Jim Devine wrote:
However, you never explain why the "Tract" wasn't essentially
monetarist, which was deLong's point.
Actually, I did. The ontological and psychological ideas to which I
pointed, e.g. the positing of an irrational "love of money" rooted in
"deep instincts," produce an understanding of the demand for money
different from "monetarism."
Thus, immediately preceding the claim that "in the long run we are all
dead," he points implicitly to the social ontological fact that social
relations are internal relations:
"Every one admits that the habits of the public in the use of money
and of banking facilities and the practices of the banks in respect of
their reserves change from time to time as the result of obvious
developments. These habits and practices are a reflection of changes
in economic and social organisation."
Immediately following the claim, he points, as examples of factors not
taken account of "by careless adherents of the quantity theory," to
forms of irrational hoarding.
"Before the war (and indeed since) there was a considerable element of
what was conventional and arbitrary in the reserve policy of the
banks, but especially in the policy of the state banks towards gold
reserves. These reserves were kept for show rather than for use, and
their amount was not the result of close reasoning. There was a
decided tendency on the part of these banks between 1900 and 1914 to
bottle up gold when it flowed toward them and to part with it
reluctantly when when the tide was flowing the other way.
Consequently, when gold became relatively abundant they tended to
hoard what came their way and to raise the proportion of the reserves,
with the result that the increased output of South African gold was
absorbed with less effect on the price level than would have been the
case if an increase of _n_ [the quantity of money] had been totally
without reaction on the value of _r_ [the proportion of their
"potential liabilities" banks keep in cash].
"In agricultural countries where peasants readily hoard money, an
inflation, especially in its early stages, does not raise prices
proportionately, because when, as a result of a certain rise in the
price of agricultural products, more money flows into the pockets of
the peasants, it tends to stick there; deeming themselves that much
richer, the peasants increase the proportion of their receipts that
they hoard." (pp. 65-6)
Keynes pointed particularly to the "bullionist complex" of the Bank of
France and Indian peasant hoarding as having these effects.
By Hayek's "monetarism," I meant his idea that "if the quantity of
money could only be kept _constant_ in all circumstances, none of
these complications [the misdirection of investment in a boom] would
arise."
Keynes says of it:
"at this point we are in deep water. 'The wild duck has dived down to
the bottom - as deep as she can get - and bitten fast hold of the weed
and tangle and all the rubbish that is down there, and it would need
an extraordinarily clever dog to dive after and fish her up again."
http://www.marxists.org/reference/subject/economics/keynes/general-theory/ch14.htm
The idea of "blindness" is part of the same psychological theory.
It's used by Keynes to explain inability to see what ought to be
obvious, e.g Hayek's inability to comprehend the argument of the
Treatise on Money.
So "talk about "social ontological and psychological ideas" is
relevant to "talking about economics."
In any event, DeLong was explicitly questioning the interpretive
claims I've just again been making.
>Keynes wasn't an "economist" in the contemporary sense. He didn't
take the
>"economic approach"...
????
Then why would he write: "I find myself moved... to remind
contemporary economists that the classical teaching embodied some
permanent truths of great significance.... There are in thse matters
deep undercurrents at work, natural forces, one may call them, even
the invisible hand, which are operating towards equilibrium..." ?
Keynes was a more subtle and complicated thinker than you recognize.
<http://mailman.lbo-talk.org/2001/2001-July/012896.html>
Ted
_______________________________________________
pen-l mailing list
[email protected]
https://lists.csuchico.edu/mailman/listinfo/pen-l
