Keynes and Sraffa

This chapter deals with John Maynard Keynes's General Theory, and the position taken is that its short-period setting is critical feature of this theory that must be part of any attempt to consider its implications for developments over time. For purposes of contrast it is useful to begin with a brief statement of what appears to be the economic basis of Piero Sraffa's approach to the determination of prices. The focus is on the factors affecting the determination of output and employment in short period, with some consideration being given as to whether there would be reliable forces at work tending to move the economy to a position of full employment over time. The relationship between Keynes's long-period employment and his short-period employment bears a superficial resemblance to the relationship between Marshall's long-period equilibrium and short-period equilibrium for competitive industries.

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