A Price-Theoretic Construction of the General Theory.

The paper reconstructs the simple Keynesian IS-LM model form Keyne's (1930) theory of the aggregate price. It does by constructing the total cost and revenue functions that are implied by Keyne's theory of price. The paper points out how the price theory contains an incorrect definition of scarcity rent, how this infuses the simple Keynesian model, and how a lack of scarcity results. It also demonstrates how the cost-revenue interpretation can be corrected and used for economic analysis.