Keynes’s Development as a Cambridge Monetary Theorist

Abstract

Needless to say, Keynes was an integral member of the intellectual circle working in the Cambridge tradition of monetary and business cycle theory that we have just surveyed. His life work spanned the arc that we just traversed, from Marshall to the General Theory. As we approach the General Theory end of this arc, as we have seen in all other sections of the book, events, and his own evolving views of them, rather than those of his contemporaries’, increasingly acted upon his mind. Having now isolated the importance of an overarching theory of money and the economic system to his attempt to explain unemployment, it will be our task in this chapter to treat Keynes as a Cambridge monetary theorist, which until the General Theory primarily meant Keynes as a monetary cycle theorist. Once again we will see the immense importance of Marshall, an influence that only slowly decayed and never disappeared.