Synthesized answer
Keynes suggests that society's economic arrangements are considered "in accord with human nature" because they rely on the private investor to save and place savings in titles to money, and the business man to set production in motion, influenced by expected profits in terms of money [1]. These arrangements assume money to be a stable measuring-rod [1].
An "undependable" monetary standard fundamentally undermines these aspects of human nature by creating instability, leading to unemployment, the precarious life of the worker, disappointment of expectation, sudden loss of savings, and excessive windfalls [1]. The risk associated with undertaking production, especially with modern international trade and complex manufacturing processes, is aggravated by an unstable monetary standard [3]. The conventional belief in the stability of a money contract, which encouraged trustees to invest exclusively in titles to money, has been historically unsupported and can lead to the complete disappearance of trust funds [5]. The passages do not explicitly detail *all* the specific human economic behaviors or motivations Keynes assumes are fundamental beyond the investor and business man, but…
Synthesized from the book passages below. Chat with the book on Feynman for follow-up.
From the book
FACE We leave Saving to the private investor, and we encourage him to place his savings mainly in titles to money. We leave the responsibility for setting Production in motion to the business man, who is mainly influenced by the profits which he expects to accrue to himself in terms of money. Those who are not in favour of drastic changes in the existing organisation of society believe that these arrangements, being in accord with human nature, have great advantages. But they cannot work properly if the money, which they assume as a stable measuring-rod, is undependable.…
mes of its appearance. Others have maintained, more plausibly, that sometimes one thing operates and sometimes another. It is one of the objects of this book to urge that the best way to cure this mortal disease of individualism is to provide that there shall never exist any confident expectation either that prices generally are going to fall or that they are going to rise; and also that there shall be no serious risk that a movement, if it does occur, will be a big one. If, unexpectedly and accidentally, a moderate movement were to occur, wealth, though it might be redistributed,…
an is a cannibal at home and eaten abroad, do not cancel out to render him innocuous and safe. But there is a further reason, connected with the above but nevertheless distinct, why modern methods of production require a stable standard,--a reason springing to a certain extent out of the character of the social organisation described above, but aggravated by the technical methods of present-day productive processes. With the development of international trade, involving great distances between the place of original production and the place of final…
ng money to be represented even by a constant quantity of a particular metal, far less by a constant purchasing power. Yet Money is simply that which the State declares from time to time to be a good legal discharge of money contracts. In 1914 gold had not been the English standard for a century or the sole standard of any other country for half a century. There is no record of a prolonged war or a great social upheaval which has not been accompanied by a change in the legal tender, but an almost unbroken chronicle in every country which has a history, back to the earliest dawn of…
, for the middle classes of the world, the gilt-edged bond came to typify all that was most permanent and most secure. So rooted in our day has been the conventional belief in the stability and safety of a money contract that, according to English law, trustees have been encouraged to embark their trust funds exclusively in such transactions, and are indeed forbidden, except in the case of real estate (an exception which is itself a survival of the conditions of an earlier age), to employ them otherwise.[2] [2] German trustees were not released from a similar obligation …
More questions about this book
- Keynes asserts that the existing organization of society "cannot work properly if the money...is undependable." Explain, using a specific example or analogy, how an unstable monetary "measuring-rod" directly disrupts the rational economic behavior of both the "private investor" and the "business man" as described in the text.
- The preface links various societal problems, from "unemployment" to "profiteering," to the "instability of the standard of value." Choose two of these consequences and delineate the precise causal steps through which monetary instability leads to each, as if explaining it to someone unfamiliar with economics.
- Keynes introduces "risk" as a distinct, fourth cost of production, arguing it's "greatly aggravated by the instability of the standard of value." In your own words, describe what constitutes these "wastes of _Risk_" and how the implementation of "sound monetary principles" would specifically reduce them.
- Keynes contends that while "conservative notions consider themselves more in place than in currency," the "need of innovation is more urgent." Based on the identified problems, what foundational "conservative notions" about currency might Keynes be implicitly challenging, and what kind of "new ideas" is he preparing the reader to receive?