Lectures on John Maynard Keynes' General Theory of Employment, Interest and Money (5): Chapter 6, The Definition of Income, Saving and Investment; Appendix to Chapter 6, Appendix on User Cost; Chapter 7, The Meaning of Saving and Investment Further Considered

University of Guelph Department of Economics and Finance Working Paper No. 2013-10

39 Pages Posted: 22 Aug 2013

See all articles by Brian S. Ferguson

Brian S. Ferguson

University of Guelph - Department of Economics

Date Written: July 27, 2013

Abstract

Chapter Six and its Appendix deal in some detail with the way Keynes is defining income, savings and investment in the General Theory while the appendix to Chapter 6 goes into detail on user cost. His concept of user cost at one point sparked a certain amount of controversy among Keynesians but has since virtually been forgotten. It is of interest to us because user cost is the place where Keynes sees firms taking account of the future consequences of their current production decisions. The General Theory is a theory of the short run, but firms’ cost curves, which are key to many short run decisions, contain a forward looking element. Chapter 7 returns to the concepts of saving and investment, relates Keynes’ definitions to those used by others (including his own from the Treatise) and relates aggregate investment, which refers to additions to physical capital stock, to the way the term is often used at the micro level, in the sense of investment in financial assets.

Keywords: Keynes, General Theory, Keynesian Economics, Savings, Investment, User Cost, Prime Costs, Keynes’ Abominable Footnote, Keynes’ Slip of the Pen

JEL Classification: B10, B12, B13, B22, B31, E12, N12, N14

Suggested Citation

Ferguson, Brian S., Lectures on John Maynard Keynes' General Theory of Employment, Interest and Money (5): Chapter 6, The Definition of Income, Saving and Investment; Appendix to Chapter 6, Appendix on User Cost; Chapter 7, The Meaning of Saving and Investment Further Considered (July 27, 2013). University of Guelph Department of Economics and Finance Working Paper No. 2013-10. Available at SSRN: https://ssrn.com/abstract=2313441 or http://dx.doi.org/10.2139/ssrn.2313441

Brian S. Ferguson (Contact Author)

University of Guelph - Department of Economics ( email )

50 Stone Road East
Guelph, Ontario N1G 2W1
Canada

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