C H A P T E RT W E N T Y - T W O Keynes and the Cambridge School We start with Maynard Keynes’s central ideas. We then discuss the strands that emerged in the work of others, some contemporaries, some followers, some agreeing and extending, others disagreeing and/or returning to ideas that Keynes | CHAPTER TWENTY-TWO Keynes and the Cambridge School G. C. Harcourt and Prue Kerr Introduction We start with Maynard Keynes s central ideas. We then discuss the strands that emerged in the work of others some contemporaries some followers some agreeing and extending others disagreeing and or returning to ideas that Keynes sloughed off or played down. The General Theory is the natural starting point. We trace developments from and reactions to it especially by people who were associated at least for part of their working lives with Cambridge England. In the concluding paragraphs we briefly discuss the contributions of those not geographically located in Cambridge who nevertheless worked within the tradition of Keynes and the Cambridge school. Keynes and the Classics The General Theory emerged as a reaction to the system of thought principally associated with Alfred Marshall and A. C. Pigou on which Keynes was brought up and which he was to subsume misleadingly under the rubric of the classical school. Keynes rationally reconstructed the classical system by setting out what though it could not be found in the writings of any one classical economist must have been assumed and developed if sense were to be made of their attitudes and claims. Keynes s procedure could be equally well described as opportunistic. In its most stark form the classical system assumes a clear dichotomy between the real and the monetary with the real the dominant partner at least in the long period. In a competitive environment there is a tendency to marketclearing in all markets including the labor market again at least in the long period. This determines the values of equilibrium normal long-period prices and 344 G. C. Harcourt and P. Kerr quantities including those for the services of the factors of production. It also provides the theoretical value of T in Irving Fisher s version of the quantity theory of money QTM Y in Marshall s version and together with the assumption of an .
