306. D. H. Robertson to Harrod , [28 April 1933] [a]



[Replies to 305 , answered by 307 ]

[28 April 1933] [b]

No, I think that during a period in which S > I, output and employment may easily be increasing. For, by an extension of your own argument, in such a period prices may well be rising, and the consequent increase of prime profits will induce many entrepreneurs to increase output,--the effect of this outweighing the contraction of output which comes about through some entrepreneurs (who are in a position to "re-contract") closing down or cutting down the scale of production because profits are still below normal. This is, I should say, the typical position in the early phases of recovery from the bottom of a slump.

I rather think JMK now recognises this, and no longer allows us to talk about S and I, but only about DS and DI. [1] But I am not familiar with his recent thinking, and I suspect that the difficulty is inherent in the paradoxical definition of S, but does not arise if S is defined in a common sense way, which it easily can be by anyone who is prepared to accept the "atomic" mechanism of my BP & the PL, [2] and is not determined, as JMK is, to apply over a period of time which is not internally homogeneous equations of a form which is only suitable for periods which are homogeneous.

I have written an article about all that,--which may or may not see the light. [3]

I must resist the temptation to write about the foreign balance till I have thought more, & read your book in print. [4]


I am staying with James Meade May 6-8, & hope to see you.

  1. 1. Refers to the marginal multiplier: see Keynes's article on "The Multiplier" (in Collected Writings, 1971-89, vol. XXI, pp. 171-78), and in his pamphlet The Means to Prosperity, 1933 (in Collected Writings, vol. IX, in particular pp. 339-45).

    2. Robertson, Banking Policy and the Price Level (1926).

    3. Robertson, "Saving and Hoarding" (1933). The paper was submitted to Keynes for publication in the Economic Journal in April 1933, and was accepted on 3 May, and subsequently further discussed. The related correspondence is published in Keynes, Collected Writings (1971-89), vol. XXIX, pp. 16-26 and volume XIII, pp. 306-09. As to the homogeneity of the periods of time, Robertson explained to Keynes that time is divided in "atomic" units ("days"), in such a way that "income may be different on one `day' from what it was on the `day' before, but it cannot change during the `day'" (letter of 19 May 1933, in Keynes, Collected Writings, 1971-89, vol. XXIX, p. 26).

    4. Harrod, International Economics ( 1933:10 ).

    1. a. ANI, two pages on one leaf, with envelope addressed to Christ Church, in KHLM 213.

      b. Postmark.

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