Changes in Output in Keynes’s Treatise on Money ¹

Abstract

Volume XIII of Keynes’s Collected Writings, Published in 1973,contains an important document for the study of the transition from the Treatise on Money (TREATISE)to the General Theory of Employment, Interest, and Money (GENERAL THEORY): a note from five surviving participants of the Cambridge “Circus” ² describing their relationship with Keynes, the nature of their criticism of the TREATISE, and their role in the development of the ideas leading to the GENERAL THEORY. The main criticism of the Circus was directed towards the assumption of a given level of aggregate output underlying the TREATISE’s fundamental equations.The note attacks the assumption of given output as rendering the TREATISE somewhat irrelevant in light of the severe unemployment facing Britain in the 1920’s and especially after 1929. The note also suggests that the Circus, by pointing out to Keynes the consequences of his assumption, played a fundamental part in the transition towards the GENERAL THEORY.

Article Footnote

I would like to thank Murray Milgate, Lance Taylor, Stephen Marglin, Amitava Dutt and Susan Vitka for their helpful comments. I am grateful to John B. Davis for encouraging me to write the paper and for his most useful editorial help. As usual, they are not responsible for my errors and misinterpretations.

The Cambridge Circus was a seminar group composed of young economists created in 1931 to discuss Keynes’s TREATISE. The survivors of the group who agreed on the note printed in the COLLECTED WRITINGS are Richard Kahn, James Meade, Piero Sraffa, Joan Robinson and Austin Robinson.