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Harald Hagemann

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Harald Hagemann

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Harald Hagemann

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Harald Hagemann

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Harald Hagemann

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Harald Hagemann

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Harald Hagemann

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Harald Hagemann

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Harald Hagemann

The chapter focuses on the essay “Economic Possibilities for our Grandchildren” in which Keynes reflects on the consequences of the combined effect of capital accumulation and technical progress and the power of compound interest. In his vision for the year 2030 Keynes considered the economic problem largely solved for the developed Western world in the long run. However, with his estimation of a 15-hour working week Keynes regarded technological unemployment as a new major disease, a temporary problem owing to a phase of maladjustment. Keynes also analysed the social and moral consequences in a materially satiated world, that is, in the age of leisure and abundance. The “Grandchildren” essay elucidates Keynes ambivalent attitude to capitalism: efficient but imperfect from a moral or cultural perspective.

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Harald Hagemann

Keynes attacked Say’s law because for him the acceptance of Say’s law of markets implied the full-employment assumption. However, the meaning of Say’s law as well as the underlying assumptions have changed over time. A classical economist such as Ricardo could easily combine his adherence to Say’s law with the analysis of the machinery problem, that is, the existence of technological unemployment. Keynes in his critique of Say’s law, as well as earlier Marx whom Keynes attested a “pregnant observation”, focused on the consequences of the store of value-function of money allowing the separation of the acts to sell and to buy, an argument first developed by John Stuart Mill and Wilhelm Roscher. In contrast to Mill and Roscher, who did not develop an asset motive to hold money, Keynes elaborated the speculative demand for money into his liquidity preference theory. He strongly rejected the idea that the interest mechanism would equilibrate savings and investment.