Abstract
Monetarists can be thought of as constituting the majority party among those ranged in opposition to Keynes; as against the Austrians as minority party, whose work is generally less well known. In addition, the monetarist framework of analysis so closely parallels that of Keynes that points of potential conflict are easily identified, and the interesting questions concern the validity of the monetarists’ interpretation of Keynes’s propositions in relation to their own and the provenance of the monetarist model itself, in terms of the relative importance of pre-Keynesian and Keynesian influences.
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Notes and References
See the useful survey by J. Burton, ‘The Varieties of Monetarism and Their Policy Implications’, The Three Banks Review (June 1982) pp. 14–31.
Also of interest is J. E. Meade’s demonstration of the difficulty of trying to assign a particular view to a particular school of thought. See J. E. Meade, ‘Comment on the Papers by Professors Laidler and Tobin’, Economic Journal (March 1981) pp. 49–55.
For an account of this methodology by which theories are assessed on their empirical performance rather than by the degree of realism of their assumptions, see M. Friedman, Essays in Positive Economics (Chicago: Chicago University Press, 1952) pp. 3–43.
M. Friedman, ‘Comments on The Critics’, Journal of Political Economy (Chicago, 1972) p. 908.
H. G. Johnson, Further Essays in Monetary Economics (London: Allen & Unwin, 1972) p. 57.
M. Friedman, The Counter Revolution in Monetary Theory, Wincott Foundation Lecture 1970 (London: IEA, 1970) p. 10.
At least the quantity theory specified by Friedman, though a tradition of monetary effects being transmitted indirectly, via the rate of interest, stretches back to Henry Thornton’s Paper Credit of 1802.
M. Friedman, A Theoretical Framework for Monetary Analysis, Occasional Paper 112 (New York: National Bureau of Economic Research, 1971) p. 27.
M. Friedman, ‘The Quantity Theory of Money: A Restatement’, in M. Friedman (ed.), Studies in the Quantity Theory of Money (Chicago: UCP, 1956) pp. 3–21.
Patinkin’s criticism was contained in D. Patinkin, ‘The Chicago Tradition, The Quantity Theory and Friedman’, The Journal of Money, Credit and Banking (1969) pp. 46–70.
That this is a generally accepted monetarist view, see D. Laidler, ‘Monetarism: An Interpretation and An Assessment’, Economic Journal (March 1981) p. 8.
That Friedman has come to acknowledge that ‘monetarism … has benefited much from Keynes’s work’ and, for example, that his transmission mechanism incorporates ‘the liquidity effect stressed by Keynes’, goes some way to meet Patinkin’s assertion that his framework is Keynesian; but on the question of the relationship of Friedman’s work to particular classical theories and to the ‘oral tradition’ in monetary economics at Chicago, the reader is referred to Patkinkin, ‘The Chicago Tradition’; and the papers by Patinkin and Friedman in Journal of Political Economy (1972).
D. Laidler, The Demand for Money 2nd edn (New York: DunDonnelley, 1977) p. 68.
See G. A. Fletcher, The Discount Houses in London: Principles, Operations and Change (London: Macmillan, 1976) p. 67; J. C. R. Dow, The Management of the British Economy 1945–60 (Cambridge: Cambridge University Press, 1968) pp. 223–7.
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© 1989 Gordon A. Fletcher
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Fletcher, G.A. (1989). Monetarism I: The Counter-Revolution. In: The Keynesian Revolution and its Critics. Keynesian Studies. Palgrave Macmillan, London. https://doi.org/10.1007/978-1-349-20108-2_16
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DOI: https://doi.org/10.1007/978-1-349-20108-2_16
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