An Essay on Marxian Economics

By Joan Robinson | Go to book overview

CHAPTER VIII
THE GENERAL THEORY OF EMPLOYMENT

So far we have considered the orthodox theory of long- period equilibrium -- the theory which applies to a situation in which the stock of capital is adjusted to circumstances, with zero net investment. The process of adjusting the stock of capital to any change in circumstances takes a long time to work through. It is therefore necessary to supplement the long-period theory by an analysis of the short-period situation, in which the process of accumulation is going on.

The orthodox short-period theory was never very precisely stated,1 but its main outline seems to have been as follows: at any moment the rate of profit is determined by the marginal productivity of the stock of capital in existence. At the rate of interest corresponding to that rate of profit there is a certain rate of saving which the community is willing to undertake, and it is the rate of saving which governs the rate of increase in the stock of capital.2

The controversies which have developed in recent

____________________
1
Cf. Keynes, General Theory, p. 195.
2
On this capital theory of the rate of interest Marshall superimposes a monetary theory, by which an increase in the stock of gold lowers the rate of interest. But the part played by the stock of gold, at any moment, in influencing the level of the rate of interest he does not discuss. ( "Evidence before the Gold-Silver Commission", Official Papers, pp. 23, 38, 130.) The failure to reduce these two theories of the rate of interest to a consistent system has been a fruitful source of confusion amongst Marshall's successors. Cf General Theory, p. 183.

-63-

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An Essay on Marxian Economics
Table of contents

Table of contents

  • Books by Joan Robinson ii
  • Title Page iii
  • Foreword v
  • Contents ix
  • Chapter I - Introduction 1
  • Chapter II - Definitions 6
  • Chapter III - The Labour Theory of Value 10
  • Appendix - Value in a Socialist Economy 23
  • Chapter IV - The Long-Period Theory Of Employment 29
  • Chapter V - The Falling Rate of Profit 35
  • Chapter VI - Effective Demand 43
  • Chapter VII - The Orthodox Theory of Profit 52
  • Chapter VIII - The General Theory Of Employment 63
  • Chapter IX - Imperfect Competition 73
  • Chapter X - Real and Money Wages 82
  • Chapter XI - Dynamic Analysis 92
  • References to "Capital" 96
  • Index 103
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