MONEY AND CAPITAL ACCUMULATION: KEYNES, ROBERTSON AND THE CONCEPT OF SAVING

Abstract

This paper retrieves the central elements of Keynes’s and Robertson’s views about the concept of saving during the 1920s and 1930s. The first section covers the partnership between both economists at the beginning of the period, as well as their respective theories on the behavior of the multiple types of savings, particularly the ones of compulsory nature, along the cyclical process of capital accumulation. After that, the principle of effective demand and the multiplier theory, as developed in Keynes’ General Theory, are examined in order to identify how these ideas moved away from the kind of analysis associated with the forced saving doctrine. Following this, the attention is focused on Robertson’s criticisms of the income-multiplier mechanism. The last section discusses Keynes’s counter argument, especially the adjustment he conducted in his theory of investment by incorporating the notion of finance into the liquidity demand function. The concluding remarks sum up the debate, pointing out its main theoretical repercussions.