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The Demand-Side II: Investment

In: The General Theory of Profit Equilibrium

Author

Listed:
  • Connell Fanning

    (National University of Ireland)

  • David O Mahony

    (University College)

Abstract

Investment is the second source of demand for current output. For the most part, Keynes’s predecessors and contemporaries did not see any need to explain what determines the demand for goods for investment purposes as a whole. They took it that, savings, whether in physical terms or in monetary terms, were invested and that the rate of interest provided the mechanism which ensured that investment and savings would be equal to each other. Keynes’s insight that the question as to what determines the employment of the available resources had to be addressed, his model of the monetary-entrepreneur economy and his conception of the phenomenon of interest ruled out the possibility that the rate of interest would do any such thing. Accordingly, he had to work out a theory of the demand for output for investment purposes. He did so in a way that complemented his theory of the demand for output for consumption purposes.

Suggested Citation

  • Connell Fanning & David O Mahony, 1998. "The Demand-Side II: Investment," Palgrave Macmillan Books, in: The General Theory of Profit Equilibrium, chapter 6, pages 94-117, Palgrave Macmillan.
    • Handle: RePEc:pal:palchp:978-0-230-50228-4_6
    DOI: 10.1057/9780230502284_6
    as

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