Introduction: Keynes, the General Theory and the Labor Market

Mass and lingering unemployment — “the intractable million,” to use Pigou’s (1947, p. 43)1 apt term — was clearly the overriding social concern behind Keynes’s General Theory of Employment, Interest and Money. 2 It is a peculiarity of that book, though, that much less of its space is given over to an analysis of the labor market than to almost any other aspect of Keynes’s argument. The essence of explicit treatment comes in the form of the critique of the “classical postulates” in Chapter 2 of the book, in the justly infamous definitions of involuntary unemployment in both Chapters 2 and 3, and in the more interesting (and unfortunately less read) discussion of “changes in money wages” in Chapter 19 and its appendix (on Pigou’s theory of unemployment). At a stretch, we might add to this list Chapter 20, “The Employment Function,” but in reality it is nothing but an attempt at a formal summation of his theory, which had been much better summarized in words in Chapter 18, “The General Theory Re-Stated.”