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  5. Marking the 90th Anniversary of The General Theory: Explorations of Keynes’s Thought
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Marking the 90th Anniversary of The General Theory: Explorations of Keynes’s Thought

Paper Session

Monday, Jan. 5, 2026 10:15 AM - 12:15 PM (EST)

Philadelphia Marriott Downtown, Room 402
Hosted By: History of Economics Society & History of Economics Society
  • Chair: Nina Eichacker, University of Rhode Island

Economic and Political Freedom: A Note on Keynes’ Liberalism and the Social Philosophy of The General Theory

Matías Vernengo
,
Bucknell University

Abstract

The General Theory (GT) was fundamentally a theoretical treatise written by John Maynard Keynes for the benefit of his fellow economists, as he explicitly stated. Most of the policy arguments associated with Keynesianism had been developed before the theory contained in that book. However, in the final chapter of the GT Keynes tried to rationalize the importance of his new theory, founded on the principle of effective demand, for the policies he had been defending since the 1920s, and for dealing with the two main problems of society that, in his view, were unemployment and inequitable distribution of income and wealth. His defense of government intervention would not, he argued, come at the expense of individual freedom. In other places, he referred to his political philosophy as liberal socialism. Contrary to some mainstream economists that assumed that economic freedom, essentially laissez-faire, was necessary for political freedom, some form of liberal democracy, in which individual freedom was central, Keynes believed that economic security, understood as a mix of full employment and some degree of income and wealth redistribution, was central for political freedom. This paper discusses how the theory developed in the book was instrumental for Keynes’ argument.

Before the Multiplier: English Actuaries and the Growth of Financial Capitalism

Marc Flandreau
,
University of Pennsylvania

Abstract

This paper examines John Maynard Keynes's formative engagement with actuarial science and its influence on his intellectual development prior to his seminal work, The Treatise on Probability (1921). Drawing on archival sources and professional correspondence, the study traces Keynes's early involvement with English actuarial societies and his practical work in risk assessment and statistical analysis during the first two decades of the twentieth century. The research demonstrates how Keynes's actuarial background provided crucial mathematical and conceptual foundations for his later theoretical innovations, particularly his approach to uncertainty and probability theory. By analyzing his contributions to actuarial journals and his correspondence with leading practitioners, the paper reveals how the actuarial profession's methods of quantifying risk and managing uncertainty shaped Keynes's emerging critique of classical economic assumptions about rationality and prediction. The paper argues that English actuarial science provided a practical laboratory where Keynes first encountered the limitations of mathematical formalism when applied to real-world uncertainty, insights that would prove foundational to his later challenge to orthodox economic thinking about markets, employment, and the role of expectation in economic behavior.

From Commerce to Consumption: Keynes's Break with Trade-Centered Economic Theory

Zachary Carter
,
Indipendent Scholar

Abstract

This paper argues that Keynes's General Theory of Employment, Interest and Money (1936) represents a fundamental departure from the trade-centric framework that had dominated macroeconomic thinking since the classical economists. Rather than viewing national economies primarily through the lens of international trade flows and comparative advantage, Keynes constructed a theoretical apparatus centered on domestic demand, employment, and the internal dynamics of capitalist economies. The study traces how pre-Keynesian macroeconomic discourse, from Adam Smith through the neoclassical synthesis, consistently privileged trade relationships as the primary mechanism for understanding economic growth, stability, and crisis. This trade-focused paradigm, the paper contends, inherently limited economists' ability to theorize unemployment, liquidity preferences, and the role of expectations in economic behavior—phenomena that required attention to domestic institutional arrangements and psychological factors rather than international exchange patterns. By reorienting economic analysis toward aggregate demand and the complex interplay between consumption, investment, and monetary policy within national boundaries, Keynes liberated macroeconomic theory from its dependence on trade-based explanations. This shift enabled him to develop concepts like the liquidity trap, animal spirits, and the paradox of thrift that would have been theoretically impossible within a framework that viewed trade as the primary driver of macroeconomic outcomes.

A re-reading of the chapter 4 of Keynes’s General Theory on the choice of the units of measure: “complex or manifold” economic magnitudes

Anna Carabelli
,
University of Piemonte Orientale

Abstract

For Keynes, the central concepts in macroeconomics are complex and the magnitudes macroeconomics con¬siders are also complex: ‘complex or manifold’ economic magnitudes. These concepts are the volume of real output/income, the volume of real net output, the stock of real capital and the general price level (Keynes CW VII, 37). In the chapter 4 of his General Theory (1936), Keynes defines them as 'incom¬mensurable collections of miscellaneous objects' (CW VII, 39). In particu¬lar, 'the community's output of goods and services' is 'a non-homo¬geneous complex which cannot be measured' (CW VII, 38). In his General Theory, there is another complex and heterogeneous magnitude, namely probability. In the General Theory, Keynes considers probability separately in Chapters 5 and 12, but he has dealt with probability at length in his A Treatise on Probability (1921).
For him, complex economic magnitudes are theoretically vague concepts. Keynes refers to the well-known ‘element of vagueness which ... attends the concept of the general price level' (CW VII, 39). Theoretical vagueness does not mean that these concepts are vague and ambiguous from an ordinary language point of view or in business practice. In ordinary language their meaning is easily grasped and they can be used for practical purposes. Theoretically, however, they remain 'conundrums’ with ‘no solution' (CW VII, 39). They raise difficulties that are purely theoretical ‘in the sense that they never perplex, or indeed enter in any way into business decisions and have no relevance to the causal sequence of economic events, which are clear cut and determinate in spite of the quantita¬tive indeterminacy of these concepts.' (CW VII, 39)

Discussant(s)
Nina Eichacker
,
University of Rhode Island
Massimo Cingolani
,
European Investment Bank-Luxemburg
JEL Classifications
  • B2 - History of Economic Thought since 1925
  • E0 - General