INTRODUCTION

The discussion of the previous chapter has established that the foundations of monetary theory must be sought within the framework of Schumpeter's Monetary Analysis. The work of Marx and Keynes – in the General Theory – falls within this tradition and it is with Keynes's monetary theory in particular that we will be concerned in later chapters. Before beginning with the analysis proper, however, it is necessary to examine some further issues of method and methodology. This need arises for two important reasons. Firstly, Keynes's monetary theory involves the application of Marshallian modes of thought, and the Marshallian partial equilibrium method is not properly understood by neoclassical general equilibrium theorists brought up on a neo-Walrasian or Wicksellian diet. Secondly, there are some issues of method and methodology outstanding from previous discussions that require clarification.

THE RICARDO–MARSHALL–KEYNES METHOD: PARTIAL EQUILIBRIUM

Although it should have been obvious all along, it is now generally acknowledged that Keynes must be evaluated from a Marshallian and not a neo-Walrasian or Wicksellian perspective. Recent attempts to trace the Marshallian components and methods in the General Theory have been made by Kregel (1981), Parinello (1983) and Asimakopulos (1982, 1984), for example. At first sight this may strike many readers as a little fanciful. After all, the General Theory supposedly initiated the development of macroeconomics while Marshallian economics is essentially microeconomics.