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The Pragmatic Basis of Keynes's Political Economy*

Published online by Cambridge University Press:  03 February 2011

Dudley Dillard
Dudley Dillard
Affiliation:
University of Maryland
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Extract

Although we still live in the shadow of the years between the First and the Second World Wars, already it seems quite clear that future historians of economic thought will regard John Maynard Keynes as the outstanding economist of this turbulent period. As one writer has recently said, “The rapid and widespread adoption of the Keynesian theory by contemporary economists, particularly by those who at first were highly critical, will probably be recorded in the future history of economic thought as an extraordinary happening.” Book after book by leading economists acknowledges a heavy debt to the stimulating thought of Lord Keynes. The younger generation of economists, especially those whose thinking matured during the great depression of the thirties, have been particularly influenced by him.

Type
Articles
Information
The Journal of Economic History , Volume 6 , Issue 2 , November 1946 , pp. 121 - 152
Copyright
Copyright © The Economic History Association 1946

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References

1 von Mering, Otto, “Some Problems of Methodology in Modern Economic Theory,” The American Economic Review, XXXIV (1944), 87.Google Scholar

2 See, for example, the recent books and other writings of J. W. Angell, A. H. Hansen, R. F. Harrod, R. G. Hawtrey, J. R. Hicks, M. Kalecki, A. P. Lerner, A. R. Marget, J. E. Meade, A. C. Pigou, D. H. Robertson, and Joan Robinson.

3 Throughout this article I have used the terms “classical economics” and “classical economists” in the sense in which Keynes uses them in his General Theory of Employment, Interest and Money (London: Macmillan and Company, 1936)Google Scholar. He defines the classical economists as the followers of Ricardo, including among others J. S. Mill, Alfred Marshall, and A. C. Pigou. As Keynes points out, this is not the original meaning of the term “classical economist.” Nevertheless, in discussing Keynes's thinking, his terminology serves the purpose of distinguishing Keynes's economics from the orthodox, traditional principles of economics.

4 (New York: Harcourt, Brace and Company, 1930), Vol. I, chap, xiv, “The Industrial Circulation and the Financial Circulation.”Google Scholar

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7 Cf. Report of the Royal Commission on Indian Currency and Finance (London: His Majesty's Stationery Office, 1926), I.Google Scholar

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9 (New York: Harcourt, Brace and Company, 1920), p. 25.

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11 Economic Consequences of the Peace, p. 22.

12 Ibid., p. 19.

13 Laissez-faire and Communism (New York: New Republic, 1926), pp. 76–77.Google Scholar

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18 See Keynes's testimony on the capital levy before the Committee on National Debt and Taxation, Minutes of Evidence (1927), II, 534–40.Google Scholar

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21 Ibid., pp. 44–45.

22 Ibid., p. 13.

23 The American edition is entitled The Economic Consequences of Sterling Parity (New York: Harcourt, Brace and Company, 1925)Google Scholar. The following quotations are from the American edition.

24 Treatise on Money, II, 182.

25 Cf. Clapham, John H., An Economic History oj Modern Britain (New York: The Macmillan Company, 1938), III, 542–45.Google Scholar

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31 Ibid., p. 11.

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37 For a standard textbook view of the relation between monetary control and public works, see Estey, James Arthur, Business Cycles; Their Nature, Cause, and Control (New York: Prentice-Hall, 1941), p. 405.Google Scholar

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52 General Theory, p. 189.

53 Economica, III (1936), 124.Google Scholar

54 Sec especially the running controversy in The Economic Journal in 1037 and 1938. In addition to Keynes, the participants included Bcrtil Ohlin, D. H. Robertson, R. G. Hawtrcy, and A. P. Lerncr.

55 The Quarterly Journal of Economics, LI (1937), 216.Google Scholar

56 The Economic Journal, XLVIII (1938), 318–19, 320.Google Scholar

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59 See my “Silvio Gesell's Monetary Theory of Social Reform,” The American Economic Review, XXXII (1942).Google Scholar

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63 Cf. Viner, Jacob, “Marshall's Economics, The Man and His Times,” The American Economic Review, XXXI (1941), 225.Google Scholar

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65 Essays in Persuasion, p. 327.

66 Ibid., p. 343.

67 Ibid., p. 324. The British election of 1945 seems to indicate that many of the “educated bourgeoisie” disagree with Keynes regarding membership in the Labour party. Approximately one half of the Labour Members of Parliament elected in the overwhelming Labour victory are from middle-class professions and trades.

68 Ibid., p. 342.

69 The Political Quarterly, I (1930), 110–24.Google Scholar

70 How to Pay for the War; A Radical Plan for the Chancellor of the Exchequer (New York: Harcourt, Brace and Company, 1940), p. 5.Google Scholar

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72 London: Macmillan and Company, 1937.

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74 Ibid., p. 99.

75 “I am no Marxian. Yet I sufficiently recognize the greatness of Marx to be offended at seeing him classed with Silvio Gesell and Major Douglas.”— Schumpeter, J. A., in his review of Keynes's General Theory in the Journal of the American Statistical Association, XXXI 1936), 791–95.CrossRefGoogle Scholar

76 For example, by Veblen, Thorstein in Absentee Ownership and Business Enterprise in Recent Times; the Case of America (New York: B.W. Huebsch, 1923Google Scholar) and by Berle, Adolf A. and Means, G. C. in The Modern Corporation and Private Property (New York and Chicago: Commerce Clearing House, 1932)Google Scholar.

77 Laissez-faire and Communism, p. 64.

78 The Times (London), 05 1,1927, p. 7.Google Scholar

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80 Laissez-faire and Communism, p. 130. There is no evidence from Keynes's published writings that his fundamental skepticism of and dislike for the economic structure of Soviet Russia ever changed in any important respect. On the contrary, such positive evidence as exists in occasional references in his later writings indicates a continuation of his earlier bias. See General Theory, pp. 380, 381; How to Pay for the War, pp. 7, 53, 55.

81 Laissez-faire and Communism, p. 131.

83 See Tawney, R. H., Religion and the Rise of Capitalism (Pelican Books, 1938), p. 48Google Scholar. For Keynes's strictures on usury, see his General Theory, pp. 241, 340, 351–53. For Keynes's acceptance of the labor theory of value, see the General Theory, pp. 213–14.

84 Heckscher, Eli F., Mercantilism (London: G. Allen and Unwin, 1935), II, esp. pp. 316–24.Google Scholar

85 General Theory, p. 31.