INTRODUCTION

Keynes foresaw that The General Theory could create problems for readers, and in his preface he wrote that for the economists of his day the ‘difficulty lies, not in the new ideas, but in escaping from the old ones’ (Keynes 1936: viii). But obstacles are also placed in the reader's way by Keynes's failure to get clear in his own mind all the elements of his theory. The inconsistencies in his treatment of the equality between saving and investment, and in the use of expectations in the aggregate demand function, discussed in the preceding chapter, illustrate this problem. There is also Keynes's seemingly paradoxical mixing of static analysis with statements and inferences about changes over time, with no explanation of how the former is to be used to derive the latter. He writes in the preface that his book ‘has evolved into what is primarily a study of the forces which determine changes in the scale of output and employment as a whole’ (vii), but it employs static analysis in its concentration on the short-period equilibrium levels of output and employment. Keynes did not deal, in any analytically precise way, with changes over time, and yet his General Theory can be the starting point for their consideration, because it observes essential features of the passage of historical time.

The General Theory is anchored in Marshall's short period, a period of ‘a few months or a year’ (Marshall 1920: 379), that is, an interval of historical, or actual, time.