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Involuntary Unemployment : The Missing Piece in Keyne's General Theory

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  • De Vroey, Michel

    (UNIVERSITE CATHOLIQUE DE LOUVAIN, Institut de Recherches Economiques et Sociales (IRES))

Abstract

This article examines critically the insights on involuntary unemployment, offered by Keynes in his general theory. It is argued that Keynes put the issue on the right track by giving this concept a micro-founded definition but shelved the task of explaining its arising by introducing it as a postulate. Such a shelving has been made possible thanks to the ‘selfsameness assumption’, i.e. the claim that involuntary unemployment and demand-deficiency are selfsame. It allowed Keynes to believe that his result about demand-deficiency could be extended to involuntary unemployment. Whereas Keynesians have taken this claim for granted, it does not stand up against recent developments. Most present-day new Keynesian models vindicate either involuntary unemployment without demand-deficiency or demand-deficiency without involuntary unemployment.

Suggested Citation

  • De Vroey, Michel, 1994. "Involuntary Unemployment : The Missing Piece in Keyne's General Theory," LIDAM Discussion Papers IRES 1994011, Université catholique de Louvain, Institut de Recherches Economiques et Sociales (IRES).
    • Handle: RePEc:ctl:louvir:1994011
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    References listed on IDEAS

    as
    1. Bernard Corry & Alan Budd & Walter Eltis & Jose Harris & Terry Peach & George Peden, 1996. "Unemployment and the Economists," Books, Edward Elgar Publishing, number 959.
    2. Vasilev, Aleksandar & Maksumov, Rashid, 2010. "Critical analysis of Chapter 23 of Keynes’s Notes on Mercantilism in The General Theory of Employment, Interest and Money (1936)," EconStor Research Reports 155318, ZBW - Leibniz Information Centre for Economics.
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    Cited by:

    1. Erhel, Christine & Zajdela, Hélène, 2003. "Que reste-t-il de la théorie du chômage de Keynes?," L'Actualité Economique, Société Canadienne de Science Economique, vol. 79(1), pages 163-177, Mars-Juin.
    2. Michel De Vroey, 2004. "Lucas on involuntary unemployment," Cambridge Journal of Economics, Cambridge Political Economy Society, vol. 28(3), pages 397-411, May.
    3. Michel De Vroey, 1997. "Le concept de chômage involontaire : de Keynes aux nouveaux keynésiens," Revue Économique, Programme National Persée, vol. 48(6), pages 1381-1408.
    4. Christophe Lavialle, 2001. "L'épistémologie de Keynes et "l'hypothèse Wittgenstein" : La cohérence logique de la Théorie Générale de l'emploi, de l'intérêt et de la monnaie," Cahiers d'Économie Politique, Programme National Persée, vol. 38(1), pages 25-64.
    5. Michel De Vroey, 2001. "L'histoire des théories économiques sous le prisme de l'hétérodoxie. Une analyse critique de l'Histoire de la pensée économique de Ghislain Deleplace," Cahiers d'Économie Politique, Programme National Persée, vol. 38(1), pages 115-133.

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