This chapter investigates the nature of the transformation of macroeconomics by focusing on the impact of the Great Depression on economic doctrines. There is no doubt…
This chapter investigates the nature of the transformation of macroeconomics by focusing on the impact of the Great Depression on economic doctrines. There is no doubt that the Great Depression exerted an enormous influence on economic thought, but the exact nature of its impact should be examined more carefully. In this chapter, I examine the transformation from a perspective which emphasizes the interaction between economic ideas and economic events, and the interaction between theory and policy rather than the development of economic theory. More specifically, I examine the evolution of what became known as macroeconomics after the Depression in terms of an ongoing debate among the “stabilizers” and their critics. I further suggest using four perspectives, or schools of thought, as measures to locate the evolution and transformation; the gold standard mentality, liquidationism, the Treasury view, and the real-bills doctrine. By highlighting these four economic ideas, I argue that what happened during the Great Depression was the retreat of the gold standard mentality, the complete demise of liquidationism and the Treasury view, and the strange survival of the real-bills doctrine. Each of those transformations happened not in response to internal debates in the discipline, but in response to government policies and real-world events.
Marshall, Pigou, and Keynes on one side of the Atlantic, and Fisher on the other, had different approaches to the quantity theory of money. But they shared its basic framework, with the result that theoretical discussions did not prevent some degree of mutual support on policy proposals. If a divergence there was, at this stage, this pertained the feasibility of Fisher’s proposals, because Fisher’s enthusiasm for reform could find no match at Cambridge. This notwithstanding, and although in varying degrees, Marshall, Pigou, and Keynes were sympathetic with Fisher’s battle for “stable money.” Indeed, a fragment from the Keynes Papers shows that, at a very early stage of his career, Keynes paid great attention to Fisher’s empirical research on the relationship between “Appreciation and interest,” taking the relation between nominal and real rates of interest as a possible explanation of the trade cycle. For some time at least, this widened the common ground upon which Fisher’s proposals for “stable money” could find some support at Cambridge.
The 40-letter correspondence concerning the French translation of The General Theory, between John Maynard Keynes and his translator, Jean de Largentaye, is a testimony of…
The 40-letter correspondence concerning the French translation of The General Theory, between John Maynard Keynes and his translator, Jean de Largentaye, is a testimony of their close collaboration, which also involved Piero Sraffa in 1938 and 1939. Largentaye’s lexicon appears at the end of the French edition, providing definitions in French of technical terms used by Keynes. After its publication by Payot in 1942, the French edition of The General Theory was well received in France and no doubt contributed to the economic and social successes of the country in the subsequent 25 years.
Kendall P. Cochran has claimed that John Maynard Keynes “developed a theory that would try ‘to account for things as they are’. In so doing he became another important…
Kendall P. Cochran has claimed that John Maynard Keynes “developed a theory that would try ‘to account for things as they are’. In so doing he became another important social economist.
The first foreign-language publication of The General Theory of Employment, Interest and Money by John Maynard Keynes was published in German in the same year as the…
The first foreign-language publication of The General Theory of Employment, Interest and Money by John Maynard Keynes was published in German in the same year as the English original in 1936. The article discusses some quality problems of the translation, but focuses in particular on the controversies which evolved around interpretations of the Preface Keynes wrote for the German edition. Whereas a margin of doubt remains as to the responsibility for the text which finally appeared in German, any accusations that Keynes had sympathies for or was indifferent to the Nazi regime are clearly rejected.
Although the global economic crisis that began in 2007 has renewed interest in Keynes among the wider educated public, graduate courses in macroeconomics usually teach…
Although the global economic crisis that began in 2007 has renewed interest in Keynes among the wider educated public, graduate courses in macroeconomics usually teach little about Keynes and the issues he analyzed, and what little they teach is often wrong (e.g., that Keynes assumed an arbitrarily fixed money wage rate or that he ignored expectations). Consequently, as macroeconomists turn their attention to the possibility, causes and consequences of financial crises and global depression, they do not have access to the insights into these questions produced by earlier generations of economists. The time and attention constraints of theory courses do not allow simply directing the students to the extensive scholarly literature on the economics of Keynes, so this paper offers a suggested introduction to the economics of Keynes for a graduate course in macroeconomics.
The Austrian economist Ludwig Lachmann claimed that Keynes was a lifelong subjectivist. To evaluate this, we start by distinguishing Keynes’ writings on probability theory from his writings on economics. In the General Theory (1936), Keynes’ treatment of expectations provides the basis for Lachmann’s view that Keynes was a subjectivist at heart. In his Treatise on Probability (1921), Keynes refers explicitly to the subjectivism–objectivism divide in probability theory and pins his colors to the objectivist mast. In this essay, we present the objectivist slant in Keynes’ earlier writings on probability theory. Thereafter, we evaluate the criteria Lachmann employed to cast Keynes as a subjectivist.
The notes reproduced here were taken by Glenn Johnson in Lloyd Mints’ course on Money and Banking at the University of Chicago in the fall of 1946. Several additional sets…
The notes reproduced here were taken by Glenn Johnson in Lloyd Mints’ course on Money and Banking at the University of Chicago in the fall of 1946. Several additional sets of course notes taken by Glenn Johnson have been published in the archival volumes of Research in the History of Economic Thought and Methodology. These included notes from Frank Knight's course on economic theory (Volume 24C) and Albert L. Meyer's course entitled elements of modern economics (appearing in this volume). A brief biography of Glenn Johnson is provided in Volume 24C, along with notes from his course on Agricultural Economics Methodology taught at Michigan State University.