The Elgar Companion to John Maynard Keynes
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The Elgar Companion to John Maynard Keynes

Edited by Robert W. Dimand and Harald Hagemann

The most influential and controversial economist of the twentieth century, John Maynard Keynes was the leading founder of modern macroeconomics, and was also an important historical figure as a critic of the Versailles Peace Treaty after World War I and an architect of the Bretton Woods international monetary system after World War II. This comprehensive Companion elucidates his contributions, his significance, his historical context and his continuing legacy.
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Chapter 36: Unemployment

Sylvie Rivot


This chapter investigates the fundamental difference made by Keynes in the General Theory between voluntary unemployment, on the one hand, and involuntary unemployment, on the other. In Keynes, voluntary unemployment is very wide-ranging in that it corresponds to any form of imperfections in wage bargaining, inadequacy in qualifications and so on. In order to understand involuntary unemployment correctly, we have to leave aside the issue of a local reduction in nominal wage: the issue is the effect of a general fall in money-wages on the long-term state of expectations. Significantly, Keynes abandons this terminology after the General Theory and subsequently refers to the distinction between structural unemployment and demand-deficiency unemployment.

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