The Coming of Keynesianism to America.

The subtitle to this delightful, interesting book tells the editors' approach: "Conversations with the Founders of Keynesian Economics." And that is what it is, a series of reminiscences of twelve persons who began their professional careers in the 1930s. Preceding the conversations is a well-crafted Introduction which could serve as a synopsis for the book's "findings." But to read that alone would do an injustice to the book because so much of the enjoyment is reading the ruminations of those who were present at the (American) creation.

About half are native to the United States: Paul M. Sweezy, the Marxist, of Harvard, who was a student at the LSE in 1932; Alvin Hansen of the frequently cited Fiscal Policy Seminar he conducted jointly with John H. Williams at the then newly founded Littauer School; Walter S. Salant of Harvard, who as a student at Cambridge in 1933-34 listened to Keynes's lectures; Paul Samuelson; and Leon H. Keyserling, a lawyer and New Dealer who was chairman of the Council of Economic Advisors in 1946-49.

There are three Canadians: Robert Bryce, Lorie Tarshis (of the first American Principles book with a Keynesian macroeconomics section, about which much time is spent on it and the subsequent Samuelson text), each of whom spent several pre-General Theory years attending Keynes's Cambridge lectures, and J. K. Galbraith, who in the absence from Cambridge of Keynes due to a heart attack spent 1937-38 discussing the General Theory with Kahn, Joan Robinson, Kalecki, and Sraffa. Bryce and Tarshis were also members of the fabled Keynes Club. "[D]etermined to be a missionary for Keynesian ideas," Bryce delivered to Hayek's seminar at the LSE the first systematic presentation of the General Theory's ideas. He went to Harvard for a few years beginning in 1935 and was with Sweezy the organizer of an informal seminar on Keynes, one in which several of the economists here participated.

Another who recounts his impressions is Abba Lerner, a student and later faculty member at the LSE for whom Keynes wrote to Robbins praising Lerner's "acute and subtle mind" but discouraging an appointment, suggesting instead that Lerner "take up . . . a craft" during the day and pursue economics in his "Talmudist" ways in the evening [pp. 113-15]. Lerner spent half a year at Cambridge, coming to understand the General Theory while listening to Keynes lecturing from its galley proofs.

Evsey Domar and Richard Musgrave's link to Keynes was through attendance at Hansen's Seminar and their subsequent positions at the Board of Governors in the early 1940s, particularly to the Board seminar Keynes delivered in 1943 in which he dismissed Lerner's functional finance, with Lerner in attendance, an occasion vividly recalled in five remembrances. Finally, there is Tibor Scitovsky, who after leaving Budapest went to Cambridge where he had no interaction with Keynes. After receiving a master's from the LSE, he spent some time at Harvard where he "discussed plenty of economics but very little about Keynes" [p. 210].

The book is replete with anecdotes, without fail interesting, germane ones, which makes for a fun read. But that is not the highlight of the conversations. In the same sense, the ample biographical material of the various economists, together with numerous asides on the many strands of interaction with others, though interesting and useful for perspective, is not the main interest. And the "good guys-bad guys," or is it "enlightened vs. Cro-Magnons," assignations, while fun, is similarly not the main theme.

Among the important findings is that Keynesian economics did not really take hold until the War, and by taking hold is meant Keynes as a central focus for theoretical and policy analysis. Thus, the eleven percent annual rate of recovery from 1936 to reattainment of full employment is never attributed to policies stemming from his framework. Though others later may be said to have made use of Keynesianism, there in fact was no direct line stemming from Keynes.

In assimilating and digesting Keynes in America, nothing is heard of any place other than Cambridge, really Harvard, and Washington. Stanford shows up after the War because Scitovsky and Tarshis were there. Prior to the War, it was Hansen's Fiscal Policy Seminar that was the beacon, as attested by Samuelson, Salant, Galbraith to an extent, Domar, and the editors. Hansen takes no explicit credit for his role.

Another point to note is that the Keynesianism of that time considered price movements as a cost plus markup phenomenon, a tradition carried over to the large scale econometric models of forty years later. Excess demand was not a consideration.

Though several comment on the state of the profession in trying to understand the depression, Samuelson in the book's longest chapter, says it best when he points out that explanations of its causes varied - Smoot-Hawley, confluence of cycles - but there nonetheless "was a lot of dissatisfaction, even among orthodox economists, with the simple notion" [p. 147] of letting the price level fall enough to reestablish equilibrium.

The basis for postwar plans to deal with the almost universally expected depression was the War's demonstration that Keynesian economics worked. Of all the economists of whom those included here were aware, there were only two who disagreed with the postwar depression expectation [p. 130]. Interestingly, Keynes did not believe that there would be a postwar depression because Social Security would reduce private saving, thereby generating additional aggregate demand [p. 202]. Keynes's preoccupation with too much saving is another theme. Questions of the national debt held no interest for Keynes. Lastly, several comment on his rude treatment of Lerner's functional finance. Keynes praised it in a letter to Lerner a year later [pp. 116-17].

This is a delightful, insightful book for scholars interested in the history of the Keynesian Revolution. It also is a good read. There is surprisingly little disagreement among the lively conversationalists on the main propositions concerning the development of Keynesianism in America. An additional plus is the index.

Frank G. Steindl Oklahoma State University