834. Harrod to J. M. Keynes , 14 September 1938 [a]

[Replies to 832 , answered by 838 ]

Christ Church

14 September 1938

Dear Maynard

I am not in disagreement, I think. If the period of time is sufficiently long to make G of the same order of magnitude as s and if the marginal propensity to save is 100%, (or, if lower, the time was long enough to make G exceed s by the required amount) my instability theory would not hold. My only doubt is whether this is sufficiently relevant--the relevant period is as you say that within which orders are readjusted--to be worth perplexing the reader with. But if you think the point sufficiently important in practice or theory I will insert a footnote.

Our difference of emphasis turns on the question whether the marginal propensity to save is of the first importance. [1] Naturally in the kind of analysis when one considers the effect of Public Works, assuming that all else remains the same, including the rate at which Investment, other than the Public Works, will proceed, the marginal propensity to save appears to be of primary importance. That is what I call static analysis. Prima facie when we try somehow to determine a warranted rate of growth and consequently a warranted level of Investment, by utilizing the acceleration principle, as I do, the significance of the marginal propensity to save recedes somewhat. Have we thereby got to closer grips with reality? This is the same as saying, is this incorporation of the acceleration principle in the technique of analysis sufficiently realistic to be an improvement? This I feel should not be answered in haste, till we see by probing it this way and that, how it works.

I return the article with the following changes. [2]

i. I have adopted a number of your verbal amendments. [3]

ii. By the frequent addition of clauses and an extra section I have tried to make it clearer what I mean by the warranted rate. [4]

iii. I have inserted a paragraph to safeguard the reader against supposing that C has anything to do with capital as distinct from consumable goods. [5]

iv. I have put in some words to distinguish my use of ex ante from that of others. [6]

v. I have rewritten some paragraphs towards the end to bring out more clearly my point about the relation of the normal warranted to the natural rate and its connexion with questions of deflation and inflation. [7]

My book in the Cambridge handbooks series is running out of print. [8] I have looked it through and am as ill satisfied with the later parts of it as I remember you originally were. I think about of it ought to be re-done and have already begun on this. The publisher agrees.

My Times article, which they originally printed with some reluctance, has involved me in a wholly unexpected volume of correspondence. [9] I thought your article yesterday most helpful. [10] The Times has become surprisingly benign in its attitude.

Meanwhile are all these efforts to be eclipsed!



  1. 1. See letter 821 , [jump to page] .

    2. This version does not survive: the final text was further radically redrafted (see letter 879 , [jump to page] ). The references listed in the following notes refer to the final version.

    3. These are listed in the editorial notes to essay 19 .

    4. Harrod, "Essay in Dynamic Theory" ( 1939:7 ), p. 16. See note 8 to the draft, here reproduced as essay 19 .

    5. Harrod, "Essay in Dynamic Theory" ( 1939:7 ), pp. 18-19. See note 18 to essay 19 .

    6. Harrod, "Essay in Dynamic Theory" ( 1939:7 ), p. 19. See note 21 to essay 19 .

    7. Harrod substituted the troublesome notion of "normal warranted rate" with the concept of "proper warranted rate": "Essay in Dynamic Theory" ( 1939:7 ), pp. 30-32.

    8. Harrod, International Economics ( 1933:10 ). Arrangements for a second edition (eventually published as Harrod 1939:3 ) were taken with Robertson: see letters 826 , 842 , 848 . A draft of the revised text was sent to Keynes, who commented upon it on 20 October 1938 (letter 859 R).

    9. Harrod, "Meeting a Trade Recession" ( 1938:11 , here reproduced as press item 22 ; see in particular note 1 for a description of the debate which followed the publication of Harrod's article).

    10. J. M. Keynes, "Efficiency in Industry: A Measure of Growth--The Moral", The Times, 13 September 1938 (in Collected Writings, vol. XXI, pp. 477-82).

    1. a. ALS, two pages on two leaves, in JMK EJ/1/5/324-25. Printed in Keynes, Collected Writings, vol. XIV, p. 338.

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