761. Joan Robinson to Harrod, 11 March [1938] [a]

[Answered by 762 ]

3, Trumpington Street, Cambridge #

11 March [1938] [b]

My dear Roy

I don't rightly know what "a reward" means so I admit I'm on shaky ground but surely its sophistical to say some work without reward. [1] The case of a rentier who works to pass the time is hardly relevant. In the ordinary case a man can't work unless he has some wages to live on--without wages he would be dead.

As for the view that seems to be capturing Oxford that the rate of interest does not affect investment I am quite open minded. [2] You notice I always mention houses, because I would expect to find interest fairly important for building & negligible for industrial plant. But do point out to your anti Keynesian colleagues that it is the Classical Theory, not the General Theory that goes down the drain if they are right. My chief reason for keeping to the old fashioned view that interest affects investment was that I wanted to keep as much in touch with the Classical view as is possible.

Your crack against a remark on p. 73 [3] is not quite fair as in other passages I emphasise the buoyancy [c] of m.e. of capital under 19 [d] conditions. [4] You can't say everything at once.

Please excuse me seeming cantankerous when you make such kind remarks about me.

Yours

Joan Robinson

1. 1. Joan Robinson refers to Harrod's review of her Introduction to the Theory of Employment (London: Macmillan, 1937). Harrod commented as follows:
   • On page 81, she borrows what is surely a fallacious argument from Mr. Keynes that interest cannot be the reward of waiting [...], because some people who have waited and own wealth do not put it out at interest, but hold it in the form of money. That some work without reward is not a reason for denying that wages is a reward of work. For the many who save under the inducement of interest, interest is the reward for doing so; the process of not hoarding their saving may require no reward, since they may be under no inclination to hoard. (Harrod 1938:5 , p. 496)

   2. In his review, Harrod questioned that the "system is highly sensitive to changes in the interest rate", surely having in mind the Oxford Economists' Research Group inquiry into interest and prices.

   3. Harrod's comment runs as follows:

   • On page 73 she writes as though it were a general law that "to preserve full employment the rate of interest would have to be constantly falling." That might be so in the circumstances of to-day, but in other circumstances the opposite might be the case. To make this generalization universally valid it is necessary to assume a stationary state. (Harrod 1938:5 , p. 496)

   Both Harrod in his review and Robinson in her letter referred to the wrong page number. The citation is from p. 78.

   This passage was discussed in letter 748 of 22 January 1938 to Robertson ( [jump to page] ).

   4. J. Robinson, Introduction to the Theory of Employment, pp. 30-32 and passim.

   1. a. ALS, four pages on two leaves, in HP IV-1089-1107. With envelope addressed to Christ Church. Reproduced by kind permission of the Provost and Scholars, King's College, Cambridge.

      b. Year not indicated, but postmarked 12 March 1938.

      c. Ms: «boyancy».

      d. Ms: emphasis is indicated by circling the number.

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