ABSTRACT
In The General Theory of Employment, Interest and Money and in his 1937 Quarterly Journal of Economics article ‘The general theory of employment’, Keynes provides an alternative analysis of the links between past, present and future in investment decision-making to the complicated mathematical analyses of orthodox investment theory.1 The essential difference between Keynes’ analysis of investment and orthodox investment models lies not so much in the factors which are claimed as determinants of investment decisions but in different understandings of the nature of rational investor behaviour. The importance of a different understanding of rationality emerges because of the crucial role played by expectations in determining investment decisions: expectational assumptions are inevitably dependent upon an underlying conception of what rationality entails.
