CHAPTER I

THE GENERAL THEORY

I HAVE called this book the General Theory of Employ-ment, Interest and Money, placing the emphasis on theprefix general. The object of such a title is to contrastthe character of my arguments and conclusions withthose of the classical 1 theory of the subject, uponwhich I was brought up and which dominates theeconomic thought, both practical and theoretical, ofthe governing and academic classes of this generation,as it has for a hundred years past. I shall argue thatthe postulates of the classical theory are applicableto a special case only and not to the general case, thesituation which it assumes being a limiting point of thepossible positions of equilibrium. Moreover, the char-acteristics of the special case assumed by the classicaltheory happen not to be those of the economic societyin which we actually live, with the result that its teach-ing is misleading and disastrous if we attempt to applyit to the facts of experience.

1“The classical economists” was a name invented by Marx to coverRicardo and James Mill and their predecessors, that is to say for thefounders of the theory which culminated in the Ricardian economics. Ihave become accustomed, perhaps perpetrating a solecism, to include in“theclassical school” the followers of Ricardo, those, that is to say, who adoptedand perfected the theory of the Ricardian economics, including(for example)J. S. Mill, Marshall, Edgeworth and Prof. Pigou.

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