ABSTRACT
Economic growth depends upon the interplay of productive potential and of effective demand. Real income cannot continue to rise unless an increase in the supply of the productive factors, labour and capital, and/or an improvement in technical knowledge enables more goods and services to be produced. But real income will not in fact grow unless the producers can find markets in which to sell the increased output; if not, productive potential will be wasted in unemployment and idleness. In this volume we shall be concerned with productive potential rather than with effective demand; we are engaged in asking what are the effects in a fully competitive economy of population growth, capital accumulation, and technical progress on the output that will be produced, provided always that a market can be found for the products. Only in a later volume will we be concerned with a proper investigation of the problems of defining and maintaining the most appropriate level of money demand to achieve the fullest use of the real opportunities of growth. Nevertheless, the problems of productive potential and of monetary demand are so closely linked that it is impossible to divorce them completely. In this volume we shall at each stage make the simplest possible set of assumptions about monetary and financial institutions to enable us to proceed on the basis that full employment of all resources is maintained and that a market is found for everything that is produced.
