All Cambridge (U.K.) undergrads have (had?) to struggle through a chapter by chapter reading of Keynes’ General Theory of Employment, Interest and Money. Some come out of this confirmed Keynesians and even Marxists and then go on to work in the City of London. This rich irony comes at the cost of some confusion for hordes of the intellectual elite as the book is extremely hard to read. It turns out that Keynes offered a lucid synopsis of his theory in the QJE in a reply to his critics. My only quibble is that I wish he had used the odd equation here or there – he speaks in equations but does not dare spell them out presumably for fear of losing his reader. But here is a spectacular passage on uncertainty vs risk:
Why does it matter? Because it affects demand for money and hence the interest rate:
The whole article is full of amazing insights. i’s are not dotted or t’s crossed. Many papers remain to be written.
(Hat Tip: Nabil Al-Najjar)