Joan Robinson Never Understood Any Part of Keynes’s Liquidity Preference Theory of the Rate of Interest in the General Theory

Abstract

Keynes‘s first paragraph in his letter of the 9th of November,1936, is the following two lines: “I beg you not to publish. For your argument as it stands is most certainly nonsense.”

Anyone who reads this correspondence will soon realize that it was simply impossible for Joan Robinson to have aided or contributed in any way to the development of the General Theory between 1930 and February, 1936, given the nature of these exchanges.

Keynes is very specific as regards his Liquidity preference theory of the rate of interest:

“You do not seem to realize that if you are right the whole theory of liquidity preference has to be thrown overboard…Such a conclusion cannot be brought in as a tacit inference from an unargued obiter dictum,”(Keynes,1936,CWJMK,Vol.14, p.146).

Over the course of the two month correspondence from September 8th, 1936 till November 13th 1936, Keynes spent a great deal of time and effort trying to correct her many errors about his Liquidity Preference Theory of the Rate of Interest. J. Robinson compounded her original errors by making more additional errors due to her attempt to argue that Keynes was mistaken. Keynes finally realized that J. Robinson simply did not know what she was talking about.

R. Skidelsky accused Roy Harrod of covering up certain aspects of Keynes’s life in his 1951 biography of Keynes in order to ”protect” Keynes’s reputation. This is correct, although Skidelsky overlooked Harrod’s additional failure to cover Keynes’s original multiplier-accelerator model of August, 1938 and Keynes’s careful tutoring of Harrod in correspondence, between July and September, 1935, of Keynes’s IS-LM model, which is presented by Keynes formally in the General Theory in chapter 21 in Part IV on pages 298-299.

Unfortunately, Skidelsky has done exactly what he condemned R. Harrod of doing in 1951. Skidelsky never covered these exchanges between J M Keynes and Joan Robinson in the period between September and November, 1936 in any published work of his in the 20th or 21st centuries.

It is then straightforward to show that other claims related to the General Theory made by Robinson can’t possibly follow ,given her complete and total ignorance of Keynes’s Liquidity preference theory of the rate of interest.