Keynes’s 1929 pamphlet first articulated that saving does not drive investment

Evidence

This conflict between Keynes and the Treasury, odd when one considers that Keynes was a Treasury advisor throughout this period, was exacerbated in 1929 when Keynes, with Hubert Henderson, produced the pamphlet “Can Lloyd George Do It?” in response to Liberal politician David Lloyd George’s much-discussed proposals in a prior pamphlet called “We Can Conquer Unemployment.” In his assessment of George’s proposals, Keynes “first adumbrated the … relation of saving to investment.” That is, he argued that saving doesn’t drive investment if “investment is free to fluctuate under the influence of expectations” such that income and employment adjust to the ex post level of saving. As a consequence, government should “fill the gap/prime the pump” by spending money that business is sitting on because of uncertainty about the future. — Mark Blyth, Austerity, 333

Categorization

• DEFINE: Defines the saving-investment relation that inverted the Treasury view into pump-priming logic.
• XREF: The 1929 Keynes-Henderson pamphlet is the direct precursor to The General Theory; connects to standard Keynesian history. — connects to: Keynesian theory holds that idle savings rather than spending retard capital accumulation — Clara E. Mattei, The Capital Order: How Economists…, 1683; Savings do not necessarily produce investment and can instead produce hoarding — Mark Blyth, Austerity: The History of a Dangerous…, 342

Broader Connections

• Savings do not necessarily produce investment and can instead produce hoarding #corroborates (0.90) — Mark Blyth, Austerity, 342
• Keynesian theory holds that idle savings rather than spending retard capital accumulation #expands (0.85) — Clara E. Mattei, The Capital Order, 1683