2009/10/08
41st UK History of Economic Thought Conference
41st UK History of Economic Thought Conference
Chancellors Hotel and Conference Centre
University of Manchester
2-4 September 2009
PROGRAMME
WEDNESDAY SEPTEMBER 2ND
12:00 onwards: Registration (Reception Area)
12:30-13:50: Lunch (Conservatory)
14:00-15:50: Session I (Marquis Room)
Chair: John Vint (Manchester Metropolitan University)
Willie Henderson (University of Minnesota, Duluth): “The development of
Adam Smith’s stadial theory: story-telling and analyses”.
Nerio Naldi University of Rome): “On the concept of relative value in the Wealth of Nations: rhetorical influences on Smith’s analysis”.
15:50-16:10: Refreshments (Conservatory)
16:10-18:50: Session II (Marquis Room)
Chair: John Aldrich (University of Southampton)
Richard van den Berg (Kingston University): “The art versus the nature of
commerce: Malachy Postlethwayt and Adam Smith”.
Julian Wells (with Alain Alcouffe) (Kingston University): “Marx, maths, and
MEGA 2”.
Fred Day (Manchester Metropolitan University): “Hodgskin and Godwin”.
19:00-20:00: Dinner (Carriage Restaurant)
20:15-21:15: Session III (Sponsored by the Hallsworth Foundation)
(Marquis Room)
Chair: Terry Peach (University of Manchester)
Samuel Hollander (Ben-Gurion University of the Negev): “Engels and Marx
on economic organization, income distribution, and the price mechanism”.
21:15- Business Meeting
THURSDAY SEPTEMBER 3RD
7:30-9:00: Breakfast (Carriage Restaurant)
9:15-11:05: Session IV (Marquis Room)
Chair: Evert Schoorl (University of Groningen)
Luis F. Carvalho (ISCTE Lisbon): “John Ruskin’s critique of classical
political economy”.
Toshiaki Hirai (Sophia University, Tokyo): “Hawtrey –on his unpublished
book, Right Policy”.
11:05-11:30: Refreshments (Conservatory)
11:30-13:00: Session V: Young Scholars Session (Sponsored by the
Hallsworth Foundation)
(Marquis Room)
Chair: Gavin Kennedy (Heriot-Watt University)
Christopher Godden (University of Manchester): "Popular economic opinion
and the history of economic thought".
Joao Rodrigues (University of Manchester): “Are Markets Everywhere?
Ludwig von Mises, Friedrich Hayek and Karl Polanyi”.
13:00-14:00: Lunch (Conservatory)
14:00-15:50: Session VI (i) (Marquis Room)
Chair: t.b.c.
Ivan A. Boldyrev (State University – Higher School of Economics, Moscow):
“Ontology of economics: an interpretive perspective”.
Andy Denis (City University): “A century of methodological individualism
Part I: Schumpeter and Menger”.
15:50-16:20: Refreshments (Conservatory)
16:20-17:15: Session VI (ii) (Marquis Room)
Chair: Roger Backhouse (University of Birmingham)
Margaret Moussa (University of Western Sydney): “On the logic of Marshall’s
Principles.
17:30-18:30: Session VII (Sponsored by the Hallsworth Foundation)
(Marquis Room)
Chair: Terry Peach (University of Manchester)
Cheng Lin (with Wang Fang) (Shanghai University of Finance and
Economics): “Evolvement of the history of Chinese economic thought”.
19:00-20:00: Reception (Sponsored by the UK History of Economic
Thought Newsletter)
20:00: Conference Dinner (C.P. Scott Room)
FRIDAY SEPTEMBER 4TH
7:30-9:00: Breakfast (Carriage Restaurant)
9:15-11:15: Session VIII (Marquis Room)
Chair: Tony Brewer (Bristol University)
Anders Ekeland (Statistics, Norway): “Tony Lawson and the nature of
mainstream economics: maths fetishism or ideology?”.
Roger E. Backhouse (with Philippe Fontaine) (University of Birmingham):
“History of economics as history of social science”.
11:15-11:45: Refreshments (Conservatory)
11:45-12:45: Session IX (Marquis Room)
Chair: t.b.c.
Evert Schoorl (with Henk Plasmeijer) (Emeritus, University of Groningen):
“Self taught teachers: Dutch economics textbooks and their authors in the 19th
and early 20th century”.
13:00-14:00: Lunch (Conservatory)
CONFERENCE ENDS
Chancellors Hotel and Conference Centre
University of Manchester
2-4 September 2009
PROGRAMME
WEDNESDAY SEPTEMBER 2ND
12:00 onwards: Registration (Reception Area)
12:30-13:50: Lunch (Conservatory)
14:00-15:50: Session I (Marquis Room)
Chair: John Vint (Manchester Metropolitan University)
Willie Henderson (University of Minnesota, Duluth): “The development of
Adam Smith’s stadial theory: story-telling and analyses”.
Nerio Naldi University of Rome): “On the concept of relative value in the Wealth of Nations: rhetorical influences on Smith’s analysis”.
15:50-16:10: Refreshments (Conservatory)
16:10-18:50: Session II (Marquis Room)
Chair: John Aldrich (University of Southampton)
Richard van den Berg (Kingston University): “The art versus the nature of
commerce: Malachy Postlethwayt and Adam Smith”.
Julian Wells (with Alain Alcouffe) (Kingston University): “Marx, maths, and
MEGA 2”.
Fred Day (Manchester Metropolitan University): “Hodgskin and Godwin”.
19:00-20:00: Dinner (Carriage Restaurant)
20:15-21:15: Session III (Sponsored by the Hallsworth Foundation)
(Marquis Room)
Chair: Terry Peach (University of Manchester)
Samuel Hollander (Ben-Gurion University of the Negev): “Engels and Marx
on economic organization, income distribution, and the price mechanism”.
21:15- Business Meeting
THURSDAY SEPTEMBER 3RD
7:30-9:00: Breakfast (Carriage Restaurant)
9:15-11:05: Session IV (Marquis Room)
Chair: Evert Schoorl (University of Groningen)
Luis F. Carvalho (ISCTE Lisbon): “John Ruskin’s critique of classical
political economy”.
Toshiaki Hirai (Sophia University, Tokyo): “Hawtrey –on his unpublished
book, Right Policy”.
11:05-11:30: Refreshments (Conservatory)
11:30-13:00: Session V: Young Scholars Session (Sponsored by the
Hallsworth Foundation)
(Marquis Room)
Chair: Gavin Kennedy (Heriot-Watt University)
Christopher Godden (University of Manchester): "Popular economic opinion
and the history of economic thought".
Joao Rodrigues (University of Manchester): “Are Markets Everywhere?
Ludwig von Mises, Friedrich Hayek and Karl Polanyi”.
13:00-14:00: Lunch (Conservatory)
14:00-15:50: Session VI (i) (Marquis Room)
Chair: t.b.c.
Ivan A. Boldyrev (State University – Higher School of Economics, Moscow):
“Ontology of economics: an interpretive perspective”.
Andy Denis (City University): “A century of methodological individualism
Part I: Schumpeter and Menger”.
15:50-16:20: Refreshments (Conservatory)
16:20-17:15: Session VI (ii) (Marquis Room)
Chair: Roger Backhouse (University of Birmingham)
Margaret Moussa (University of Western Sydney): “On the logic of Marshall’s
Principles.
17:30-18:30: Session VII (Sponsored by the Hallsworth Foundation)
(Marquis Room)
Chair: Terry Peach (University of Manchester)
Cheng Lin (with Wang Fang) (Shanghai University of Finance and
Economics): “Evolvement of the history of Chinese economic thought”.
19:00-20:00: Reception (Sponsored by the UK History of Economic
Thought Newsletter)
20:00: Conference Dinner (C.P. Scott Room)
FRIDAY SEPTEMBER 4TH
7:30-9:00: Breakfast (Carriage Restaurant)
9:15-11:15: Session VIII (Marquis Room)
Chair: Tony Brewer (Bristol University)
Anders Ekeland (Statistics, Norway): “Tony Lawson and the nature of
mainstream economics: maths fetishism or ideology?”.
Roger E. Backhouse (with Philippe Fontaine) (University of Birmingham):
“History of economics as history of social science”.
11:15-11:45: Refreshments (Conservatory)
11:45-12:45: Session IX (Marquis Room)
Chair: t.b.c.
Evert Schoorl (with Henk Plasmeijer) (Emeritus, University of Groningen):
“Self taught teachers: Dutch economics textbooks and their authors in the 19th
and early 20th century”.
13:00-14:00: Lunch (Conservatory)
CONFERENCE ENDS
The Return to Keynes, Harvard University Press
The Return to Keynes
Edited by Bradley Bateman, Toshiaki Hirai and Maria Cristina Marcuzzo,
Harvard University Press, 2010
During the 1990s, John Maynard Keynes, and Keynesian economics, were declared to be well and truly dead. Then came the financial and economic crises of 2008 and they were reborn as a way of understanding economies with significant unemployment. This excellent collection of essays, brought together by three prominent scholars of Keynes and Keynesian policy, will be a convenient way for those who have forgotten Keynesian economics to refresh themselves, and for others to learn for the first time.
--Craufurd Goodwin, Duke University
This fascinating collection of papers addresses the current status and relevance of Keynes from a number of perspectives: the return of macroeconomic policy activism, the state of modern macroeconomics, the recent scholarship of Keynes's life and work, and some elements of Keynes's work that might be relevant to the current crisis. The authors' backgrounds are diverse and their scholarship often cutting edge. A fine guide to the present state of play.
--D.E. Moggridge, University of Toronto
It is a basic truth in the history of economics that great ideas never die. They attain this permanence because they are shaped by both the internal demands of economic theorizing as well as the external realities of the economy. The Return to Keynes, edited by three distinguished scholars, testifies to this truth and demonstrates that doing the history of economics is a part of doing economics well. Keynesian macroeconomic policy as a tool for stabilization is now firmly fixed in the toolbox of economics.
--Yuichi Shionoya, Hitotsubashi University
http://www.hup.harvard.edu/catalog/BATRET.html?show=reviews
Product Description
Keynesian economics, which proposed that the government could use monetary and fiscal policy to help the economy avoid the extremes of recession and inflation, held sway for thirty years after World War II. However, it was discredited after the stagflation of the 1970s, which not only proved resistant to traditional Keynesian policies but was actually thought to be caused by them. By the 1990s, the anti-Keynesian counter-revolution seemed to reach its pinnacle with the award of several Nobel Prizes in economics to its architects at the University of Chicago.
However, with the collapse of the dot-com boom in 2000 and the attacks of 9/11 a year later, the nature of macroeconomic policy debate took a turn. The collapse prompted a major shift in macroeconomic policy, as the Bush administration and other governments around the world began to resort to Keynesian measures—both monetary and fiscal policies—to stabilize the economy. The Keynesian rebirth has been most dramatically illustrated during the past year when central banks have pumped billions of dollars of liquidity into the world’s financial system to address the crises of confidence, illiquidity, and insolvency that were triggered by the sub-prime lending crisis. The Return to Keynes puts Keynesian economics in a fresh perspective in order to assess this surprising new era in economic policy making.
See all Editorial Reviews
--------------------------------------------------------------------------------
Product Details
Hardcover: 284 pages
Publisher: Belknap Press of Harvard University Press (February 15, 2010)
Language: English
ISBN-10: 0674035380
ISBN-13: 978-0674035386
Edited by Bradley Bateman, Toshiaki Hirai and Maria Cristina Marcuzzo,
Harvard University Press, 2010
During the 1990s, John Maynard Keynes, and Keynesian economics, were declared to be well and truly dead. Then came the financial and economic crises of 2008 and they were reborn as a way of understanding economies with significant unemployment. This excellent collection of essays, brought together by three prominent scholars of Keynes and Keynesian policy, will be a convenient way for those who have forgotten Keynesian economics to refresh themselves, and for others to learn for the first time.
--Craufurd Goodwin, Duke University
This fascinating collection of papers addresses the current status and relevance of Keynes from a number of perspectives: the return of macroeconomic policy activism, the state of modern macroeconomics, the recent scholarship of Keynes's life and work, and some elements of Keynes's work that might be relevant to the current crisis. The authors' backgrounds are diverse and their scholarship often cutting edge. A fine guide to the present state of play.
--D.E. Moggridge, University of Toronto
It is a basic truth in the history of economics that great ideas never die. They attain this permanence because they are shaped by both the internal demands of economic theorizing as well as the external realities of the economy. The Return to Keynes, edited by three distinguished scholars, testifies to this truth and demonstrates that doing the history of economics is a part of doing economics well. Keynesian macroeconomic policy as a tool for stabilization is now firmly fixed in the toolbox of economics.
--Yuichi Shionoya, Hitotsubashi University
http://www.hup.harvard.edu/catalog/BATRET.html?show=reviews
Product Description
Keynesian economics, which proposed that the government could use monetary and fiscal policy to help the economy avoid the extremes of recession and inflation, held sway for thirty years after World War II. However, it was discredited after the stagflation of the 1970s, which not only proved resistant to traditional Keynesian policies but was actually thought to be caused by them. By the 1990s, the anti-Keynesian counter-revolution seemed to reach its pinnacle with the award of several Nobel Prizes in economics to its architects at the University of Chicago.
However, with the collapse of the dot-com boom in 2000 and the attacks of 9/11 a year later, the nature of macroeconomic policy debate took a turn. The collapse prompted a major shift in macroeconomic policy, as the Bush administration and other governments around the world began to resort to Keynesian measures—both monetary and fiscal policies—to stabilize the economy. The Keynesian rebirth has been most dramatically illustrated during the past year when central banks have pumped billions of dollars of liquidity into the world’s financial system to address the crises of confidence, illiquidity, and insolvency that were triggered by the sub-prime lending crisis. The Return to Keynes puts Keynesian economics in a fresh perspective in order to assess this surprising new era in economic policy making.
See all Editorial Reviews
--------------------------------------------------------------------------------
Product Details
Hardcover: 284 pages
Publisher: Belknap Press of Harvard University Press (February 15, 2010)
Language: English
ISBN-10: 0674035380
ISBN-13: 978-0674035386
2009/09/25
ESHET, Porto (April 2006) An Analysis of the General Theory Proofing Process
ESHET, Porto (April 2006)
An Analysis of the General Theory Proofing Process
Toshiaki Hirai (Sophia Univ.)
INTRODUCTION
The main purpose of this paper is (i) to examine and to show objectively and exactly how Keynes went on revising the proof of the General Theory, and is (ii) to detect the main features of this proofing process. The period covers the summer of 1934 to February 1936.
If I would be asked what the key points are in this paper, my answer is simple:
There exists no paper which has examined the latter half of Keynes’s developmental process from the Treatise to the General Theory in spite of many studies examining the Keynesian Revolution from a point of history of economic thought have been so far made. The reason is that almost all the studies have been concentrated on the period up to 1933-34, maintaining that the Keynesian Revolution or the General Theory has been, in substance, completed in 1933 (albeit this is right), and that little effort has been spent for clarifying the 18 months leading up to the General Theory with which this paper deals.
What concerns us in this paper is what the major changes are in this proofing process? How and why did Keynes make changes, having made a drastic change from the Treatise to the road leading up to the General Theory up until 1933?
In order to answer this question, we need to investigate the following.
1) To endeavor to describe accurately based on the material concerned how Keynes made changes.
2) To consider the implication and significance which these changes brought about to Keynes’s theory.
The first task is descriptive and explanatory, and the second is theoretical in nature. Through the second task, we may shed some light on the nature and characteristics of the General Theory. (It may not be, for example, a complete book in terms of theory.)
I. AN OUTLINE OF THE PROOFING PROCESS
Keynes had constructed major components of the General Theory (the liquidity preference theory, the marginal efficiency of capital, the fundamental psychological law, the multiplier etc.) before “The General Theory”. In terms of style, however, in this manuscript we first find material incorporated into the General Theory: Ch. 12, “The State of Long-Term Expectation (or Confidence)” is the prototype for GT, Ch. 12, “The State of Long-Term Expectation”; Ch. 10, “The Propensity to Spend” is the precursor of GT, Ch. 8, “The Propensity to Consume: I. The Objective Factors”, and Ch. 9, “The Propensity to Consume: II. The Subjective Factors”.
Having completed almost all the text in the table of contents of “The General Theory” by March 1934, Keynes went to the United States in May and came home in June. He remarked in his letter to Kitoh (22 June 1934) that “it will be some months more before I am ready for printing”.
Insight into the subsequent proofing process is offered by eight pieces of evidence.
[1] The first evidence is a typescript, referred to by Moggridge as “The Pre-First Proof Typescript”4, written in the summer of 1934 (concurrently with the Summer Manuscript). This contains the prototypes of GT, Ch.4, “The Choice of Units”, Ch.5, “Expectation as Determining Output and Employment” and Ch.11, “The Marginal Efficiency of Capital”.
Ch. 6, “The Meaning of Definition”, of “The General Theory” also corresponds to GT, Ch.6, “The Definition of Income, Saving and Investment” and its “Appendix on User Cost”.
In that summer Kahn visited and helped Keynes. In early September6 Keynes wrote to his publisher, D. Macmillan: “I am now fairly well on with my forthcoming Treatise on Economic Theory and … it might be ready for publication sometime next year. ... My provisional title is The General Theory of Employment, Interest and Money.”
After “The Pre-First Proof Typescript” came a set of galleys, which we will call Galley 1, 2 and 3 (June 1935).
(i) Three galleys have the same TOC.
(ii) Galley2 is a revised version of Galley1 while Galley3 revises Galley2. In each galley, only part of the material specified in the TOC was written. Moreover, Galley2 rewrites only parts of Galley1, while Galley3 rewrites only parts of Galley2. Consequently, some sections of the text remained at either Galley1 or 2 stage until what we shall call “The Changeover” (September 1935).
(iii) The text of Galley1 was, of course, written first, but it appeared in October and December 1934, and in the January, May and summer of 1935, so parts of Galley1 postdate Galley2.
(iv) Although Galley1 of GT, Ch.17, “The Psychological and Social Incentives to Liquidity”, and Ch.19, “The Essential Properties of Interest and Money” do not survive, we have confirmation of it in Robertson’s letter to Keynes (3 February 1935) etc.
(v) The TOC differs considerably from that of the General Theory, for Keynes considerably revised Galley3 in August 1935.
[2] The second source is Galley1. By 13 September 1934 Keynes had sent off the first three chapters, the titles of which are the same as those of the corresponding chapters of the General Theory (though Ch.3, “The Principle of Effective Demand”, differs in substance). The galley for them came out on 10 October. Keynes delivered his Michaelmas lectures based on it together with the manuscript for Chs. 4-14.
That Keynes felt this manuscript needed revision is clear from two letters to Kahn. On 18 September Keynes wrote:
“I … have found out one or two interesting novelties. … I’ve solved the riddle of how to define Income in some sort of a net sense…. The deduction from the gross sales proceeds of the output of a given equipment necessary to yield income is that part of the quasi-rent … necessary to induce the entrepreneur not to leave his equipment idle. … [T]he appropriate depreciation allowance is the sacrifice involved in using the equipment as compared with postponing its use, as estimated by the entrepreneur himself”.
Nine days later he wrote:
“I am getting towards the end of the re-writing which you led me into and will show you the new way for dealing with net income in detail next term. It is clumsy …but the best I have done yet”.
These progress reports relate mainly to Ch.6, “The Meaning of Income”, which deals with user cost and Ch.7, “The Definitions of Quasi-Rent, Saving and Investment”, of the TOC.
Keynes then sent the publisher first Chs.4-11, and secondly Chs.12-19, which respectively correspond to GT, Chs. 4-9 and Chs. 11-17. The galleys for these probably came out between early December 1934 and mid-January 1935. This marks the virtual birth of the General Theory. Keynes sent off to Robertson10 Chs.1-19, which we will call “Galley1(I)”.
[3] The third source is the revision of Galley1(I), i.e., Galley2. Ch.17, “The Psychological and Social Incentives to Liquidity”, and Ch.19, “The Essential Properties of Interest and Money”, which correspond to GT, Chs. 15 and 17 respectively, both survive. As the second galleys for Chs. 1-6 were ready on 29 January 1935, some of Galley1(I) must have been returned to the publisher by the end of 1934. The remaining part would have been revised by January 1935, for Keynes wrote a letter to Kahn (15 January):
“I have done two more chapters for you …. [T]hey cover the ground of the philosophical chapter, ninety per cent re-written … concerning the fundamental characteristics of interest … considerably remodeled”.
This would relate to Ch.18, “Philosophical Considerations on the Essential Properties of Capital, Interest and Money”, of “The General Theory”, suggesting that Keynes reworked this as Ch.18, “Sundry Observations on the Nature of Capital”, and Ch.19, “The Essential Properties of Interest and Money”. In response, the publisher returned the remainder of Galley2, i.e. Chs.7-19, to Keynes in April 1935.
[4] The fourth source is the manuscript comprising Chs. 20-25 of the TOC, which cover the same material as GT, Chs. 10 and 18-22. Keynes probably sent this off to the publisher after March 1935, as is suggested by two circumstances.
Firstly, he wrote a letter to Kahn (26 March)12: “I have now finished a full-dress critique of the Prof. [Pigou] to go in as an appendix to the chapter on changes in money wages”. This would indicate that he had already finished writing “Appendix on Professor Pigou’s Theory of Unemployment” to Ch.23, “Changes in Money Wages”, which corresponds to GT, Appendix to Ch.19.
Secondly, this manuscript was sent off to several colleagues in June.
From these elements we deduce that Keynes received the galley in May 1935. We will call this Galley1(II).
[5] The fifth source is Galley3 (June), comprising Chs.2-6, which correspond to GT, Chs.2-5 and part of Chapter 6. In June Keynes sent off to Harrod, Hawtrey, Kahn, and Joan Robinson the following:
(i) Ch.1 of Galley2;
(ii) Chs.7-19 of Galley2, which correspond to GT, some of Ch.6, all of Ch.7, Section I-IV of Ch.8, Chs.9-14, Appendix to Ch.14, and Chs.15-17;
(iii) Galley1(II) (Chs.20 to 25).
This means that what they received was Chs.1-25 of the TOC, corresponding to GT, Chs.1-22.
According to Keynes’s letter to Macmillan (31 July):
(i) he sent the final pages of Galley3 to the printer;
(ii) he expected the book to appear in November.
[6] The sixth source concerns Chs.26-28 of the TOC. Although the galley for these is not extant, the chapter titles are known to us; Ch.26, “Notes on Mercantilism and the Usury Laws”, Ch.27, “Notes on the History of the Notion of ‘Effective Demand’ ”, and Ch.28, “Is an Individualist Economy Capable of Providing Full Employment?”.
Chs.26 and 27 together would correspond to GT, Ch.23, “Notes on Mercantilism, the Usury Laws, Stamped Money and Theories of Under-Consumption” while Ch.28 to Ch.24, “Concluding Notes on the Social Philosophy towards Which the General Theory Might Lead”.
According to Keynes’s letter to J. Robinson (3 September) he sent the last three chapters off to her, and was still working along the TOC:
I now have … the last three chapters …. The last two chapters are completely unrevised. Roy [Harrod] strongly objects to chapter 26 as a tendentious attempt to glorify imbeciles. ... I have been occupied for several weeks in somewhat re-writing Book I and completely re-writing Book II. In the case of Book II practically not a word of the version you have read has been left standing. … I have somewhat modified my definition of user cost (JMK.13, pp. 650-651).
On the evidence of this letter together with the galleys he sent to some fellow-economists in June 1935 and his letter to Daniel Macmillan (11 September), Keynes’s work on these chapters and their appearance in galley form would have taken place between June and July. We will call this set of proofs Galley1(III).
[7] The seventh source is the revision after Galley1(III), the evidence for which comes from Keynes’s letter to Robinson (3 September) and to Hawtrey (4 September).
The first reveals that he had been engaged for several weeks in rewriting Book I (Chs.1-3) and Book II (Chs.4-9).
The second indicates that Keynes revised Book III (Chs.10-11).
From Hawtrey’s detailed comments, and Keynes’s response (1 October) we know that Keynes had also embarked on rewriting Book IV. We will call it “The Great Revision”.
[8] The eighth source is the revision of Galley1(III). Keynes carried this out between September and October, for we have his letter to Robinson (3 September) and Robertson (10 October), in which he says: “I am now practically finished, and am sending my galleys to the printers to be paged”.
We may also presume that the change-over from the TOC to the GT’s TOC was made in this period. We will call it “The Changeover”.
In his letter to Macmillan (9 January 1936) Keynes writes: “I now have the exact size of the book for the leaflet, namely, xii plus 403”.
After 19 January or thereabouts, the General Theory was out of his hands. It was published on 4 February.
Now we need to keep the following in mind.
First, Galley1 is the most telling of the galleys:
(i) the galley is written along the TOC and laid the foundations for succeeding galleys;
(ii) through an examination of the appendix to JMK.14 (pp. 351-512; hereafter “The Variorum”), we see that in Galleys2 and 3 Keynes made only formal revisions except for a few points.
Second, we need to compare these sets of galleys not only with the preceding developments but also with the General Theory.
For the first comparison we focus on the new ideas in each set of galleys. For the second, together with the new ideas in each set of galleys we will examine formal aspects such as the degree of completion.
II. The Pre-First Proof Typescript
１． The employment function
２． Definitions of some fundamental concepts
III. Galley1(I)
1. The state of Development before Galley1(I)
A. Consumption
(a) Objective factors
However, Ch.10 of Galley1(I) differs considerably from GT, Ch.8, Section II. In “The General Theory” Keynes identified the objective factors as:
(i) the quantity of employment as determining the aggregate current rate of real income;
(ii) the rate of interest;
(iii) the state of long-term expectation.
In Galley1(I) he deleted (i), keeping (ii) and (iii) only, and proceeded to discuss (i) separately, using income rather than the quantity of employment. He then went on to add an argument justifying the substitution in the General Theory.
The analysis in (ii), which is the same as in “The General Theory”, is included as GT’s fourth objective factor, “changes in the rate of time-discounting” while the analysis in (iii), which is the same as that in “The General Theory”, is incorporated to some extent in GT’s third objective factor, “windfall changes in capital-values not allowed for in calculating net income”.
(b) Subjective factors
The argument concerning the influence of distribution on the propensity to consume restates the argument of “The General Theory”, namely that the employment function becomes a straight line with a slope of 45°. In GT Keynes drops it and takes income distribution as given. Concerning “negative saving”, furthermore, in Galley1(I) Keynes adds negative saving by firms and “unemployment relief financed by borrowing” together with the purchase of annuities and death duties in “The General Theory”. In GT, on the other hand, he refers only to “unemployment relief financed by borrowing”.
B. The Rate of Interest
Ch.17, “The Psychological and Social Incentives to Liquidity”, and Ch.19, “The Essential Properties of Interest and Money”29, of Galley1(I) (corresponding respectively to GT, Ch.15, “The Psychological and Business Incentives to Liquidity”, and Ch.17 (the same title) are not extant. However, we have Keynes’s letter to Kahn (15 January 1935)30, and Robertson’s letter to Keynes (3 February) for them.
The letter to Kahn indicates that Keynes rewrote 90 per cent of these chapters of Galley1(I). All we can say for certain is that Chs.17 and 19 of Galley2, which were completed by 15 January 1935, are identical to GT, Chs.15 and 17, apart from minor changes in wording.
The differences between Galley1(I) and Galley2 concern very trivial points. In the Great Revision, however, both chapters were considerably rewritten before the General Theory. This is confirmed by:
(i) Keynes’s letter to Kahn (27 August), in which he was thinking of completely rewriting the chapters on the theory of interest;
(ii) the fact that of the chapters on the theory of the rate of interest, Keynes rewrote these two chapters only.
Keynes was spurred on to rewrite these two chapters as a result of a discussion with Harrod, which brought his attention to his failure to make his theory of interest immune to misunderstanding.
Although the theme is common to GT, the appendix to Chapter 14 and to Ch.16 of Galley1(I), in formal respects we see two points of difference:
(i) in Galley1(I), Keynes points out that Marshall does not clearly distinguish quasi-rent as a return on assets from interest as a return on money, while in GT he deletes this;
(ii) Keynes’s criticism of Pigou’s theory of interest is more extensively developed in GT, using also Pigou(1927; 1933).
III. Galley1(II)
In Ch.3, “The Principle of Effective Demand”, of Galley1(I), Keynes defined the employment function as D’= F(N) (D’ denotes “the supply price” in the sense of an expectation of sale proceeds), N the volume of employment). However, in Ch.21 of First Galley1(II) he defines it as N = F(D) (where D denotes effective demand).
Then, in the Great Revision, Keynes set about clearing up the confusion by, on the one hand, calling the employment function of Galley1(I) the “aggregate supply function”, and on the other hand, calling that of Galley1(II) the employment function. In the Great Revision, Keynes also used for the first time the concept of the “aggregate demand function”, and re-defined effective demand as exclusive of “user cost”.
From this development we can infer that the employment function, N = F(Dw), of GT is a function of the equilibrium value, Dw (effective demand in terms of wage units). This can be verified by examining the theoretical structure of GT directly.
Ch.23 of Galley1(II) can be traced back to the following:
(i) Keynes launches his attack on Pigou (1933) in September 1933, and enters into fierce debate with Robertson;
(ii) Keynes discusses the book in his first lecture of the 1933 Michaelmas Term; (iii) in a letter to Kahn (26 March 1935), Keynes says that he has finished writing an
appendix for Pigou’s book.
Aside from these three chapters, we find no precursors to Galley1(II).
We see no difference in content between Galley1(II) and the corresponding parts of GT except minor changes in wording. The only exception is Section II of Ch.20, which summarizes the argument in the preceding chapters. It was considerably rewritten, possibly, in the Great Revision.
V. The Great Revision
b. Theoretical and Conceptual Revisions
The most significant differences between the Summer Manuscript and “The General Theory” in the definitions are that in the Summer Manuscript:
(i) windfall profit disappears;
(ii) user cost, Us, is considered to be the difference between effective demand and income (equation (7));
(iii) income equals the sum of consumption and investment (equation (8)).
(ii) Galley1(I) and GT
For a proper understanding of Keynes’s definitions of fundamental concepts we need to attend to how the concept of “user cost” is defined.
We can summarize the relation between the definitions of fundamental concepts adopted in Galley1(I) and in GT as follows:
(i) The difference in the definitions of effective demand, investment and prime cost depends on whether they include user cost (Galley1(I)) or not (GT);
(ii) the definitions of income, profit and saving are the same in the two;
(iii) the equation U2 = U1 - B is vital to the relation between the two sets of definitions.
B. Chapter 3
We say that equations (45) to (47) are the formulation used in GT with the proviso that in GT the definitions of effective demand, investment, income, profit and saving have been changed in such a way that user cost is not included. In GT Keynes explains the reason for this change as follows: “since user cost is obviously dependent both on the degree of integration of industry and on the extent to which entrepreneurs buy from one another, there can be no definition of the aggregate sums paid by purchasers, inclusive of user cost, which is independent of these factors” (GT, p. 24, fn.2).
VI. The Changeover
As we explained in Section 1, “The Changeover” designates the revision work of Galley3 and the change from TOC to the table of contents of GT, which took place between September and October 1935. Evidently, up to September Keynes continued to structure his work in line with TOC. In his letter to Harrod (17 August 1935) he writes: “Here are the last two chapters of my book. ... But chapter 26 is too long, .... In chapter 27 the emphasis hasn’t worked out” (JMK. 13, p. 542). Further, in his letter to Hawtrey (4 September 1935), he reports: “I have ... completed my re-writing of the first three books, namely chapters 1-11” (JMK. 13, p. 576).
Even as late as September, Keynes continued to rewrite the chapters treating the rate of interest. In his letter to Harrod (10 September 1935), we read: “I shall be here from September 22 … up to the end of the month. ... by then I shall have finished re-writing the chapters dealing with rate of interest” (JMK.13, p. 559). This bears fruit in GT, Ch.14, “The Classical Theory of the Rate of Interest”.
However we know neither when Keynes compiled the table of contents of GT, nor how he rewrote the galley after September. August was the period of the Great Revision. At that stage Keynes may well have been simultaneously engaged in rewriting the galley making a marked departure from TOC, although we lack the evidence. Apart from this, it was probably in September and October that he rearranged the whole galley in line with the table of contents of GT. Hawtrey, in his letter to Keynes (19 December 1935), made comments on the proofs based on the table of contents of GT, for we find such a passage as “Own―rates of interest. A renewed study of chapter 17 leads me ...” (JMK.13, p. 625).
It should be noted that Chs.6-10 (in TOC) undergo substantial further change to reach the form of GT, and that there the arrangement again changes as a result of Ch.22 (of TOC) being shifted to become Ch.10 of GT.
VII. CONCLUSION
The following points emerge from our analysis:
(1) Galley1(I) represents the most considerable piece of revision work carried out on the topics covered in TOC. Galley2 and Galley3 represent stylistic revisions of Galley1(I).
(2) Galley1(I) is composed of Chapters 1-19. Of these, Chs. 4, 5, 12 and 13 had been fashioned into completed texts of the corresponding parts of GT before Galley1(I). The other chapters are completed both in contents and at the stylistic level, as far as TOC is concerned. However, the theory of consumption, the theory of liquidity preference, and the definitions of various fundamental concepts had been completed in substance before Galley1(I).
(3) The largest change in the proofing process from Galley1(I) to Galley3 takes place in the Great Revision. The definitions of some fundamental concepts (such as effective demand, investment, and the prime cost) change as a result of both the change in the definition of “user cost” and the change in its treatment.
“The Monetary Theory of Production”: Before April 1932. JMK.13, pp.381-396.
“Historical Retrospect” (1932): JMK.13, pp.406-408.
“The Parameters of a Monetary Economy” (1932):JMK.13, pp.397-405.
“The First Manuscript” (1933): JMK.29, pp.62-66.
“The Second Manuscript” (1933): JMK.29, pp.63, 66-73, 87-92, 95-102.
“The Third Manuscript” (1933): JMK.29, pp.76-101, and JMK.13, pp.421-422.
“The First Undated Manuscript”: the end of 1932 - the beginning 1933. JMK.29, pp.102-111.
“The Second Undated Manuscript”: the end of 1932 - the beginning 1933. JMK.29, pp.111-120.
“The General Theory”: Spring in 1934. JMK.13, pp.423-456.
The Summer Manuscript (1934): JMK.13, pp.471-484.
The Pre-First Proof Typescript: Summer in 1934. See JMK.14, p.351.
TOC: the table of contents from Galley1 to Galley3.
Galley1(I), Galley2, Galley1(II), Galley3 and Galley1(III): See LKE and SKE, Table 13-1.
The Great Revision: August 1935. See LKE and SKE, 14, 1(A).
The Changeover: September and October 1935.
LKE: Hirai T. 2003, Looking at Keynes’s Economics from Multiple Points of View, University of Tokyo Press (in Japanese). LKE, x, y:LKE, Ch.x, Sec. y. (The short and updated version is to be published from Routledge.)
SKE: Hirai T., December 1997-March 1999, “A Study of Keynes’s Economics” (I)-(IV), Sophia Economic Review, 43(1[67-136], 2[13-121]), 44 (1[35-127], 2[29-96]). SKE, x, y: SKE, Ch.x, Sec. y.
2009/09/22
Book Review: The Economics of Keynes: A New Guide to The General Theory
Mark G. Hayes, The Economics of Keynes: A New Guide to The General Theory (Cheltenham and Northampton: Edward Elgar, 2006) pp.xvi, 257, ￡25, ISBN 13:978-1-84720-082-2.
I.
Readers might feel bewildered by the unusual composition of this book: short texts and long appendices, almost equal in page length. Moreover, each appendix comprises several sections, and is cross-referenced to both text and appendix, which might entail some groping before grasping what the author intends to argue.
The book is subtitled “A New Guide to The General Theory”, and one might expect it to be an easily understandable introduction for those who have not read The General Theory. In fact this is not the case.
It might more appropriately have been called a “guide” to the author’s own interpretation of The General Theory. The author sets out to show readers what he regards as the essence of the General Theory, without referring to the various other interpretations so far made — we might mention Gordon ed. (1970), in which the then leading economists expound what they regard as the essence of The General Theory, and Leijonhufvud (1968), to take but two examples. The book also does not examine Keynes’s other writings such as A Tract on Monetary Reform (1923) and the Treatise (1930). Readers are asked to have The General Theory at hand, for in his argumentation the author only gives the page references of The General Theory, adding difficulty for those who have not read it. Again, the book finds room only for the author’s own interpretation of The General Theory and is written for those already familiar with it .
II.
Let us now look into the substance of the book. In this reviewer’s understanding, two points are presented as the essence of The General Theory: one is concerned with equilibrium analysis, and the other with expectations and liquidity.
My aim has been to show more clearly how Keynes extended Marshall’s theory of supply and demand, or competitive equilibrium, to take account of the true nature of the monetary production economy … The major corollary is that equilibrium analysis in economics can be rigorous … only in a given state of expectation, which for most purposes means only at a point in time (p.206).
It should be borne in mind that the above quotation somehow concerns four “propositions of The General Theory” (p.1): equilibrium, competition, money and expectation (the rest is liquidity).
As the reviewer takes it, in The General Theory Keynes sees the market economy as possessing two contrasting potentialities: (i) stability, certainty and simplicity; (ii) instability, uncertainty and complexity. His fundamental perception of the market economy can be summarized as follows: “The market society is stable in the sense that it can remain in ‘underemployment equilibrium’, but if it goes beyond certain constraints, it becomes unstable” (Hirai, 2008, pp.180-181). With this understanding the reviewer endorses the author’s above interpretation.
Equilibrium Analysis
The author emphasizes that “[t]he core of The General Theory must be understood as an equilibrium theory” (p.4). Here, according to him, equilibrium should: (i) be grasped in the “mechanical” sense (see pp.3 and 75); (ii) follow Marshall’s tradition (see p.175). Thus he is critical of views regarding The General Theory as a long-run theory (see pp.206 and 221).
The argument for this can be seen at least in two places.
First we have Chapter 3, “The Principle of Effective Demand” (of The General Theory), for the author regards it as “the core of the book” (p.54).
… Keynes extends Marshall’s analysis of competitive supply and demand from partial to system equilibrium, by introducing the principle of effective demand (p.60).
The author’s unique position emerges when he says that “the point of effective demand is a
short-period equilibrium position” (p.59), for “short-period” is defined as extremely brief period – as daily basis or a point in time, with which this reviewer cannot agree.
Since Keynes’s short period is his day, …, this means that aggregate demand and supply are in static equilibrium at all times (every day) (p.59).
Secondly, the author talks about “the equilibrium sub-system of The General Theory” (p.175), admitting “IS-LM model” interpretation:
… section I of G..T.’s Chapter 18 describes a set of simultaneous equations …. Although
Hick’s claim to have Keynes’s blessing for IS-LM is controversial, Keynes undoubtedly
assented to the interpretation (p.175).
“Sub-system” here means that the three independent variables (the propensity to consume, the state of long-term expectation and the preference for liquidity) go “beyond the reach of equilibrium analysis”. They are closely related to expectation and uncertainty (another feature of The General Theory). This is why he describes Ch.18, “The General Theory of Employment Re-Stated”, “as a short-term equilibrium model nested within a larger open system, in which comparisons of different positions of static equilibrium of the model can be made, but which cannot itself be modelled in equilibrium terms” (p.176. Underlines are mine).
Throughout the book Keynes is described as the economist who extended Marshallian theory (e.g. pp.70-72 and 84). No reference is made to the fact that Keynes criticized the classical dichotomy and Say’s law as advocated by Marshall, as well as both Marshall’s theory of interest and his quantity theory — which is why, regarding Marshall as a classical economist, he put forward a theory of underemployment equilibrium. The author’s argument on the relationship between the two does not deal with this point.
Expectations and Liquidity
Let us turn to another point focused upon by the author: expectations and liquidity (the fourth and fifth propositions of The General Theory). Although the author develops a variety of arguments in this respect, we will confine our attention to the main point for lack of space.
In Ch.4 (of this book) the author explains, as features of The General Theory, “Keynes’s three macroeconomic functions” (the propensity to consume, the schedules of liquidity preference and marginal efficiency of capital) and “his system of classification” (consumption goods and a larger compartment composed of money, bonds and capital assets), arguing that “the common foundation … [of them] is our uncertainty about the future” (p.140. See also p.144).
Here the author places particular stress on Ch.17, “The Essential Properties of Interest and Money”, in which, he remarks, a broader definition of liquidity preference (“Liquidity means more than convertibility and includes the degree to which the value of an asset…, is independent of changes in the state of long-term expectation” [p.151]) and the above two schedules (see p.143) are argued.
The author emphasizes, above all, the rate of interest in this respect.
… the rate of interest has a life of its own, based on our well-founded distrust of forecasts of the long-term future and on the security offered by money, as the store of value least affected by changes in such forecasts (p.154).
The reviewer agrees that Ch.17 is very important in understanding The General Theory. However, it occupies a unique position, for the argument there is developed in stock terms [of all the assets], and “the price of each asset is held under perfect competition at the equilibrium point where the net advantage … from holding any asset is the same” (p.140), while in the rest of The General Theory the argument is developed in flow terms (of income, saving and investment). There is no guarantee that the stock equilibrium, in which, thanks to its liquidity, money rules the roost and under-employment equilibrium occurs, should be compatible with the flow equilibrium, at which the level of employment is determined (as argued in Ch.3 or Ch.18). The two cannot be compatible, for the period in the case of stock equilibrium is long (capital assets are changeable) while in the case of flow equilibrium it is short (capital assets are assumed to be fixed) – a point not considered in this book.
III.
The author declares in the Epilogue that “The purpose of this book has been to set forth a perspective on The General Theory which resolves many puzzles and paradoxes that have been found in it by other writers over 70 years” (p.221).
This is indeed an extremely difficult task. Readers who have never read The General Theory are in no position to evaluate this book in relation to it, while the readers who have read and studied it, like the present reviewer, will find themselves agreeing in some places, and disagreeing in others. After all, eventually all the readers have to address The General Theory as it is, and come to their own evaluations of it.
As the author says in his Preface, “this book will draw some fire, although I trust also some support, from [both the Classical and the Post Keynesian Schools)” (p.xi).
References
Clower, R., 1965. The Keynesian counterrevolution: a theoretical appraisal. In F. Hahn and F. Bechling ed. The theory of interest rates. London: Macmillan, pp.103-25.
Gordon, J. ed., Milton Friedman’s monetary framework. Chicago: University of Chicago Press, 1970.
Hirai, T., 2008. Keynes’s theoretical development – from the Tract to the General Theory. London and New York: Routledge.
Leijonhufvud, A., 1968. On Keynesian economics and the economics of Keynes. Oxford: Oxford University Press.
(Journal of the History of Economic Thoughtより）
Book Review: Roger Backhouse and Bradley Bateman (eds.), The Cambridge Companion to Keynes
Roger Backhouse and Bradley Bateman (eds.), The Cambridge Companion to Keynes, Cambridge: Cambridge University Press, 2006, pp. 327.
Toshiaki Hirai (Sophia University, Tokyo)
Keynes has had no equal among economists in terms of the depth of his influences in various fields. The so-called “Keynesian Revolution” is his most important contribution, and yet it shows no more than part of his great achievements. Keynes was an intellectual leader of the Liberal Party. In addition, he himself made an important contribution in the field of philosophy and was a central member of the Bloomsbury Group, to mention only a few achievements.
This book deals with Keynes in, broadly speaking, the following aspects: (a) an economist, (b) a philosopher-ethicist, (c) a human being.
I. An Economist
The papers concerned are sub-divided into theory and economic policy.
1. Theory
Backhouse (ch. 2) deals with the Keynesian Revolution, focusing on the debates, evaluation, and re-evaluation of the past seventy years. He maintains that because the General Theory has two inconsistent theoretical elements (IS-LM and “uncertainty”), the Keynesian Revolution can be approached in two quite different ways: Keynesian orthodox and Post-Keynesian thought. He pays attention to both aspects and yet evaluates the former more highly than the latter. His treatment is fair, for Keynes’s economics was propagated and ruled the roost in the 1940s to the 70s in terms of either of the IS-LM or its extended version together with econometrics and national income accounting. This does not mean, however, that the other component, “uncertainty”, is not important. The General Theory sees the market economy as possessing (i) stability, certainty and simplicity and (ii) instability, uncertainty and complexity.
Laidler (ch. 3) examines Keynes’s account of classical economics, seeing it as a caricature. He argues that classical economics provides the General Theory with invaluable information (cf. p. 42) and that the present-day “New Classical Economics” happens to be the same as what Keynes repudiated as the “Classics”.
Keynes looked at the antecedents of the General Theory (the Mercantilists, Malthus and Hobson), criticizing Ricardo and J.S. Mill.
Laidler criticizes Keynes because he overlooked how classical economists were cautious about Say’s Law and emphasized the role of money. Is this criticism persuasive? First, the “Wicksell Connection” did not pay attention to it. Secondly, the monetary debates in the 19th century did not become the core of classical economics.
Laidler describes the General Theory as having two elements, stating that Keynes’s theory was propagated in the form of the IS-LM theory, and dropped another element: monetary exchange. “[These simplifications] helped to ensure that macroeconomics began to lose sight of this essential feature of his contribution ….” (p. 52) Laidler earlier (1999) evaluated the IS-LM element, arguing that it put together what macroeconomics had developed before the General Theory. In contrast, Laidler here seems to put emphasis on the other element.
Leijonhufvud (ch. 4) favourably insists on the continuity between Marshall and Keynes, criticizing Walrasian theory. His stance is as follows: “Keynes was a Marshallian in the deep sense, … when he broke with Marshall …, their very differences presumed a shared system of thought. Keynes’s claim to greatness as a theorist is based on his departures from Marshall.” (p.77)
Leijonhufvud earlier (1999) classified economists into “Classical” (Marx, Marshall and Keynes) and “Modern” (Arrow, Debreu and Lucas).
This distinction is clear in pp. 59-63. Marshall is regarded as a successor of the Classical tradition, and therefore Marshallian equilibrium theory is regarded as dynamic.
It is true that Marshall consciously worked as a successor to the Classics. His way of argument differed from the Classics, however, since the Classics were concerned with a growth theory and downgraded the concept of equilibrium, while Marshall proposed “a theory of stable equilibrium of normal supply and demand”. Marshallian theory differs from Walrasian theory in important respects, and yet both belong to the Catallactics.
Concerning Keynes, the situation is complicated. After his essay “Alfred Marshall” (1925), there is no record of Keynes’s applauding Marshall. In the General Theory, Marshall appears only as an object of criticism. These criticisms were not trivial, for Keynes worked out his monetary theory of production by overcoming the defects in Marshall’s theory. Although Leijonhufvud refers to two types of effective demand failures, he seems to consider them to be secondary (cf. p. 66).
2. Economic Policy
Hoover (ch. 5) examines Keynes’s theory methodologically. He compares the Marshallian with the Walrasian methodology. Hoover’s stance is as follows: “Keynes’s attitude is similar to Marshall’s, but Keynes is more a physician than archaeologist.” (p.82)
I agree with his view. Keynes always developed a model from a policymaker’s point of view, for it was vital to him to understand where the malaise lay and how to cure it.
Bateman (ch. 15) deals with the difference between Keynes and Keynesianism on economic policy. He argued that Keynes “rarely explicitly supported [deficit spending] policy” (p.275), but rather “espoused a consistent argument that monetary policy should be kept loose.” (p.278)
I agree with this point. Throughout the 1920s, Keynes advocated a policy of a low rate of interest . In 1931 during the Great Depression, he favored lowering the long-term rate of interest, to be followed by a policy of public investment (JMK.13, p. 364). He was also flexible on his prescription, as is seen in How to Pay for the War (1940).
Peden (ch. 6) focuses on “what Keynes said about monetary policy, public investment and fiscal policy in relation to unemployment and inflation.” (p.100) We can see here the relation between Keynes, his disciples and Treasury officials.
II. A Philosopher-Ethicist
The papers concerned are subdivided into philosophy-ethics and political philosophy.
1. Philosophy-Ethics
Since the 1980s, studies on Keynes as a philosopher have appeared. The main problem here is the nature of the Probability (1921. The original work can be traced back to 1907.) and whether it influenced the General Theory (1936). The controversy between the continuity camp and the discontinuity camp has been over how Keynes in the intervening period should be evaluated, given the fact that only a few fragments remain.
The papers here belong to the discontinuity camp. While paying attention to the world events which might have changed Keynes’s thinking (cf. p. 175), Raffaelli (ch. 9) states that Ramsey’s influences on Keynes are well documented while those of Wittgenstein are difficult to prove.
Gillies (ch. 11) describes Keynes’s philosophy after Ramsey’s criticism as “intersubjective” (p. 211), pointing to long-term expectation and “uncertainty.”
Baldwin (ch. 13) examines Keynes as an ethicist. He argued that Keynes first developed an ethical theory as an improvement on Moore’s theory but later abandoned it. Yet Baldwin concluded that “although his later beliefs include a new emphasis on the importance of retaining confidence in social and economic institutions, Keynes remained true to his youthful … [conviction] that “sometimes old duties must go to be replaced by new.” (p.255)
3. Political Philosopher
Brittan (ch. 10) characterised Keynes’s political stance as follows: (a) suspicion of fixed rules, (b) dislike of the money motive, (c) interest in non-conclusive inferences (cf. p. 189). He also maintains that Keynes accepted many of the interventionist conclusions of the old “New Liberals,” while he was an individualist at the personal level (cf. p. 190). It was a surprise to me that Brittan presents Schumpeter as Keynes’s rival since Schumpeter regarded capitalism as inevitably collapsing and provided a blueprint of socialism.
Klaes (ch. 14) seems to state that Keynes was a modernist in the sense of the Bloomsbury Group, although he believes that this should not distract us from “exploring how parts of Keynes’s work may … be expanded” (p. 268) in terms of Post-Modernism.
III. A Human Being
Goodwin (ch. 12) explains how the Bloomsbury principles influenced Keynes in “(a) his professional as well as his personal life and … as (b) a more ethical economist” (p.236).
I agree with point (a), but I doubt (b). I believe that in order to understand Keynes as a whole, a study of the Bloomsbury Group is indispensable. So far, few economists have shown interest in it, and this has been a serious obstacle to understanding the British Society intellectually.
In Marcuzzo (ch.7) I find “Keynes and the Cambridge Economists” interesting, which, based on the huge correspondence, describes a theoretical relation among Keynes and his contemporaries in relation to the Keynesian Revolution.
In Moggridge (ch. 8), what attracted me was “Keynes’s Management of His Intellectual Property”: “Whether it were raising pigs at … Tilton, managing the Cambridge Arts Theatre, or dealing with his publishers, Keynes revelled in the details.” (p.142) This reveals one of his features. The same man who criticized capitalistic society and put forward proposals for an international system was the last person to neglect mundane details.
IV. Some Remarks
The features of this book as a whole are as follows.
1. A propensity to regard the relation between Marshall and Keynes as continuous in terms of theory and methodology.
2. Much attention to Keynes’s philosophical/ethical aspects.
On the other hand, Keynes’s theoretical development and social philosophy are not taken up. The book is too small to cover Keynes’s multifarious aspects. The rest is to be dealt with in other books.
References
Laidler, D. (1999), Fabricating the Keynesian Revolution, Cambridge University Press.
Leijonhufvud, A. (1999), “Mr Keynes and the Moderns” in Pasinett, L. and Shefold, B. eds, The Impact of Keynes on Economics in the 20th Century, Edward Elgar
Hirai, T. (2007), Keynes’s Theoretical Development – from the Tract to the General Theory, Routledge.
(History of Economic Ideas)
Toshiaki Hirai (Sophia University, Tokyo)
Keynes has had no equal among economists in terms of the depth of his influences in various fields. The so-called “Keynesian Revolution” is his most important contribution, and yet it shows no more than part of his great achievements. Keynes was an intellectual leader of the Liberal Party. In addition, he himself made an important contribution in the field of philosophy and was a central member of the Bloomsbury Group, to mention only a few achievements.
This book deals with Keynes in, broadly speaking, the following aspects: (a) an economist, (b) a philosopher-ethicist, (c) a human being.
I. An Economist
The papers concerned are sub-divided into theory and economic policy.
1. Theory
Backhouse (ch. 2) deals with the Keynesian Revolution, focusing on the debates, evaluation, and re-evaluation of the past seventy years. He maintains that because the General Theory has two inconsistent theoretical elements (IS-LM and “uncertainty”), the Keynesian Revolution can be approached in two quite different ways: Keynesian orthodox and Post-Keynesian thought. He pays attention to both aspects and yet evaluates the former more highly than the latter. His treatment is fair, for Keynes’s economics was propagated and ruled the roost in the 1940s to the 70s in terms of either of the IS-LM or its extended version together with econometrics and national income accounting. This does not mean, however, that the other component, “uncertainty”, is not important. The General Theory sees the market economy as possessing (i) stability, certainty and simplicity and (ii) instability, uncertainty and complexity.
Laidler (ch. 3) examines Keynes’s account of classical economics, seeing it as a caricature. He argues that classical economics provides the General Theory with invaluable information (cf. p. 42) and that the present-day “New Classical Economics” happens to be the same as what Keynes repudiated as the “Classics”.
Keynes looked at the antecedents of the General Theory (the Mercantilists, Malthus and Hobson), criticizing Ricardo and J.S. Mill.
Laidler criticizes Keynes because he overlooked how classical economists were cautious about Say’s Law and emphasized the role of money. Is this criticism persuasive? First, the “Wicksell Connection” did not pay attention to it. Secondly, the monetary debates in the 19th century did not become the core of classical economics.
Laidler describes the General Theory as having two elements, stating that Keynes’s theory was propagated in the form of the IS-LM theory, and dropped another element: monetary exchange. “[These simplifications] helped to ensure that macroeconomics began to lose sight of this essential feature of his contribution ….” (p. 52) Laidler earlier (1999) evaluated the IS-LM element, arguing that it put together what macroeconomics had developed before the General Theory. In contrast, Laidler here seems to put emphasis on the other element.
Leijonhufvud (ch. 4) favourably insists on the continuity between Marshall and Keynes, criticizing Walrasian theory. His stance is as follows: “Keynes was a Marshallian in the deep sense, … when he broke with Marshall …, their very differences presumed a shared system of thought. Keynes’s claim to greatness as a theorist is based on his departures from Marshall.” (p.77)
Leijonhufvud earlier (1999) classified economists into “Classical” (Marx, Marshall and Keynes) and “Modern” (Arrow, Debreu and Lucas).
This distinction is clear in pp. 59-63. Marshall is regarded as a successor of the Classical tradition, and therefore Marshallian equilibrium theory is regarded as dynamic.
It is true that Marshall consciously worked as a successor to the Classics. His way of argument differed from the Classics, however, since the Classics were concerned with a growth theory and downgraded the concept of equilibrium, while Marshall proposed “a theory of stable equilibrium of normal supply and demand”. Marshallian theory differs from Walrasian theory in important respects, and yet both belong to the Catallactics.
Concerning Keynes, the situation is complicated. After his essay “Alfred Marshall” (1925), there is no record of Keynes’s applauding Marshall. In the General Theory, Marshall appears only as an object of criticism. These criticisms were not trivial, for Keynes worked out his monetary theory of production by overcoming the defects in Marshall’s theory. Although Leijonhufvud refers to two types of effective demand failures, he seems to consider them to be secondary (cf. p. 66).
2. Economic Policy
Hoover (ch. 5) examines Keynes’s theory methodologically. He compares the Marshallian with the Walrasian methodology. Hoover’s stance is as follows: “Keynes’s attitude is similar to Marshall’s, but Keynes is more a physician than archaeologist.” (p.82)
I agree with his view. Keynes always developed a model from a policymaker’s point of view, for it was vital to him to understand where the malaise lay and how to cure it.
Bateman (ch. 15) deals with the difference between Keynes and Keynesianism on economic policy. He argued that Keynes “rarely explicitly supported [deficit spending] policy” (p.275), but rather “espoused a consistent argument that monetary policy should be kept loose.” (p.278)
I agree with this point. Throughout the 1920s, Keynes advocated a policy of a low rate of interest . In 1931 during the Great Depression, he favored lowering the long-term rate of interest, to be followed by a policy of public investment (JMK.13, p. 364). He was also flexible on his prescription, as is seen in How to Pay for the War (1940).
Peden (ch. 6) focuses on “what Keynes said about monetary policy, public investment and fiscal policy in relation to unemployment and inflation.” (p.100) We can see here the relation between Keynes, his disciples and Treasury officials.
II. A Philosopher-Ethicist
The papers concerned are subdivided into philosophy-ethics and political philosophy.
1. Philosophy-Ethics
Since the 1980s, studies on Keynes as a philosopher have appeared. The main problem here is the nature of the Probability (1921. The original work can be traced back to 1907.) and whether it influenced the General Theory (1936). The controversy between the continuity camp and the discontinuity camp has been over how Keynes in the intervening period should be evaluated, given the fact that only a few fragments remain.
The papers here belong to the discontinuity camp. While paying attention to the world events which might have changed Keynes’s thinking (cf. p. 175), Raffaelli (ch. 9) states that Ramsey’s influences on Keynes are well documented while those of Wittgenstein are difficult to prove.
Gillies (ch. 11) describes Keynes’s philosophy after Ramsey’s criticism as “intersubjective” (p. 211), pointing to long-term expectation and “uncertainty.”
Baldwin (ch. 13) examines Keynes as an ethicist. He argued that Keynes first developed an ethical theory as an improvement on Moore’s theory but later abandoned it. Yet Baldwin concluded that “although his later beliefs include a new emphasis on the importance of retaining confidence in social and economic institutions, Keynes remained true to his youthful … [conviction] that “sometimes old duties must go to be replaced by new.” (p.255)
3. Political Philosopher
Brittan (ch. 10) characterised Keynes’s political stance as follows: (a) suspicion of fixed rules, (b) dislike of the money motive, (c) interest in non-conclusive inferences (cf. p. 189). He also maintains that Keynes accepted many of the interventionist conclusions of the old “New Liberals,” while he was an individualist at the personal level (cf. p. 190). It was a surprise to me that Brittan presents Schumpeter as Keynes’s rival since Schumpeter regarded capitalism as inevitably collapsing and provided a blueprint of socialism.
Klaes (ch. 14) seems to state that Keynes was a modernist in the sense of the Bloomsbury Group, although he believes that this should not distract us from “exploring how parts of Keynes’s work may … be expanded” (p. 268) in terms of Post-Modernism.
III. A Human Being
Goodwin (ch. 12) explains how the Bloomsbury principles influenced Keynes in “(a) his professional as well as his personal life and … as (b) a more ethical economist” (p.236).
I agree with point (a), but I doubt (b). I believe that in order to understand Keynes as a whole, a study of the Bloomsbury Group is indispensable. So far, few economists have shown interest in it, and this has been a serious obstacle to understanding the British Society intellectually.
In Marcuzzo (ch.7) I find “Keynes and the Cambridge Economists” interesting, which, based on the huge correspondence, describes a theoretical relation among Keynes and his contemporaries in relation to the Keynesian Revolution.
In Moggridge (ch. 8), what attracted me was “Keynes’s Management of His Intellectual Property”: “Whether it were raising pigs at … Tilton, managing the Cambridge Arts Theatre, or dealing with his publishers, Keynes revelled in the details.” (p.142) This reveals one of his features. The same man who criticized capitalistic society and put forward proposals for an international system was the last person to neglect mundane details.
IV. Some Remarks
The features of this book as a whole are as follows.
1. A propensity to regard the relation between Marshall and Keynes as continuous in terms of theory and methodology.
2. Much attention to Keynes’s philosophical/ethical aspects.
On the other hand, Keynes’s theoretical development and social philosophy are not taken up. The book is too small to cover Keynes’s multifarious aspects. The rest is to be dealt with in other books.
References
Laidler, D. (1999), Fabricating the Keynesian Revolution, Cambridge University Press.
Leijonhufvud, A. (1999), “Mr Keynes and the Moderns” in Pasinett, L. and Shefold, B. eds, The Impact of Keynes on Economics in the 20th Century, Edward Elgar
Hirai, T. (2007), Keynes’s Theoretical Development – from the Tract to the General Theory, Routledge.
(History of Economic Ideas)
Book Review: Keynes and his Battles, Gilles Dostaler
Keynes and his Battles, Gilles Dostaler,
Edward Elgar, Cheltenham (UK) and Northampton (USA), 2007, vi; 374pp
Toshiaki Hirai
I. Introduction
So far we have no economist who surpassed Keynes in terms of profound influences in various fields. The phenomenon in economics and social philosophy known as the “Keynesian Revolution” is the most important among his influences. And yet it occupies no more than a part of his achievements.
As a youth he contributed to the development of philosophy and logic under the influences of G.E. Moore and Russell. He was an intellectual leader of the Liberal Party. He was a central figure of the Bloomsbury Group. He was a splendid and inexhaustible debater, among which impeachment against the Versailles Treaty is well known. He worked as an enthusiastic patron of the artistic activities. He was engaged in managing insurance companies. He was responsible for the financial management of King’s College. He worked as designer of the world order after the Second World War. Surprisingly enough, many of these activities were simultaneously made. His interest was extended indefinitely and his brain incredibly fast worked with vigorous blood flowing through vessel.
The book brilliantly analyzes and describes Keynes as a human being by shedding light on these multiple activities, and tries to explain Keynes’s life in terms of persistence and continuity rather than inconsistency and discontinuity. The reviewer will discuss only a few below from many topics which were very interestin (the main chapters runs as follows: Ch.2 Ethics; Ch.3 Knowledge; Ch.4 Politics; Ch.5 War and Peace; Ch.6 Money; Ch.7 Labour; Ch.8 Gold; Ch.9 Art).
II. The Apostles and the Bloomsbury Group
The apostles and the Bloomsbury Group made profound influence on Keynes’s way of thinking and living on several points.
Firstly, he and his friends such as Lytton Strachey, Leonard Woolf, was greatly enchanted by Moore’s Ethics. This can be discerned in two aspects. One concerns Keynes’s ethics. The other concerns Keynes’s work on probability. It started by criticizing Ch.5, “Ethics in relation to conduct” of Moore’s Principia Ethica, was submitted as fellow dissertation of King’s College, and was finally published in 1921 as A Treatise on Probability. The author puts emphasis on uncertainty as unmeasurable. (he is right, and yet the reviewer thinks that Keynes defines probability as a degree of rational belief between the propositions, which should be objective, and tries to prove induction in terms of pure logic).
Secondly, Keynes was greatly involved in the Bloomsbury Group. The group was a creator of new culture in, among others, literature and painting. It shared Moore’s “religion” and were anti-utilitarians and were critical of women’s discrimination. It was a group in which apostles’ s mind was integrated with artistic value judgment of the Post-Impressionism and new literature movement. The members were, in essence, individualistic liberalists in the sense that they highly rated human relation and beauty, while neglecting the social conventions. This seems to have contributed to the (miraculous) maintenance of friendship among them throughout their lives notwithstanding the occurrence of complicated human and love relations. In the book are these complicated relations vividly described.
III. Political Stance
Since his youth Keynes showed great interest in politics, as is shown by his stance, for example, of the Boer War.
When the (First World) war occurred, Keynes was asked to join the Treasury. He accepted the offer, in spite of the fact that at that time he was making great efforts for the publication of the Probability with help of Russell and Broad. He broke off this work, which resulted in postponing the publication until eight years later.
This war was to change the world considerably. It was no exception to Keynes – the tension with the rest of the Bloomsbury group, his ability and confidence as high official in leading the UK in international finance, the tough fight with the USA in negotiation, the deep disappointment with the development of the Paris Peace Conference, his proposal for reconstructing Europe such as the “Grand Scheme”.
In the 1920s Keynes was greatly involved in the Liberal Party through the management of the Nation and Athenaeum, the Liberal Summer School and so forth. He advocated the New Liberalism – the mid-way house between the Liberalism and Socialism. However, his political activities made a convoluted tour, reflecting the then political situation of the UK. He belonged to the Asquith camp, but later came to approach the Lloyd-George one. After the fatal defeat of the Liberal Party, Keynes moved toward the Labour Party. It should be noted that his socio-philosophical and economic influences manifested themselves among the young politicians such as Dalton and Gaitskell of the Labour Party, although he finally became a Liberal Party member of the House of Lords.
In the book these activities and the complicated political changes of Keynes are brilliantly portrayed.
IV. Economics
In the reviewer’s view The General Theory sees the market economy as possessing two contrasting aspects: (i) stability, certainty and simplicity; (ii) instability, uncertainty and complexity. His fundamental perception of the market economy can be summarized: “The market society is stable in the sense that it can remain in ‘underemployment equilibrium’, but if it goes beyond certain constraints, it becomes unstable”.
In the book reviewed aspect (i) is stressed, while aspect (ii) is rather overlooked. The author argues that aspect (i) can be traced back to the Probability. If The General Theory had lacked in aspect (i), it would not have won such a success. Moreover, Keynes showed aspect (ii) whenever he advocated economic policy.
The reviewer wish that this book would have dealt with Keynes’s colleauges such as Robertson and Hawtrey as economist as well as social philosopher, for Robertson and Hawtrey were not classified by Keynes as “classical economists”.
Again, the book is very readable, and a great contribution to understanding Keynes as a human being endowed with such incredible talents.
（『経済学史研究』に掲載書評のearlier version）
Edward Elgar, Cheltenham (UK) and Northampton (USA), 2007, vi; 374pp
Toshiaki Hirai
I. Introduction
So far we have no economist who surpassed Keynes in terms of profound influences in various fields. The phenomenon in economics and social philosophy known as the “Keynesian Revolution” is the most important among his influences. And yet it occupies no more than a part of his achievements.
As a youth he contributed to the development of philosophy and logic under the influences of G.E. Moore and Russell. He was an intellectual leader of the Liberal Party. He was a central figure of the Bloomsbury Group. He was a splendid and inexhaustible debater, among which impeachment against the Versailles Treaty is well known. He worked as an enthusiastic patron of the artistic activities. He was engaged in managing insurance companies. He was responsible for the financial management of King’s College. He worked as designer of the world order after the Second World War. Surprisingly enough, many of these activities were simultaneously made. His interest was extended indefinitely and his brain incredibly fast worked with vigorous blood flowing through vessel.
The book brilliantly analyzes and describes Keynes as a human being by shedding light on these multiple activities, and tries to explain Keynes’s life in terms of persistence and continuity rather than inconsistency and discontinuity. The reviewer will discuss only a few below from many topics which were very interestin (the main chapters runs as follows: Ch.2 Ethics; Ch.3 Knowledge; Ch.4 Politics; Ch.5 War and Peace; Ch.6 Money; Ch.7 Labour; Ch.8 Gold; Ch.9 Art).
II. The Apostles and the Bloomsbury Group
The apostles and the Bloomsbury Group made profound influence on Keynes’s way of thinking and living on several points.
Firstly, he and his friends such as Lytton Strachey, Leonard Woolf, was greatly enchanted by Moore’s Ethics. This can be discerned in two aspects. One concerns Keynes’s ethics. The other concerns Keynes’s work on probability. It started by criticizing Ch.5, “Ethics in relation to conduct” of Moore’s Principia Ethica, was submitted as fellow dissertation of King’s College, and was finally published in 1921 as A Treatise on Probability. The author puts emphasis on uncertainty as unmeasurable. (he is right, and yet the reviewer thinks that Keynes defines probability as a degree of rational belief between the propositions, which should be objective, and tries to prove induction in terms of pure logic).
Secondly, Keynes was greatly involved in the Bloomsbury Group. The group was a creator of new culture in, among others, literature and painting. It shared Moore’s “religion” and were anti-utilitarians and were critical of women’s discrimination. It was a group in which apostles’ s mind was integrated with artistic value judgment of the Post-Impressionism and new literature movement. The members were, in essence, individualistic liberalists in the sense that they highly rated human relation and beauty, while neglecting the social conventions. This seems to have contributed to the (miraculous) maintenance of friendship among them throughout their lives notwithstanding the occurrence of complicated human and love relations. In the book are these complicated relations vividly described.
III. Political Stance
Since his youth Keynes showed great interest in politics, as is shown by his stance, for example, of the Boer War.
When the (First World) war occurred, Keynes was asked to join the Treasury. He accepted the offer, in spite of the fact that at that time he was making great efforts for the publication of the Probability with help of Russell and Broad. He broke off this work, which resulted in postponing the publication until eight years later.
This war was to change the world considerably. It was no exception to Keynes – the tension with the rest of the Bloomsbury group, his ability and confidence as high official in leading the UK in international finance, the tough fight with the USA in negotiation, the deep disappointment with the development of the Paris Peace Conference, his proposal for reconstructing Europe such as the “Grand Scheme”.
In the 1920s Keynes was greatly involved in the Liberal Party through the management of the Nation and Athenaeum, the Liberal Summer School and so forth. He advocated the New Liberalism – the mid-way house between the Liberalism and Socialism. However, his political activities made a convoluted tour, reflecting the then political situation of the UK. He belonged to the Asquith camp, but later came to approach the Lloyd-George one. After the fatal defeat of the Liberal Party, Keynes moved toward the Labour Party. It should be noted that his socio-philosophical and economic influences manifested themselves among the young politicians such as Dalton and Gaitskell of the Labour Party, although he finally became a Liberal Party member of the House of Lords.
In the book these activities and the complicated political changes of Keynes are brilliantly portrayed.
IV. Economics
In the reviewer’s view The General Theory sees the market economy as possessing two contrasting aspects: (i) stability, certainty and simplicity; (ii) instability, uncertainty and complexity. His fundamental perception of the market economy can be summarized: “The market society is stable in the sense that it can remain in ‘underemployment equilibrium’, but if it goes beyond certain constraints, it becomes unstable”.
In the book reviewed aspect (i) is stressed, while aspect (ii) is rather overlooked. The author argues that aspect (i) can be traced back to the Probability. If The General Theory had lacked in aspect (i), it would not have won such a success. Moreover, Keynes showed aspect (ii) whenever he advocated economic policy.
The reviewer wish that this book would have dealt with Keynes’s colleauges such as Robertson and Hawtrey as economist as well as social philosopher, for Robertson and Hawtrey were not classified by Keynes as “classical economists”.
Again, the book is very readable, and a great contribution to understanding Keynes as a human being endowed with such incredible talents.
（『経済学史研究』に掲載書評のearlier version）
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