Fritz Helmedag, Technical University Chemnitz
One of the central points in the ‘General Theory’ of J. M. Keynes reads: “[…] given […] the community’s propensity to consume, the equilibrium level of employment […] will depend on the amount of current investment.” The present article intends to provide a systematic account of (partly known) specifications of this proposition. For example, a variation of investments impinges in the first instance only on profits and changes thereby the national income. To what extent this affects employment remains open. Furthermore the multiplier effect is generally independent of the propensity to consume of society as a whole, rather it is governed by the consumption behaviour of the profit earners alone. Actually, if workers who save receive a share of profits too, this participation does not influence the level of total profits at all. Besides, we shall see that capitalists’ profits may be reduced even though total profits rise. Finally the analysis enables us to assess the purchasing power argument put forward by trade unions.