Postscript: When Keynes was a Monetarist

Abstract

It is significant that during the post General Theory period Keynes did not repudiate his early writings on money. Although, even before it went to press, Keynes recognised A Treatise on Money as the premature and confused expression of revolutionary new ideas, his earlier work — A Tract on Monetary Reform — is a masterpiece without blemish. It deserves greater attention. Indeed, Friedman has expressed the opinion that the Tract is ‘the most explicitly monetarist work amongst the writings of the Cambridge School’ (Presley, 1985, p. 2).¹ The reasons derive from the book’s principal concern which is that savings, investment, production, and employment depend upon stability in the value of money; that, without a scientific understanding of money matters, the order of society is threatened.

Keynes’s Tract on Monetary Reform (1923) was largely forgotten as the economics profession swung toward the Keynes of the General Theory. (Dorn, 1987, p. 13)