on speculation, liquidity preference and the theory of employment, are concerned with clarifying and generalising Keynes' theory: the first paper (1939) on speculation and economic stability, by analysing the interaction between the stock and flow aspects of market demand and supply; the second, on own-interest rates, which clarifies the theory of the structure of interest rates put forward in the first paper, developed and focussed attention on a difficult and relatively neglected aspect of Keynesian theory relevant to monetary policy. Two review articles, on Hawtrey's Capital and Employment and Pigou's Employment and Equilibrium, illuminate the differences be tween Keynesian and previous theories of money, credit and interest. In this second edition, this section is supplemented by an Appendix reproducing the author's comment on Pigou's (1937) article on real and money wage rates in relation to employment, which had the effect of bringing Pigou's own view of these relationships close to the Keynesian position; and may be of educational value now, in the context of primitive 'monetarist' doctrines flourishing.

The section on economic fluctuations includes the 1938 essay on stability and full employment, which contained, in embryo, many of the author's ideas, subsequently developed, on growth as well as fluctuations; and his well-known 1940 model of the trade cycle, postulating that non-linear investment and/or savings functions produce a 'limit cycle'; as well as papers examining what of the Austrian theories the trade cycle had survived the new theory of employment and a paper setting out the author's reasons for rejecting the accelerator concept in con nection with trade cycle theory.

The last section, on growth theory, contains both the author's first assault on a combined theory of growth and the cycle (1954) and a radical reconsideration of the whole problem in his 1957 model of economic growth. It also contains two specialised papers: one discussing why underdeveloped countries have failed to participate in the economic development of the past two centuries; and a lecture at Peking University on the basic differences between a Keynesian and Marxian approach to growth under capitalism.