ABSTRACT
The General Theory of Employment, Interest and Money by John Maynard Keynes was published in 1936, a little over a century and a half after Adam Smith’s An Inquiry into the Nature and Causes of the Wealth of Nations.1 In his well known book, Smith offers a synthesis of several earlier currents of thought, including French physiocracy, and this new comprehensive theoretical system constitutes the point of departure of classical political economy. Criticizing what he called mercantilism, which, dominating economic thought during the two previous centuries, advocated protectionism as well as an active intervention, as much economic as military, by the newly constituted Nation States, Adam Smith expressed the well known allegory in which the individual is ‘led by an invisible hand to promote an end which was no part of his intention… By pursuing his own interest he frequently promotes that of the society more effectually than when he really intends to promote it’.2 For Smith, the ‘expences of the sovereign or commonwealth’3 must be limited to those necessitated by defence and justice, and to ‘erecting and maintaining those public institutions and those public works, which, though they may be in the highest degree advantageous to a great society, are, however, of such a nature, that the profit could never repay the expence to any individual or small number of individuals, and which it therefore cannot be expected that any individual or small number of individuals should erect or maintain’.4 Smith’s work played an essential role in the development of the economic liberalism, emergent with the triumph of nineteenthcentury capitalism, in an England which had become a dominant world power. Codified by David Ricardo5 and John Stuart Mill,6 political economy became, for the most part, an English science. But it was a French economist, Jean-Baptiste Say, who enunciated in 1803 the law of markets,7 according to which, considering the neutrality of money in the economy, supply creates its own demand, and, therefore, there could be no question of having general gluts in a free market economy and thus no chance of the phenomenon which Keynes would call involuntary unemployment. Economic reality, with its regular succession of crises generating simultaneously masses of unsold commodities and misery, contradicted the theory, as was stressed by, among others, Malthus,8 Sismondi9 and then Marx.10 Paradoxically, it was by constructing his system from Ricardian political economy that Marx, in his major work, Capital, attempted to give a theoretical foundation to what he believed to be the ineluctable fate of the capitalist societies, namely their transformation into socialist societies.
