Some Cambridge reactions to The General Theory: David Champernowne and Joan Robinson on full employment

Abstract

This essay analyses early reactions put forward by Cambridge economists David Champernowne and Joan Robinson to J. M. Keynes's treatment of the labour market in The General Theory. Champernowne's and Robinson's critical reactions represented attempts to fill the gap of the determinants of changes in money-wages, which they both identified as a weak spot in the argument of the book. They rejected, albeit for different reasons, Keynes's notion of the point of full employment as an upper limit defined by the equality between the real wage rate and the marginal disutility of employment. Instead of Keynes's taxonomy of types of unemployment, Champernowne and Robinson introduced, respectively, the concepts of ‘monetary employment’ and ‘monetary unemployment’, and of ‘critical levels’ of employment.

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