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The Demand-Side I: Consumption

In: The General Theory of Profit Equilibrium

Author

Listed:
  • Connell Fanning

    (National University of Ireland)

  • David O Mahony

    (University College)

Abstract

Keynes formulated the theory of the supply of output as a whole in terms of employment. The next step is to discover what governs the demand for output as a whole. As we saw in the previous chapter, he based his theory of the supply of output as a whole on the received theory of the firm. There was no received theory on the demand-side on which he could base a corresponding theory of the demand for output as a whole. Consequently, he had to develop a completely new theory for that purpose. He did so by reference to the demand for output for consumption purposes and to the demand for output for investment purposes. By reckoning consumption and investment in wage-units the employment implied on the demand-side is taken into account. Thereby, the demand for output as a whole is put on the same footing as its supply and the two sides can be analyzed with a view to the discovery of the conditions in which they would be in equilibrium.

Suggested Citation

  • Connell Fanning & David O Mahony, 1998. "The Demand-Side I: Consumption," Palgrave Macmillan Books, in: The General Theory of Profit Equilibrium, chapter 5, pages 75-93, Palgrave Macmillan.
    • Handle: RePEc:pal:palchp:978-0-230-50228-4_5
    DOI: 10.1057/9780230502284_5
    as

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