Concluding Notes: Is It Relevant?

Abstract

In the preceding chapter we have tried to show that Keynes’s monetary theory was intimately bound up with his theory of capital and that together they form the basis of an analysis of the causes of fluctuations in output and employment. It is interesting to note that in a recent book [36] Hicks — the founder of IS/LM analysis — comes round to the same conclusion.

I pass to consider the other main parts of the Keynes theory — the marginal efficiency of capital and the theory of money. I shall take them together, for I think I can show that they belong together … [and in a footnote Hicks continues] In my ‘Mr Keynes and the Classics’ Econometrica, 1937, I similarly reduced Keynes’ three relations to two,¹ taking the multiplier with the marginal efficiency of capital to form the SI curve. I have come to feel that the alternative grouping, which I am following here, is more revealing’ ([36] p. 31).