PREFACE vii

and IV), that I failed to deal thoroughly with the effectsof changes in the level of output. My so-called “fun-damental equations” were an instantaneous picturetaken on the assumption of a given output. Theyattempted to show how, assuming the given output,forces could develop which involved a profit-dis-equilibrium, and thus required a change in the level ofoutput. But the dynamic development, as distinctfrom the instantaneous picture, was left incompleteand extremely confused. This book, on the otherhand, has evolved into what is primarily a study ofthe forces which determine changes in the scale of out-put and employment as a whole; and, whilst it isfound that money enters into the economic scheme inan essential and peculiar manner, technical monetarydetail falls into the background. A monetary economy,we shall find, is essentially one in which changing viewsabout the future are capable of influencing the quantityof employment and not merely its direction. But ourmethod of analysing the economic behaviour of thepresent under the influence of changing ideas about thefuture is one which depends on the interaction ofsupply and demand, and is in this way linked up withour fundamental theory of value. We are thus led toa more general theory, which includes the classicaltheory with which we are familiar, as a special case.

The writer of a book such as this, treading alongunfamiliar paths, is extremely dependent on criticismand conversation if he is to avoid an undue pro-portion of mistakes. It is astonishing what foolishthings one can temporarily believe if one thinks toolong alone, particularly in economics (along with theother moral sciences), where it is often impossible tobring one’s ideas to a conclusive test either formal or