Book contents
- Frontmatter
- Contents
- General Introduction
- Editorial Introduction
- Preface
- Preface to the German Edition
- Preface to the Japanese Edition
- Preface to the French Edition
- Book I Introduction
- Book II Definitions and Ideas
- Book III The Propensity to Consume
- Book IV The Inducement to Invest
- 11 The Marginal Efficiency of Capital
- 12 The State of Long-term Expectation
- 13 The General Theory of the Rate of Interest
- 14 The Classical Theory of the Rate of Interest
- 15 The Psychological and Business Incentives to Liquidity
- 16 Sundry Observations on the Nature of Capital
- 17 The Essential Properties of Interest and Money
- 18 The General Theory of Employment Re-stated
- Book V Money-wages and Prices
- Book VI Short Notes Suggested by the General Theory
- Appendix 1 Printing Errors in the First Edition
- Appendix 2 Fluctuations in Net Investment in the United States (1936)
- Appendix 3 Relative Movements of Real Wages and Output (1939)
- Index
17 - The Essential Properties of Interest and Money
from Book IV - The Inducement to Invest
Published online by Cambridge University Press: 05 November 2012
- Frontmatter
- Contents
- General Introduction
- Editorial Introduction
- Preface
- Preface to the German Edition
- Preface to the Japanese Edition
- Preface to the French Edition
- Book I Introduction
- Book II Definitions and Ideas
- Book III The Propensity to Consume
- Book IV The Inducement to Invest
- 11 The Marginal Efficiency of Capital
- 12 The State of Long-term Expectation
- 13 The General Theory of the Rate of Interest
- 14 The Classical Theory of the Rate of Interest
- 15 The Psychological and Business Incentives to Liquidity
- 16 Sundry Observations on the Nature of Capital
- 17 The Essential Properties of Interest and Money
- 18 The General Theory of Employment Re-stated
- Book V Money-wages and Prices
- Book VI Short Notes Suggested by the General Theory
- Appendix 1 Printing Errors in the First Edition
- Appendix 2 Fluctuations in Net Investment in the United States (1936)
- Appendix 3 Relative Movements of Real Wages and Output (1939)
- Index
Summary
It seems, then, that the rate of interest on money plays a peculiar part in setting a limit to the level of employment, since it sets a standard to which the marginal efficiency of a capital-asset must attain if it is to be newly produced. That this should be so, is, at first sight, most perplexing. It is natural to enquire wherein the peculiarity of money lies as distinct from other assets, whether it is only money which has a rate of interest, and what would happen in a non-monetary economy. Until we have answered these questions, the full significance of our theory will not be clear.
The money-rate of interest—we may remind the reader—is nothing more than the percentage excess of a sum of money contracted for forward delivery, e.g. a year hence, over what we may call the ‘spot’ or cash price of the sum thus contracted for forward delivery. It would seem, therefore, that for every kind of capital- asset there must be an analogue of the rate of interest on money. For there is a definite quantity of (e.g.) wheat to be delivered a year hence which has the same exchange value to-day as 100 quarters of wheat for ‘spot’ delivery. If the former quantity is 105 quarters, we may say that the wheat-rate of interest is 5 per cent per annum; and if it is 95 quarters, that it is minus 5 per cent per annum.
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- Chapter
- Information
- The Collected Writings of John Maynard Keynes , pp. 222 - 244Publisher: Royal Economic SocietyPrint publication year: 1978