This paper assesses Pigou’s theories of industrial fluctuations and employment according to the canons of the economic orthodoxy prevailing in the 1920’s and 1930’s. Firstly, we review the conceptions about the commercial cycle advanced during the inter-war years and their inner connections with the classical tradition. After that, we investigate how the original pigovian viewpoint on industrial fluctuations evolves towards a theory of aggregate employment, with special attention to the role played by expectations, the demand for labor and the public expenditure. At the same time, the classical roots of Pigou’s approach are examined in order to confront it, in the end, with Keynes’ critique.
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