A Monetary Theory of Employment

A Monetary Theory of Employment

A Monetary Theory of Employment

A Monetary Theory of Employment


Presents the author's alternative monetary theory and macroeconomics to both the quality theory and Keynes's work. This text reveals Means's view of the economic processes in the real world, and the state of monetary and macroeconomics theory in the mid-1940s.


Warren J. Samuels

The manuscript presented here was, according to dates indicated on the first pages of several chapters, completed during March and April 1947. It has not been published previously.

The manuscript is significant with regard to (1) the development of Gardiner Means's analysis of the economy and his reaction to John Maynard Keynes's General Theory (1936); (2) the state of monetary and macroeconomic thinking in the mid- 1940s; (3) it being an example of a mode of reasoning alternative to both the quantity theory of money and Keynesian macroeconomics; and (4) Means's serious attention to the limits of his work, including testing.

Means called his analysis a monetary theory of employment. the matter calls for explication.

Historically, monetary theory dealt with, and attempted to explain, the demand and supply of money, interest rates, and price level. the quantity theory of money attempted to treat changes in the price level as a more or less purely monetary phenomenon, some writers going so far as to define inflation as an increase in the supply of money (and vice versa for deflation), rather than as an increase (decrease) in the general price level; that is, building into the definition of the phenomenon a particular theory of its causation.

Moreover, when the quantity theory was combined with an analysis such as that of Say's law, it could be used to rule out of analytical bounds changes in the demand for money and in output and employ-

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