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Perspectives on the History of Economic Thought, vol. 5-6.

These two volumes contain a selection of the papers presented at the History of Economics Society meetings hosted by the University of Richmond, Richmond, Virginia in June 1989. The great variety of themes touched upon in the contributions, attests the vitality of the history of economic thought. On the other hand, the lack of cohesiveness of both volumes illustrates the persistent doubts of the discipline about its subject matter.

Part I of Volume 5 provides a good idea as to how economists in general can learn from the past. Louis Baeck suggests that the "Mediterranean tradition in economics," starting with Aristotle's Ethica Nichoniachea, may well cast light on the contemporary debates about the relationship between economics and ethics. Besides, he makes the point that an important root of this tradition, namely, the economic thought of classical Islam, has been neglected. To the extent that "Islam's contribution to economic thought is more than simply a link in the transmission of classical culture to Europe" [p. 4], a great deal of original ideas remains in obscurity. The limitations of the history of economics are not simply spatial; they also apply to time. In his "Information and Risk in the Medieval Doctrine of Usury during the Thirteenth Century," Andre Lapidus clearly demonstrates how contemporary concepts can participate in reformulating old problems, although "it is not [his] intention to discover a first draft of modern economic theory in these thirteenth century writings" [p. 23]. Similarly, Todd Lowry shows that economics has a past which surreptitiously determines the nature of today's theory. For example, he argues that emphasis upon entrepreneurship is the outcome of the individual decision-making, stemming from "interest in and respect for leadership positions in antiquity" [p. 39]. Nowhere in the volume is the problem of the place of "history" in the history of economics as well addressed as in these three contributions.

Part Two deals with "variations on classical themes." The papers presented here try to correct, indeed enrich, traditional interpretations. In this regard, Antoin Murphy claims that the "antipathy towards Law during the French Revolution has a modem parallel in the distrust and neglect modern economists have also shown towards him" [p. 49]. As a result, commentators have put aside some modernistic aspects of Law's conception of money, more particularly, his insights into the notion of the demand for money and his formulation of "the law of one price for internationally traded goods" [p. 50). Addressing "Das Adam Smith Problem," Mary Ann and Robert Dimand maintain that The Wealth of Nations and The Theory of Moral Sentiments are consistent with each other in a stronger sense than is usually alleged. The authors emphasize the compatibility of moral sentiments with the competitive general equilibrium. However, in order to be complete, the demonstration of consistency should include clarifications as to whether or not economic mechanisms affect the nature and "logic" of moral sentiments, and therefore their leverage on economic behaviors. Finally, John Vint argues that McCulloch is the founder of the "rigid" version of the wages fund doctrine, thus meaning that he strove "to protect the idea of a predetermined real wages fund from the notion of wages paid in money" (p. 74). On the other hand, Mill's ambiguous formulation of this doctrine marks the surrender of the theory. Using a Lakatosian framework, Vint concludes that, provided the lack of a genuine alternative, it is no wonder that attempts either to revive the doctrine (Cairnes) or to limit its weaknesses (1871 edition of Mill's Principles) follow the "surrender."

Part Three contains two papers. In the first one, Thomas Humphrey argues that the controversy between Kaldor and Friedman about monetary mechanisms traces back to much older debates (older than the assimilation of the dispute to a post-Keynesian development would suggest). In fact, this controversy echoes the currency school-banking school debate. This conclusion appears somewhat disappointing, for the author does not elucidate exactly why the classical debate survives in a slightly different form. The second paper investigates the analogy between medical and commercial responses to competing therapies in early Victorian England. If we accept Timothy Alborns contention that such similarities "can be attributed to the similar standing and aspirations of the commercial and medical professions" [p. 105], it follows that we have to take into consideration the way economists and doctors represented their role in society. Now, when we consider the respective influence of medicine and economics on the formation of this perception, it is quite clear that the influence of economic discourse is much more of a determinant. Consequently, the "similarities" mentioned by Alborn are not so surprising.

The closing part addresses "Topics in the Economics of Marxism." Zoltan Kenessey wonders: "Why Das Kapital remained unfinished?" He stresses the intellectual difficulties of the undertaking. Using the correspondence of Marx and the Amsterdam materials (housed in the archives of the International Institute of Social History), Kenessey demonstrates that, due to the limitations of the day, Marx's willingness to base a mathematical theory of business cycle on statistical data ended up in a failure. In a sense, Johan Lonnroth's paper complements Kenessey's. As Kenessey shows that the apologists of Marx perhaps failed to understand his intellectual ambitions, Lonnroth maintains that the Swedish opponents to Marx gave a biased, indeed unfair, treatment of his works, thereby favoring the defeat of Marxism.

Volume 6 is mainly devoted to Keynesian topics. In the first paper of Part 1, O'Donnel convincingly argues that Keynes had a political philosophy, in which two influences prevail: Moore and Burke. The former is essential to comprehend Keynes's definition of "politics as a means to ethical ends" [p. 6]; the latter reinforces Keynes's opposition to any "change which ushered in certain evil in the present in the hope of far greater good in an uncertain future" [p. 9]. Besides, O'Donnel regards Keynes's political position as unconventional. Yet such characterization is not so amazing as long as we bear in mind the primacy of ethics over politics in Keynes's political philosophy. In "|A Prodigy of Constructive Work': J. M. Keynes on Indian Currency and Finance," Robert Dimand scrutinizes Keynes's early views on monetary policy. According to the author, Keynes sketches in this book what was to become the theoretical framework of the Bretton Woods system.

Part II groups together three articles which evaluate the impact of The Economic Consequences of the Peace (ECP) in Britain, United States and Italy. Using Keynes's own distinction between inside and outside opinion, John Hemery shows that the latter displays very contrasted reactions. As for inside opinion, he claims that it "remained essentially unchanged by Economic Consequences" [p. 451. Broadly speaking, ECP had a "surprisingly limited impact in Britain" [p. 521. On the other hand, Charles Blitch claims that Keynes's work had a great influence on the "American perception of the Treaty of Versailles and its League Covenant" [p. 66]. More generally, Blitch's remarks about Allyn Young's perspective on the Treaty clearly illustrate the fact that controversies about Keynes's book mainly depended on a different appreciation of the place of political issues in political economy. Domenico da Empoli's paper demonstrates that the concordance of Italian public opinion with Keynes's ECP was just occasional. More precisely, the "acceptance" of Keynes's views stems from the existence of several perspectives on the Treaty, which were not mutually incompatible. In any case, although well accepted, ECP was not praised for its economic arguments.

Part III includes two papers presenting Hayek's and Hutt's criticism of Keynes. According to Gilles Dostaler, the persistence of Keynesianism in a new form together with the emergence of the new classical macroeconomics - inspired by Hayek - provide an opportunity to renew the debate between the latter and Keynes. Despite some methodological similarities, the respective doctrines of Keynes and Hayek appear to be irreconcilable with each other on the question of capital, saving and interest. More specifically, Hayek's position on the origin of crisis is incompatible with Keynes's in the sense that Hayek believes that "|it is the rate of saving which sets the limits to the amount of investment that can be successfully carried through'" [p. 961. Even if the debate between Hayek and Keynes resembles eighteenth-century quarrels about the relationships between saving and investment, it is doubtful whether the comparison also applies to the appreciation of the role of government in economic activity, as suggested by Dostaler [p. 99]. In his "Hutt and Keynes," Leland Yeager insists that, unlike Keynes, "Hutt's macroeconomics is more disaggregative and micro-oriented" [p. 103]. Similarly, Hutt focuses on wrong pricing and the failure of markets to clear [p. 1051, thus paralleling Clower and Leijonhufvud line of argument about incomplete and imperfect information. Finally, Hutt's "style of argument" as well as Keynes's novelty account for the eclipse of the South African author's work.

Part IV is a potpourri. In the first paper, Hans Brems sets out to test whether the Austrian time-interest equilibrium would survive the relaxation of the assumption of stationary technology. In order to do so, he builds an optimal-replacement model including technological progress. He finds that a "lower rate of interest would tilt the balance in favour of more frequent replacement, that is, shorter useful life, thus reversing Austrian time-interest doctrine" [p. 1251. In his paper on Wicksell, Bo Sandelin intends to correct die customary interpretation that there is no real Wicksell effect in Wicksell. To the extent that the latter does take into account the modifications occurring in the value of capital as the wage rate and the rate of return change with changes in techniques, there is no room for "an assertion that |the real Wicksell effect does not appear in Wicksell in any guise"' [p. 133]. Charles Clark's article on "Naturalism in Economic Theory" closes the volume. Clark convincingly argues that the abstraction of mainstream economics from "non-natural forces" comes together with "state of nature" explanations which were already in use among some of the Enlightenment philosophers.

The papers presented in these two volumes justify the title of the series. Indeed, in addition to shedding new light on important themes in the history of economic thought, the contributions exhibit alternative methodological approaches to studying the past. That such a variety results in heterogeneousness, shows that a precise definition of the subject matter of the discipline is still wanting.
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Author:Fontaine, Philippe
Publication:Southern Economic Journal
Article Type:Book Review
Date:Jul 1, 1992
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