KEYNES ON CAPITALISM - REPLY

Greg Hill's recent article voices the Keynesian complaint that capital ism produces unemployment because there is no mechanism that coordinat es decisions to save with decisions to invest. But resources that are not spent on current consumption are either ''invested'' as bank depos its or ''hoarded'' as cash. Deposits are lent out by banks to investor s, who are informed by interest rates as to the degree of saving for f uture consumption that is taking place. And wage/price flexibility, as well as increases in the supply of cash, can avoid declines in real i ncome and employment caused by increased cash holdings.