The Supply-Side

Abstract

The supply-side is as important as the demand-side in the general theory of employment. As in the general theory of value or price the two sides are as important as the two blades of a scissors (Marshall, 1920: 348). Yet Keynes says very little about his supply-side. The reason seems to be that he considers what he calls the aggregate supply function to involve ‘few considerations which are not already familiar’ (CW, VII: 89). ‘The form’, he says, ‘may be unfamiliar but the underlying factors are not new’ (CW, VII: 89). It may be taken, then, that Keynes did not see himself as making any fundamental additions to economic theory in his discussion of the supply-side even though he develops it in terms of the resources which firms employ and the expectations they form in a way which, in retrospect, seems to make a significant addition to the theory of the firm as it was in his own time.