ABSTRACT
Keynes was interested in removing unemployment which was due to deficiency in aggregate demand but he accepted that some of the unemployed were virtually unemployable, some were out of work because of seasonal factors, some were moving between jobs and some could not find employment because of lack of mobility between trades or locality. Keynes’s own interests as an economist were largely confined to monetary economics. As Keynes pointed out, when prices fell, the real rate of interest rose, as did the value of money relative to fixed assets. In the 1920s, Keynes still held to the pre-Keynesian assumption that changes in financial variables did not affect the long-term equilibrium positions of real variables in the economy. Keynes arrived at a practical solution to this problem even before he had worked out his theoretical position in the Treatise. Keynes started work on The General Theory in 1932, the worst year of the slump.
