As Keynes himself admitted in 1938, his approach to portfolio management changed dramatically during the course of his career. He abandoned 'speculation' in favour of 'investment'—namely, a 'careful selection of a few investments … having regard to their cheapness and potential intrinsic...

In a recent article in this journal, Luigi L. Pasinetti not only reminded us of the role played by the Modigliani–Miller (MM) theorem in the current crisis but also provided a critique based on examining its underlying assumptions. In this note, I extend his critique as it applies to one...