ȀȄȇ Partʺ: Economicsinflation rather than maintain the desired real stimulus. Ļe longer-run
effects of Keynesianism are another story.ţŔōŠ ŗőťŚőş“ŏŞśţŐőŐ śšŠ”
Even in its early years, Keynesianism may have been a misfortune. Sounder
developments in economic theory might have gained influence had not
Keynesianism crowded them off the intellectual scene. What Clark War-
burton has called “monetary disequilibrium theory” already had an hon-
ourable tradition, extending back at least as far as David Hume inȀȆȄȁ
and P.N. Christiernin inȀȆȅȀ.ȀEven earlier in that century, a rudimentary
version evidently found successful expression in policy in several Amer-
ican colonies (LesterȀȈȂȈ/ȀȈȆǿ, chaps.ŕŕŕ,ŕŢ, andŢ). Warburton’s own
efforts to extend the theory and the statistical evidence for it in theȀȈȃǿs
andȀȈȄǿs were robbed of attention by the then-prevalent Keynesianism.
A sound approach to macroeconomics, in my view, runs as follows
(it largely overlaps what W.H. Hutt teaches in his own idiosyncratic ter-
minology). Fundamentally, behind the veil of money, people specialise
in producing particular goods and services to exchange them for the
specialised outputs of other people. Any particular output thus consti-
tutes demand for other (non-competing) outputs. Since supply constitutes
demand in that sense, there can be no fundamental problem of deficiency
of aggregate demand. Even in a depression, men and women are will-
ing to work, produce, exchange, and consume. In particular, employers
are willing to hire more workers and produce more goods if only they
could find customers, while unemployed workers are willing and eager to
become customers if only they could be back at work earning money to
spend.
Ļis doctrine is not just a crude, Panglossian version of Say’s Law.
It goes on to recognise that something may be obstructing the transac-
tions whereby people might gratify unsatisfied desires to the benefit of all
concerned. It inquires into what the obstruction might be. In Hutt’s ver-
sion, villains are obstructing the market forces that would otherwise move
wages and prices to market-clearing levels.
Clark Warburton offered a different emphasis. As he argued (e.g.,
ȀȈȅȅ, selectionȀ, esp. pp.ȁȅ–ȁȆ), a tendency towards equilibrium rather
ȀPehr Niclas Christiernin (ȀȆȁȄ–ȀȆȈȈ) was a Swedish philosopher and economist at
the University of Uppsala.