General Theory by Keynes – Free Ebook

John Maynard Keynes’ book The General Theory of Employment, Interest and Money published 1936 was a paradigm shift from the classical school. His book was a new understanding of money and markets. Whereas Keynes’ Treatise on Money was an extension of the theory of time,  his General Theory started what is known as the “Keynesian revolution”.

My recommendation as a college Economics Professor is, you need to read the original the General Theory, not someone’s interpretation of Keynes theory, as you will discover a radical difference.

This is why I present his book here for you to read or skim.

Download this book for free

Download The General Theory of Employment, Interest Money by John Maynard Keynes in ebook formats for free

Download for free the General Theory here.

General Theory of Employment, Interest and Money – Download in PDF

General Theory of Employment, Interest and Money – Download in Epub

The incommensurability of Classical economics with economics

Keynes’ General Theory was significant because it reinterpreted the way markets function. Markets were not seen as simply a self-correcting mechanism, but rather, a complex dynamic between, consumers, investors, and government where human emotion was coupled with economic incentives.

Most notably John Maynard Keynes’ book The General Theory of Employment, Interest, and Money rewrote the textbook understanding of supply and demand behavior in aggregate, and the role of government in terms of countercyclical policies. This newfound role of government action was written in the context of a time of great economic upheaval known as the Great Depression. It appealed to academics and policymakers as it explained market failures to adjust to equilibrium. Keynesian economics theory was important, not only because of the logic behind the theory but specifically, the application empowered the espousers to help the situation of the time.

Think about it. This one book was the basis of such much change in government intervention in economic affairs. Do you think that was correct?

Did Keynes deepen the dichotomies in economics with his General Theory?

Whatever you think of the rigor of Keynes logics, the effect on economics was divisive. This is a positive, rather than a normative statement. The book furthered the dichotomy between monetary and real economics as well as microeconomics and macroeconomics. This is a controversial topic but worth consideration and examination. Some will argue it is only now we are seriously trying to address the micro-foundations of macroeconomics as well as the synthesis between monetary and real economics, for example, Michael Woodford’s Interest and Prices. Do you think Keyes’ book added or subtracted to the advancement of economics?

John Maynard Keynes wrote the book on modern Macro

Read the General Theory not someone’s interpretation of Keynes

Many people have studied Keynesian Economics for an interest, studied AP economics or took college classes. Students might even be able to give the pros and the cons, yet never actually read anything by Keynes. Legions of economic students, even at the graduate level are immersed in Keynesian theory, yet have never read one word of the actual writings of John Maynard Keynes.

Policymakers have made their living off of promoting Keynesian ideas, yet have never read The General Theory of Employment, Interest, and Money. Can you that?

I teach Economics at a college level and working on my Ph.D. I tell my students it is critical to read primary source material from original thinkers. This is always better than the textbook, the web or even my understanding as a Professor. If you want to understand Keynesian economics, read Keynes’. Become an eye-witness to the history of economic thought. If you want to understand any ideas in economics, read the words of the world philosophers of the past. If you are inspired make your own interpretation in the content of the time and place you live in by reflecting on the primary source material.

Great minds come around only once every hundred years or so, read their words, not someone’s interpretation of them.

Mark Biernat

If you actually read Keynes you will find, often subsequent economist developed theoretical models that are not congruent with Keynes’ original writings. Ideas that were never in the General Theory are associated with Lord Keynes.

Ideas found in the General Theory of Employment, Interest and Money

Some ideas from are:

  • consumption function –  The relationship between consumption spending and disposable income.
  • principle of effective demand – Total goods and services demanded that determine the rate of employment.
  • liquidity preference – The preference to hold money compared to other assets.
  • Sticky wages – Downward rigidity of wages because worker are reluctant to take pay cuts when a company or economy is in financial trouble, therefore the intersection of aggregate demand and aggregate supply can be suboptimal resulting in unemployment.
  • demand not supply – The classical economics understood Say’s law, that supply creates its own demand as valid, however, Keynes believed that demand was the key component of determining the level of the economy.
  • low employment equilibrium – The ideas that equilibrium was not synonymous with the optimally efficient use of resources because of irregularities that exist in the market system.
  • Interventionism – Governments role was central in managing the business cycle.

Gave new predominance to these ideas:

  • multiplier – A change in autonomous spending results in a larger change in real GDP
  • marginal efficiency of capital – “the rate of discount that would make the present value of the series of annuities given by the returns expected from the capital asset during its life just equal its supply price.” – (Keynes General Theory (p.135).

Ideas which are Keynesian are interpretations of Keynes and formalization which have not been questioned to the core and some which were not in his General Theory, such as the IS-LM curves. Therefore, there is no better way to understand the pros and cons of Keynesian economics than reading or skimming,  The General Theory of Employment, Interest and Money.

Aggregate demand shift + sticky wages = equilibrium below full employment

If aggregate demand was the main driver behind the increase in GDP and prices including nominal wages were sticky, the economy could be stuck at equilibrium below full employment.

For example, if the aggregate the demand curve shifts to the left and output reduced through a drop in consumption (Y=C+I+G+NX), however, wages do not equilibrate, in other words, wages do not drop, rather they are sticky, there will be persistent unemployment. This unemployment will reinforce the cycle of depressed consumption.

The Keynesian prescription

If aggregate demand and aggregate supply intersect at a level below full employment then, the solution is to boost aggregate demand. It does not matter how,  public works, tax cuts any fiscal stimulus will get the lifeblood of the economy circulating through the circular flow.  The goal of Keynesian economics is to stimulate the economy through fiscal stimulus when markets fail.

What do you think of the economics of John Maynard Keynes?

Above is a downloadable free version of the complete General Theory of Employment, Interest Money. If you have any commentary on the impact of Keynes’ theory or your understanding of this book, please share this in the comments below or contact me.

By Mark Biernat

Mark Biernat - I write about frugality on the expense side and revenue generation ideas on the income side which can be applied to the country as a whole or your home economy. Please like this page on FB. Thank you.

5 comments

  1. What I think of you is that you know nothing about academia or at least economics, first, an individual who reads the wealth of nations will not make you superior in any way to any real economist, because the real economist knows what they have instructed based on what Adam Smith opened the doors to him and that was the economy. Second, there is no such “interpretation” because the books must be faithful to what their writers wrote, the publisher who is truly reliable and sophisticated will not change anything because the work of being current, for publication, will not do an action. third and that is a lie that the work will change over time because of an interpretation. Third, all Keyseians have read Keynes’s totally real words, both in his books and primarily as a General Employment Theory, so he would not be a Keyseian otherwise. Or does he belong to some secret society or something to reveal “the real words” when in reality they are nothing more than skewed misinterpretations of yourself? Sir, your works are biased, they come from dubious sources and you are just a pseudo-intellectual ‘smart’ enough to put a phrase of yours that said ‘Oh, what a revolutionary phrase of mine! That affirms falsehoods, like that Adam Smith was radical, when he was the father of liberalism beginning with classical liberalism, or that today’s economists are nothing compared to you or what would become of me if I read any of your books. I hope you took the time to read this comment, because I will be back in a few good years to give you the criticism you deserve on your publications, books and the fallacies that you affirm in a general way. Regards.

  2. Oh, by the way, I’d like to read your interview or something similar about those Keyseians who don’t know anything about “real words” that you do. Oh wait, I get it, you just don’t have any evidence, stop writing about what you don’t know and I would love to see you tell a current Keyseian economist that he is not a Keyseian, and see your debate lost because it will be so, lost.

    Postscript: You are a pseudo-intellectual, because in no sense I see the foundation or at least the grace of this being a joke in bad taste, to think for just a second that publishers change the words of economists. Do you know what that assumption is called? Correct, interpretation, something that is a shot in your foot on your little web page that serves as a refuge to write your false and confusing premises. Your stupidity and ignorance will not reach more than a handful of people (like five or two because this page is like a Montana town) who will come believing that here is Hayek’s work “ Road to Serfdom ” when there is no more than a pseudo publishing your interpretation, because you are not a reliable publisher, an unpleasant fact that you will have to chew.

  3. What I think of you is that you don’t know anything about academia or at least economics, first, an individual who reads the wealth of nations will not make you superior in any way to any real economist, because the real economist knows what they have instructed based on what Adam Smith opened the doors on and that was economics. Second, there is no such “interpretation” because books must be true to what their writers wrote, the publisher who is truly reliable and sophisticated will not change anything because the job of being up to date, for publication, will not do an action. third and that is a lie that the work will change over time due to an interpretation, since as I said the books are published exactly the same as their authors wrote them since the publishers cannot change the information of the same with an ” interpretation ” ‘, a false, conspiratorial premise and without any foundation on his part. Third, all Keyseians have read Keynes’s totally real words, both in his books and primarily as a general theory of employment, so it would not be a Keyseian otherwise. Or does he belong to some secret society or something to reveal “the real words” when in reality they are nothing more than skewed misinterpretations of yourself? Sir, your works are biased, they come from dubious sources and you are just a ‘smart’ pseudo-intellectual enough to put a phrase of yours that says’ Oh, what a revolutionary phrase of mine! That affirms falsehoods, such as that Adam Smith was radical, when he was the father of liberalism beginning with classical liberalism, or that today’s economists are nothing compared to you or what would be of me if I read any of your books that are the ” true ” about the ” trash of others ”. Real books are much better in too many aspects such as quality, reliability and fidelity to the work done by their author.

  4. I hope you took the time to read this comment, because I will be back in a few good years to give you the criticism you deserve on your publications, books and the fallacies that you affirm in a general way. Regards.

    Oh, by the way, I’d like to read your interview or something similar about those Keyseians who don’t know anything about the “real words” that you know. Oh wait, I get it, you just don’t have any evidence, stop writing about what you don’t know and I would love to see you tell a current Keyseian economist that he is not Keyseian, and see your debate lost because it will be lost.

  5. Remember, I will return, I will have already reviewed your stupidities and I will come with strong arguments, so that you learn how I said to be conspiratorial, write about what you do not have the slightest idea and affirm that your little intelligent words from your blog have the same validity as an academic article. That clearly if it is false, they are less valuable and less relevant since they are nothing more than an opinion of his people (interpretation).

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