The General Theory and Keynes for the 21st Century
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The General Theory and Keynes for the 21st Century

Edited by Sheila Dow, Jesper Jespersen and Geoff Tily

This book is devoted to the lasting impact of The General Theory (and Keynes’s thought) on macroeconomic theory, methodology and its relevance for understanding the post-crisis challenges of the 21st Century. A number of contributions take their departure from Keynes's presentation during the 1930's of his new macroeconomic understanding and its policy implications. Other chapters take a more pluralistic view of Keynes's ideas and their importance for contemporary debates. Further, it is demonstrated that many textbooks often misrepresent The General Theory and therefore cannot be a reliable guide to 21st Century economic policy.
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Chapter 10: Keynes on domestic and international monetary reform

Sheila Dow


In looking to Keynes for guidance on modern policy issues, we identify some general principles which can be carried forward to the present day. In order to address problems arising from the domestic and international monetary systems, we focus on the principle of effective demand and the theory of liquidity preference, applied to analysis of a monetary production economy. Yet for Keynes theorising started and ended with context. The analytical process started with identifying the problem and looking to relevant theory for illumination. Yet it was crucial to consider the nature of the context in order to assess the validity of the assumptions and, if necessary, to change them. We therefore consider the differences in monetary systems between the 1930s–1940s and the present day in order to form a Keynesian view of monetary reform.

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