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Victoria Chick

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Victoria Chick

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Victoria Chick

The Bloomsbury Group were friends, mostly from their undergraduate years in Cambridge, who began to meet at 46 Gordon Square in 1904. They talked far into the night about absolutely anything, supported each other in their work and at play, and blew away the stifling fog of Victorian values. Their lifestyle was revolutionary for the time. Most of them were writers or artists; Keynes, whose destiny lay within the Establishment, was their exception – an exception that proved their unwritten rule, that friendship was their highest value. They were not only hugely productive, they broke new ground, in painting (Vanessa Bell, Duncan Grant), art criticism (Roger Fry), biography (Lytton Strachey) and fiction (Virginia Woolf). They gave another dimension to Keynes’s life and influenced his thinking and his writing style.

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Victoria Chick

Keynes is credited with introducing the word ‘liquidity’ to economic discourse. Liquidity preference refers to his new theory of the rate of interest, which is determined by the extent to which asset holders are willing to give up liquidity in exchange for a higher return, in conjunction with the amounts of liquid and illiquid assets that there are. Always a gambler, Keynes added the speculative motive to well-known reasons to prefer liquidity. This involved expectations of future interest rates, as rate movements cause changes in asset valuations. Since expectations of the future are difficult to fit into traditional static models, his theory met resistance, and not only from those wedded to traditional loanable funds theory. His theory was modified as a result and now has largely dropped out of sight, despite its explanatory power in the financial crash.

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Victoria Chick

Economic theory that is relevant to the real world is always a product of its time, taking for granted the institutions and behaviours that characterise that time. Old books, like Keynes’s General Theory, present a conundrum: how much is still pertinent today and what revisions are necessary to bring the theory into line with changes in the economic system since the book was written. This chapter attempts an answer to that question. It is argued that the principle of effective demand and liquidity preference is almost unchanged, but that globalisation and changes to the banks’ behaviour pose serious questions for the theory, as does our new awareness of resource constraints and climate change. The underlying methodology remains the best on offer and should be retained in any revision.

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Victoria Chick

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Victoria Chick and Sheila C. Dow

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Victoria Chick and Sheila Dow

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Victoria Chick and Alan Freeman

This chapter explores the evidence for, and the consequences of, Keynes’s evaluation of the long-term prospects for capitalism. It is 65 years since the Second World War cleared the way for the post-war ‘Golden Age’ of growth and accumulation. The advanced economies now, however, face a marked and persistent slowdown (Blanchard 2015). There is no shortage of suggested causes, ranging from inequality (Piketty 2014), to financialisation (Stockhammer 2004), low real interest rates and low inflation (Summers 2014) and structural budget deficits (Jespersen 2016). Priority, or even causal precedence, has yet to be assigned to any one of these diverse but interlinked factors.

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Victoria Chick and Jesper Jespersen