In the following passage Chris Freeman attempts to recover Keynes' earlier emphasis on the role of technology in generating new investment. He argues that this insight was lost to Keynes and Keynesians over time. "In this *Treatise of Money* in 1930, Keynes actually *did* acknowledge the role of Schumpeterian revolutions in technology: 'In the case of fixed capital, it is easy to understand why fluctuations should occur in the rate of investment. Entrepreneurs are induced to embark on the production of fixed capital or deterred from doing so by their expectations of the profits to be made. Apart from the many minor reasons why these should fluctuate in a changing world, Professor Schumpeter's explanation of the major movements may be unreservedly accepted.' This passage is remarkable for unequivocal recognition of the role of new technology in generating new surges of investment and growth in capitalist societies. The tragedy of the Keynesian tradition was that it regressed from this standpoint to a purely abstract approach to the role of new technologies, and one-sided emphasis on the role of demand in the short-term business cycle. For the Keynesians it became a matter of relative indifference *which* were the new technologies and fast-growing sectors of the economy and the associated problems of structural change. They also ignored the problem of long-term swings in the *direction* of technical change, and of cyclical changes in the capital-output ratio. By a kind of imperceptible process the idea of a constant capital-output ratio shifted from the status of a conventient modelling assumption to the status of generalization about growth. Keynes *did*, however, concern himself with the long-term tendency to a decline in the marginal efficiency of capital (productivity of capital)..." >From The Economics of Hope: Essays on Technical Change, Economic Growth and the Environment. London: Pinter Publishers, 1992, p. 167 Rakesh Bhandari Ethnic Studies
