KEYNES, THE KEYNESIANS AND THE CLASSICS - A SUGGESTED INTERPRETATION

Mainstream interpretations of Keynes's General Theory are surveyed. An alternative post-classical interpretation is proposed. Keynes is inte rpreted as treating classical theory as the valid theory of allocation but this type of theory is of limited relevance for macro analysis. T he productive sector is characterised by the utilisation mode of activ ity regulated by the non-allocative multiplier process. However the fi nancial sector is allocative and Keynes proposed the allocative theory of liquidity preference. It is argued that this dual conception of th e macro economy is suggestive of the need for a more realistic method in macroeconomics.