Keynes's Finance Motive and Post Keynesian Interpretation

Abstract

After publishing the General Theory, Keynes introduced a fourth motive of holding money called the ‘finance motive.’ There are not many studies on Keynes's articles after 1937 by historians of economic thought, but there are by comparison many papers by Post Keynesians. First, in this paper I investigate the process of formation of the finance motive according to Ohlin's critiques. Second, I explore the controversy between Keynes and Robertson. Third, I consider the relationship of Post Keynesian interpretation to the controversy between Keynes and Robertson, and last, I examine the position of the finance motive.
The conclusions of this paper are: First, the finance motive is introduced by responding to Ohlin's critiques and is considered to be a concession to Ohlin, but the core of liquidity preference theory is not revised. Second, Robertson's critique shows that the banking system can be illiquid, but the reason for Keynes's neglect of Robertson's critique is that Keynes implicitly considered the case of endogenous money supply. Third, the view of regarding the finance motive as a fourth motive is more close to Keynes's aim than is the view of connecting the finance motive and the transactions motive.