Here Keynes frames the firm as the form of intelligence, establishing expectations, procuring employees and capital equipment, receiving returns, and adjusting expectations. He also says, here, that the expectations are more of a causal/fundamental influence, with respect to employment and output, than “actually realized” results/proceeds are.
Thus the behaviour of each individual firm in deciding its daily output will be determined by its short- term expectations—expectations as to the cost of output on various possible scales and expectations as to the sale-proceeds of this output; though, in the case of additions to capital equipment and even of sales to distributors, these short-term expectations will largely depend on the long-term (or medium- term) expectations of other parties. It is upon these various expectations that the amount of employment which the firms offer will depend. The actually realised results of the production and sale of output will only be relevant to employment in so far as they cause a modification of subsequent expectations. Nor, on the other hand, are the original expectations relevant, which led the firm to acquire the capital equipment and the stock of intermediate products and half-finished materials with which it finds itself at the time when it has to decide the next day’s output. Thus, on each and every occasion of such a decision, the decision will be made, with reference indeed to this equipment and stock, but in the light of the current expectations of prospective costs and sale-proceeds.