A Digression on Keynes’s Treatise

According to Harrod (1951, pp. 474–5), Keynes’s Treatise on Money (1930a) did not have a happy career. Within a few months of its publication, many of its ideas had been made obsolete by further discussion within the ‘Cambridge Circus’ (which was preparing the General Theory), and the subsequent appearance of the latter did much to discourage interest by reinforcing the Treatise’s image as a transitional work. This lack of attention was later corrected by arguing that the Treatise’s importance went well beyond what had been originally thought, i.e., that it was a re-examination of the channels through which monetary impulses are transmitted, in a perspective that went beyond the mechanism of the quantity theory, though remaining fundamentally dependent on it. Arguments supporting ‘rehabilitation’ ranged from the importance the Treatise attributed to institutional factors to its being a forerunner of many of the ideas later developed in the General Theory, such as underemployment and the theory of profits.