ȀȆȃ Partʺ: Economicsare best known and in which they treat the same topics—their money-
macro theories.ŗőťŚőş śŚ ŐőřōŚŐ ŒōŕŘšŞő
As theGeneral Ļeoryin particular shows, Keynes believed in a deep-
seated, recurrent tendency toward deficiency of effective demand, caus-
ing unemployment and loss of potential output. Keynes had no particu-
lar complaint about how the price mechanism would allocate resources,
given adequate total demand. Especially in wealthy communities, how-
ever, private investment tended to be inadequate to absorb all the saving
that would be attempted at full employment. Although Keynes and his
followers sometimes identified the difficulty as characteristic of a mon-
etary economy as opposed to a barter economy, they did not trace defi-
ciency of demand to an unstable and often wrong quantity of money.
Even though Keynes waffled a bit on the question of monetary disorder
(notably in chapterȀȆof theGeneral Ļeory), he definitely was not a mone-
tarist in today’s sense of the word. Monetary disequilibrium, if it occurred,
reflectedrealtroubles; he saw market failure, particularly failures centred
in the labour and stock and bond markets. He believed that on average
over time, business investment was inadequate for full employment and
was prone to fluctuate with the state of business confidence, which in turn
was subject to sudden change because estimates of prospective yield had
to be made using limited knowledge. Keynes alluded to waves of opti-
mism and pessimism, an antisocial fetish of liquidity, and “dark forces of
time and ignorance” enveloping the future (ȀȈȂȅ, pp.ȀȄȂ–ȀȄȄ). For such
reasons, he thought that an acceptable approximation to full employment
required sustained government action to maintain adequate total spend-
ing. (To avoid repeating myself in detail, and for documentation, I refer
to my chapterȈ.)
ŔšŠŠ ’ş řŕŏŞś śŞŕőŚŠōŠŕśŚ
Hutt’s macroeconomics is more disaggregative and micro-oriented. Hutt
adopts a Say’s Law, or goods-against-goods, approach. People specialize
in producing particular goods and services to trade them away for the spe-
cialized outputs of other people. Incomes created in particular lines of
production are the sources of demand for the outputs of other lines: sup-
ply of some things constitutes demand for other (non-competing) things.