ABSTRACT
John Maynard Keynes is able to establish the truth of this proposition with the assistance of some of the tools which he fashioned in the General Theory. Keynes shows that, although consumer demand is determined by income, it is not equal to income, because it does not increase at the same rate as income. The doctrines of classical economics can apply only in a full employment economy. In taking exception to the classical doctrine of free trade, Keynes does not do so because he considers the law of comparative advantage to be erroneous. In effect, Keynes makes full employment the prerequisite for a policy of free trade. According to Keynes, the amount of employment is limited by the extent of the aggregate demand. In the General Theory Keynes appears to rule out the former alternative by his contention that the economy is usually characterized by a condition of chronic unemployment.
