Journal of Post Keynesian Economics / Spring 2003, Vol. 25, No. 3 471 © 2003 M.E. Sharpe, Inc. 0160–3477 / 2003 $9.50 + 0.00. DAVID DEQUECH Keynes’s General Theory: valid only for modern capitalism? Abstract: Some interpretationsrestrict the applicabilityof the General Theory to modern capitalism because of the financial institutions assumed by Keynes. Although acknowledgingsome evidence in support of these interpretations,the paper argues that Keynes also developed the fundamental elements of a gen- eral theory of unemployment and potential instability under capitalism, with- out having clearly disentangledthese elements from more institutionallyspecific ideas. Such a general theory applies to all types of capitalist economy, but still is institutionallyspecific, referring to capitalism. The paper extracts this more general message, which was partly obscured by Keynes’s emphasis on modern financialinstitutions. Key words: capitalism, financial institutions, Keynes, unemployment. Economists, and Post Keynesians in particular, disagree about the gen- erality or restricted applicability of Keynes’s General Theory—as well as about the related issue of the (in)appropriateness of seeking general theories. There are different interpretations of Keynes’s opus magnum in this respect. This paper focuses on just one of these interpretations, namely, that the General Theory is applicable only to a modern or so- phisticated capitalist economy. From the viewpoint of such an interpre- tation, Keynes’s theory is seen as not truly general, but restricted instead to a special case. Let us call this the modern capitalism or modernist interpretation. More specifically, this paper focuses on the versions of this interpretation that emphasize the financial institutions assumed by Keynes. 1 The author is an Assistant Professor of Economics, University of Campinas, São Paulo, Brazil. Financial support from the Brazilian National Research Council (CNPq) and FAEP-Unicamp is gratefully acknowledged. 1 Other versions emphasize the labor market institutionsor the institutionsof market structure. For references and discussion, see Dequech (1999a).