<p>Keynes’s ‘conjecture’ that there are general equilibria of involuntary unemployment that are resistant to falling wages has now been demonstrated, albeit at the cost of making relatively restrictive assumptions about how markets or anticipation functions operate. This article aims to show that a general equilibrium model can be constructed based on assumptions widely accepted by economists, such as rejecting the Keynesian ‘second classical postulate’ and differentiating between households of employees and shareholders. In this model, involuntary unemployment is independent of wages. In this model, unemployment is explained solely by the determinants of effective demand: households’ marginal propensities to consume, the incentive to invest, and the interest rate. This marginal modification of the general equilibrium model calls into question the first welfare theorem, specifically the Pareto optimality of general equilibrium.</p>