Trying to Make Sense of the Principle of Effective Demand

Most of the scholarly reinterpretations of the Principle of Effective Demand are not in line with Keynes’s original presentation of it in Chapter 3 of the General Theory. To substantiate this claim, Keynes’s definition is here first reproduced and then compared with different reinterpretations of the principle by textbook authors, and Neo-Ricardian, Kaleckian, and Post Keynesian economists. A new interpretation of the Principle of Effective Demand is suggested which links the Post Keynesian D/Z-model to a reproduction scheme that – broadly in the tradition of Marx – distinguishes between the consumptionand investmentgoods “departments”.