Coping with Reality: Keynes Versus Mainstream Textbooks in Economics

Abstract: Despite the fact that The General Theory of Theory of Interest, Employment and Income (GT) is a highly theoretical work, Keynes tries to make his theory as realistic as possible. In this paper it is analyzed how. This is done by identifying selected quotations in which Keynes either explicitly refers to the actually existing economy or comments upon or relates to the question of theorizing versus reality. By analyzing (or generalizing) this empirical material it is demonstrated that Keynes copes with reality by generalizing from experience, giving priority to the most important parts of economic reality and by making empirically based assumptions rather than assumptions consistent to a theoretical model. If economic textbooks were to apply the same stringent principles not much would be left…