Sumner is throwing everything at the wall now in the hope something sticks, using any trick in his book he can to deny it-and he has a lot of tricks. However, here Glasner is calling him out and what's great is Glasner really can't be fooled because he knows his economic history so well.
In his latest Sumner complains about-his friend and fellow Market Monetarist-Glasner not letting him enjoy his weekend:
"David Glasner just won’t let me rest and enjoy my weekend. He continues to insist that Keynes developed the theory that the demand for money is a function of the nominal interest rate (and other variables), and cites a 1935 article by John Hicks. So let’s take a look at a later article by Hicks, the one where he reviewed the GT and developed the famous IS-LM graph."
http://www.themoneyillusion.com/?p=22905&cpage=1#comment-266354
He then quotes extensively from Hicks in his Mr. Keynes and the Classics-the founding document for the famous Neoclassical Synthesis-that post Keynesians see as the zero hour for the bastardization of Keynes-where Hicks introduces his ad hoc IS-LM model. Here Keynes is made to sound like he didn't contribute much to the demand function for money:
"Consequently we have for the General Theory
M= (I,i), Ix=C(i), Ix=S(I).
"With this revision, Mr. Keynes takes a big step back to Marshallian orthodoxy, and his theory becomes hard to distinguish from the revised and qualified Marshallian thoery, which as we have seen, are not new. Is there really any difference between them, or is the whole thing a sham fight?"
Of course, Hicks didn't conclude that it was. This quote might seem to make Sumner's point however, Glasner's quotre of Hicks in 1934 has quite a diffferent implication. Remember in the piece that Sumner is quoting, Hicks is trying to bring back a rapprochement between the Keynesian Revolution and the old Classical school-really the Neoclassical school.
"My suggestion may, therefore, be reformulated. It seems to me that this third theory of Mr. Keynes really contains the most important of his theoretical contribution; that here, at last, we have something which, on the analogy (the approximate analogy) of value theory, does begin to offer a chance of making the whole thing easily intelligible; that it si form this point, not from velocity of circulation, or Saving and Investment, that we ought to start in constructing the theory of money. But in saying this I am being more Keynesian than Keynes [note to Blue Aurora this was written in 1934 and published in 1935]."
http://uneasymoney.com/2013/08/06/hicks-on-keynes-and-the-theory-of-the-demand-for-money/
I've said it a number of times-Sumner is the true heir to Friedman. Here he is doing the same apologetics Friedman did when this question was broached back in his own life time.
"But Friedman was not a Keynesian, and had a radically different way of looking at things. He was quite justified in claiming that the basic building blocks for his theory were there well before Keynes. Indeed Friedman’s approach owes much more to Fisher than to Keynes. Both Fisher and Friedman saw the price level as being the key variable that adjusted to restore monetary equilibrium, not the interest rate. To Friedman the interest rate was a sort of epiphenomenon. And both Fisher and Friedman visualized the Phillips curve model in terms of inflation affecting output, not output affecting inflation (as the Keynesians visualize it.) And so on."
The claim that Freidman's approach owes more to Fisher than Keynes is great because it's a falsifiable claim. A look at the record indeed falsifies it:
These hallmarks of the Keynesian liquidity-preference theory also char-
In his latest Sumner complains about-his friend and fellow Market Monetarist-Glasner not letting him enjoy his weekend:
"David Glasner just won’t let me rest and enjoy my weekend. He continues to insist that Keynes developed the theory that the demand for money is a function of the nominal interest rate (and other variables), and cites a 1935 article by John Hicks. So let’s take a look at a later article by Hicks, the one where he reviewed the GT and developed the famous IS-LM graph."
http://www.themoneyillusion.com/?p=22905&cpage=1#comment-266354
He then quotes extensively from Hicks in his Mr. Keynes and the Classics-the founding document for the famous Neoclassical Synthesis-that post Keynesians see as the zero hour for the bastardization of Keynes-where Hicks introduces his ad hoc IS-LM model. Here Keynes is made to sound like he didn't contribute much to the demand function for money:
"Consequently we have for the General Theory
M= (I,i), Ix=C(i), Ix=S(I).
"With this revision, Mr. Keynes takes a big step back to Marshallian orthodoxy, and his theory becomes hard to distinguish from the revised and qualified Marshallian thoery, which as we have seen, are not new. Is there really any difference between them, or is the whole thing a sham fight?"
Of course, Hicks didn't conclude that it was. This quote might seem to make Sumner's point however, Glasner's quotre of Hicks in 1934 has quite a diffferent implication. Remember in the piece that Sumner is quoting, Hicks is trying to bring back a rapprochement between the Keynesian Revolution and the old Classical school-really the Neoclassical school.
"My suggestion may, therefore, be reformulated. It seems to me that this third theory of Mr. Keynes really contains the most important of his theoretical contribution; that here, at last, we have something which, on the analogy (the approximate analogy) of value theory, does begin to offer a chance of making the whole thing easily intelligible; that it si form this point, not from velocity of circulation, or Saving and Investment, that we ought to start in constructing the theory of money. But in saying this I am being more Keynesian than Keynes [note to Blue Aurora this was written in 1934 and published in 1935]."
http://uneasymoney.com/2013/08/06/hicks-on-keynes-and-the-theory-of-the-demand-for-money/
I've said it a number of times-Sumner is the true heir to Friedman. Here he is doing the same apologetics Friedman did when this question was broached back in his own life time.
"But Friedman was not a Keynesian, and had a radically different way of looking at things. He was quite justified in claiming that the basic building blocks for his theory were there well before Keynes. Indeed Friedman’s approach owes much more to Fisher than to Keynes. Both Fisher and Friedman saw the price level as being the key variable that adjusted to restore monetary equilibrium, not the interest rate. To Friedman the interest rate was a sort of epiphenomenon. And both Fisher and Friedman visualized the Phillips curve model in terms of inflation affecting output, not output affecting inflation (as the Keynesians visualize it.) And so on."
The claim that Freidman's approach owes more to Fisher than Keynes is great because it's a falsifiable claim. A look at the record indeed falsifies it:
These hallmarks of the Keynesian liquidity-preference theory also char-
acterize Friedman's exposition. It should be said that Friedman has taken
some account of criticisms and has in recent years partly acknowledged
this intellectual indebtedness. Thus in his 1956 essay Friedman presented
his analytical framework as one that "conveys the flavor" of the Chicago
quantity-theory tradition of Simons, Mints, Knight, and Viner and did
not even mention Keynes or the liquidity-preference theory (Friedman
1956, pp. 3-4). In contrast, in his 1968 and 1970 essays he does not
mention either the Chicago School or its individual members-and he de-
scribes his framework as "a reformulation of the quantity theory that has
been strongly affected by the Keynesian analysis of liquidity preference"
(Friedman 1968, p. 439b).
At the same time, Friedman has not yet faced up to the implications of
the fact6 that whatever the similarities in policy proposals (and there are
significant differences here too [Patinkin 1969a, p. 47]), the theoretical
framework of the Chicago School of the 1930s and 1940s-a major center
of the quantity theory at the time-differed fundamentally from his. In
particular, the Chicago School-as exemplified especially by Henry
Simons-was basically not interested in the demand function for money
(Simons never even mentioned this concept! ) and carried out its analysis
instead in terms of Fisher's MV - PT equation. Furthermore (and in
marked contrast with Friedman) the basic assumption of the Chicago School
analysis was that the velocity of circulation is unstable. Correspondingly,
it considered sharp changes in this velocity to be a major source of in-
stability in the economy.
I note that Sumner gave me no Hat Tip-though I suspect it was my comments earlier where I quoted Glasner that ruined his relaxation.
See Glasner today: yet more on it! (Sumner comments there too)
ReplyDelete