From the Treatise on Money to The General Theory: John Maynard Keynes's Departure from the Doctrine of Forced Saving

Abstract

I examine John Maynard Keynes's struggle with the doctrine of forced saving during the period 1924–36, from when he worked on the Treatise on Money to the completion of his General Theory. I investigate what led Keynes to completely abolish ideas related to forced saving and how his new formulation was affected by this struggle. I argue that the forced saving thesis is inherently inconsistent with his Fundamental Equations, and the change in the equilibrating mechanism from price to output proposed by Ralph Hawtrey enabled Keynes to completely abolish this notion from his monetary theory.