ABSTRACT
Accounting for Keynes’s tremendous success in persuading economists and the general public of the irrelevance of classical economics to the problems of any real economy or “the economy in which we live” (Keynes 1936:13), particularly one faced with the problem of unemployed labor and productive capacity, was his claim that the classical economists assumed the existence always of full employment. Keynes asserted this claim in his criticisms and denial of the relevance of the classical theories of interest, inflation, the quantity theory of money (from which a theory of the price level is derived), the classical forced-saving doctrine, and the law of markets or Say’s Law. He specifically mentions J.-B.Say, David Ricardo, Alfred Marshall, and A.C.Pigou among those who employed the fullemployment assumption.2 It turns out that none of the classical theories in question employs that assumption. Yet it attests to Keynes’s ability to persuade his audience that practically all introductory and intermediate macroeconomics textbooks, some of whose authors are also historians of economic thought, repeat his claim without contradiction.
