2013년 7월 28일 일요일

[발췌: Hayek's LLL, vol. 2. chapter 9] 'Social' or Distributive Justice

출처: F. A. Hayek, Law, Legislation and Liberty, Vol. 2: The Mirage of Social Justice (University of Chicago Press, 1976)
자료: 구글도서

Chapter 9. 'Social' or Distributive Justice  (p. 62)

※ 발췌 /  excerpts of which: 

p. 78~: 

( ... ... ) inspector of taxes and the inventor of a life-saving drug, of the jet pilot or the professor of mathematics, the appeal to 'social justice' does not give us the slightest help in decidingㅡand if we use it it is no more than an insinuation that the others ought to agree with our view without giving any reason for it.

  It might be objected that, although we cannot give the term 'social justice' a precise meaning, this need not be a fatal objection because the position may be similar to that which I have earlier contended exists with regard to justice proper: we might not know what is 'socially just' yet we know quite well what is 'socially unjust'; and by persistently eliminating 'social injustice'. This, however, does not provide a way out of the basic difficulty. There can be no test by which we can discover what is 'socially unjust' because there is no subject by which such an injustice can be committed, and there are no rules of individual conduct the observance of which in the market order would secure to the individuals and groups the position which as such (as distinguished from the procedure by which it is determined) would appear just to us. [21] It does not belong to the category of error but to that of nonsense, like the term of 'a moral stone'.

The meaning of 'social'  (p. 78)

( ... ... )

'Social injustice' and equality  (p. 80)

( ... ... )

'Equality of opportunity'  (p. 84)

( ... ... )

'Social justice' and freedom under the law  (p. 85)

The idea that men ought to be rewarded in accordance with the assessed merits or deserts of their services 'to society' presupposes an authority which not only distributes these rewards but also assigns to the individuals the tasks for the performance of which they will be rewarded. In other words, if 'social justice' is to be brought about, the individuals must be required to obey not merely general rules but specific demands directed to them only. The type of social order in which the individuals are directed to serve a single system of ends is the organization and not the spontaneous order of the markets, that is, not a system in which the individuals is free because bound only by general rules of just conduct, but a system in which all are subject to specific directions by authority.

  It appears sometimes to be imagined that a mere alteration of the rules of individual conduct could bring about the realization of 'social justice'. But there can be no set of such rules, no principles by which the individuals could so govern their conduct that in a Great Society the joint effect of their activities would be a distribution of benefits which could be described as materially just, or any other specific and intended allocation of advantages and disadvantages among particular people or groups. In order to achieve any particular pattern of distribution through the market process, each producer would have to know, not only whom his efforts will benefit (or harm), but also how well off all the the other people (actually or potentially) affect by his activities will be as the result of the services they are receiving from other members of the society. As we have seen earlier, appropriate rules of conduct can determine only the formal character of the order of activities that will form itself, but not the specific advantages particular groups or individuals will derive from it.

   This rather obvious fact still needs to be stressed since even eminent jurists have contended that the substitution of 'social' or distributive for individual or commutative justice need not destroy the freedom under the law of the individual. Thus the distinguished German legal philosopher Gustav Radbruch explicitly maintained that 'the socialist community would also be a ^Rechtstaat^ [i.e., the Rule of Law would prevail there], although a ^Rechtstaat^ governed not by commutative but by distributive justice.'[31] And of France it is reported that 'it has been suggested that some highly placed administrators should be given the permanent task of "pronouncing" on the distribution of national income, as judges pronounce on legal matters."[32] Such beliefs, however, overlooks the fact that no specific pattern of distribution can be achieved by making the individuals obey rules of conduct, but that the achievement of such particular pre-determined results requires deliberate co-ordination of all the different activities in accordance with the concrete circumstances of time and place. It precludes, in other words, that the several individuals act on the basis of their own knowledge and in the service of their own ends, which is the essence of freedom, but requires that they be made to act in the manner in which according to the knowledge of the directing authority is required for the realization of the ends chosen by the authority.

  The distributive justice at which socialism aims is thus irreconcilable with the rule of law, and with that freedom under the law which the rule of law is intended to secure. The rules of distributive justice cannot be rules for the conduct towards equals, but must be rules for the conduct of superiors towards their subordinates. Yet though some socialists have long ago themselves drawn the inevitable conclusion that 'the fundamental principles of formal law by which every case must by judged according to general rational principles... obtains only for the competitive phase of capitalism,'[33] and the communists, so long as they took socialism seriously, had been proclaimed that 'communism means not the victory of socialist law, but the victory of socialism over any law, since with the abolition of classes with antagonistic interests, law will disappear altogether',[34] when, more than 30 years ago, the present author made this the central point of discussion of the political effects of socialist economic policies,[35] it evoked great indignation and violent protests. But the crucial point is implied even in Radbruch's own emphasis on the fact that the transition from commutative to distributive justice means a progressive displacement of private by public law,[36] since public law consists not of rules of conduct for private citizens but of rules of organization for public officials. It is, Radbruch himself stresses, a law that subordinates the citizens to authority.[37] Only if one understands by law not the general rules of just conduct only but any command issued by authority (or any authorization of such commands by a legislature), can the measures aimed at distributive justice by represented as compatible with the rule of law. But this concept is thereby made to mean mere legality and ceases to offer the protection of individual freedom which it was originally intended to serve.

  There is no reason why in a free society government should not assure to all protection against severe deprivation in the form of an assured minimum income, or a floor below which nobody need to descend. To enter into such an insurance against extreme misfortune may well be in the interest of all; or it may be felt to be a clear moral duty of all to assist, within the organized community, those who cannot help themselves. So long as such a uniform minimum income is provided outside the market to all those who, for any reason, are unable to earn in the market an adequate maintenance, this need not lead to a restriction of freedom, or conflict with the Rule of Law. The problem with which we are here concerned arise only when the remuneration for services rendered is determined by authority, and the impersonal mechanism of the market which guides the direction of individual efforts is thus suspended.

  Perhaps the acutest sense of grievance about injustice inflicted on one, not by particular persons but by the 'system', is that about being deprived of opportunities for developing one's abilities which others enjoy. ( ... p. 87 )

[발췌: A.O. Ebenstein's Friedrich Hayek] The Fatal Conceit

출처: A. O. Ebenstein, Friedrich Hayek: A Biography (2001, 2003)
자료: 구글도서

A Chapter the title of which is "The Fatal Conceit" (p. 306)

※ 발췌 / excerpts of which

pp. 306~307 unavailable.

p. 308:

( ... ... ) productive as possibleㅡas they can. Rules are necessary in every society. The golden question is what rules should be.

  As Hayek completed ^Law, Legislation and Liberty^ during the later 1970s, he was reluctant to publish what he thought would be his last major work without "at least indicating in what direction" his ideas were heading. He added an epilogue, the Hobhouse Lecture, to the work, which expressed "more directly the general view of moral and political evolution which has guided me in the whole enterprise." [2] He originally thought that ^Law, Legislation and Liberty^ would be his final work, on which he endeavored longer than any other project during his career.

  16 years elapsed between when Hayek commenced work on ^Law, Legislation and Liberty^ in 1962 and when he completed it in 1978. He became more of a libertarian in the concluding chapter of ^Law, Legislation and Liberty^. In the third to last section, "The devolution of internal policy to local government," he spoke in favor of "most service activities rendered by central government" being "devolved to regional or local authorities." He thought the "result would be the transformation of local and even regional governments into quasi-commercial corporations competing for citizens."[3]

  Hayek foresaw a communitarian future through the implementation of libertarian practices. Communitarianism is the supremacy of local values and local institutions, and of diversity among communities. Communitarianism is not similar values and institutions throughout a geographical area. Communitarianism is diversity of communities, not necessarily diversity in communities. Diversity is differentiation. Singularity of communities is uniformity, not diversity.

  At the same time, true communitarianism is not the preservation of past mode of human society and organization for their own sake. Writing eloquently that it is desirable, both for individuals and for society as a whole, to allow the disappearance of past, premodern ways of life, Hayek stated that " We should be showing more respect for the dignity of man if we allowed certain ways of life to disappear altogether instead of preserving them as specimens of a past age." [4] The communities that emerge in a libertarian order are those that are chosen by their adult members as long as they do not physically harm others.

  In the penultimate section of ^Law, Legislation and Liberty^, "the abolition of the government monopoly of services," Hayek wrote the most libertarian sentiments of his career. He stated that there is "of course no need for central government to decide who should be entitled to render different services, and it is highly undesirable that it should possess mandatory powers to do so. This means that any governmental agency allowed to use its taxing power to finance such services ought to be required to refund any taxes raised for these purposes to all those who prefer to get the services in some other way." [5] These words were even more significant because of the governmental services to which he applied themㅡ"without exception to all those services of which the government possesses a legal monopoly, with the only exception of maintaining and enforcing the law and  maintaining for this purpose an armed forces, i.e. all those from education to transport and communications, including post, telegraph, telephone and broadcasting services, all the so-called 'public utilities,' the various 'social' insurance and, above all, the issue of money." In the last pages of ^Law, Legislation and Liberty^, published in 1979, Hayek the classical liberal became Hayek the libertarian.[6]

  ( ... ... )

[발췌: Hayek's LLL, vol. 3. Chapter 18] The abolition of the government monopoly of services

출처: F. A. Hayek, Law, Legislation and Liberty, Vol. 3: The Political Order of a Free People (University of Chicago Press, 1979)

Chapter 18.  The Containment of Power and the Dethronement of Politics

※ 발췌 / of which some excerpts from the section: 

The abolition of the government monopoly of services (p. 147)

There is of course no need for central government to decide who should be entitled to render the different services, and it is highly undesirable that it should possess mandatory powers to do so.[KHNW p291-2]
  • Indeed, though it may in some instances for the time being be true that only governmental agencies with compulsory powers of levying contributions can render certain services, there is no justification for any governmental agency possessing the exclusive right of supplying any particular service
  • Though it may turn out that the established supplier of some services is in so much better a position to render it than any possible competitor from private enterprise, and thus will achieve a de facto monopoly, there is no social interest in giving him a legal monopoly of any kind of activity
  • This means of course that any governmental agency allowed to use its taxing power to finance such services ought to be required to refund any taxes raised for these purposes to all those who prefer to get the services in some other way
  • This applies without exception to all those services of which today government possesses or aspires to a legal monopoly, with the only exception of maintaining and enforcing the law and maintaining for this purpose (including defence against external enemies) an armed forces, i.e. all those from education to transport and communications, including post, telegraph, telephone and broadcasting services, all the so-called 'public utilities', the various 'social' insurances and, above all, the issue of money.[KHNW p291-1] Some of these services may well for the time being most efficiently be performed by a de facto monopoly; but we can neither insure improvement nor protect ourselves against extortion unless the possibility exists of somebody else offering better services of any of these kinds.
  As with most of the topics touched upon this final chapter, I cannot enter here into any more detailed discussion of the service activities which are today rendered by government; but in some of these cases the question whether the government ought to possess an exclusive right to them is of decisive importance, not merely a question of efficiency but of crucial significance of the preservation of a free society. In these case the objection against any monopoly powers of government must preponderate, even if such a monopoly should promise services of higher quality. We may still discover for example, that a government broadcasting monopoly may prove as great a threat to political freedom as an abolition of the freedom of the press would be. The postal system is another instance where the prevailing government monopoly is the result solely of this striving of government for control over private activity and has in most parts of the world produced a steadily deteriorating service.

[※ 이하 내용은 화폐 발행과 관련된 내용에 국한돼있음]
  Above all, however, I am bound to stress that in the course of the work on this book I have been, by the confluence of political and economic considerations, led to the firm conviction that a free economic system will never again work satisfactorily and we shall never remove its mot serious defects or stop the steady growth of government, unless the monopoly of the issue of money is taken from government. I have found it necessary to develop this argument in a separate book,[16] indeed I fear now that all the safeguards against oppression and other abuses of government power which the restructuring of government on the lines suggested in this volume are intended to achieve, would be of little help unless at the same time the control of government over the supply of money is removed. Since I am convinced that there are now no longer any rigid rules possible which would secure a supply of money by government by which at the same time the legitimate demands for money are satisfied and the value of that money kept stable, there appears to me to exist no other way of achieving this than to replace the present national moneys by competing different moneys offered by private enterprise, from which the public would be free to choose that which serves best for their transactions.

  This seems to me so important that it would be essential for the constitution of a free people to entrench this principle by some special clause such as: 'Parliament shall make no law abiding the right of anybody to hold, buy, sell or lend, make and enforce contracts, calculate and keep their accounts in any kind of money they choose.' Although this is in fact implied in the basic principle that government can enforce or prohibit kinds of action only by general abstract rules, applying equally to everyone, including government itself, this particular application of the principle is still too unfamiliar to expect courts to comprehend that the age-old prerogative of government is no longer to be recognized, unless this is explicitly spelled out in the constitution.

The dethronement of politics (p. 149)

(... ...)

[책: Hayek's] Law, Legislation and Liberty (1973)

출처: F. A. Hayek, Law, Legislation and Liberty (University of Chicago Press, 1973)


Vol. 1: Rules and Order  (자료: 구글도서)

  Chapter 1. ....

  Chapter 2. ....

  Chapter 3. Principles and Expediency  (p. 55)

  Chapter 4. The Changing Concept of Law (p. 72)

  Chapter 5. Nomos: The Law of Liberty (p. 94)

  Chapter 6. Thesis: The Law of Legislation (p. 124)

  Notes (p. 145)

Vol. 2: The Mirage of Social Justice (자료: 구글도서)

  Chapter 7. General Welfare and Particular Purposes  (p. 1)

  Chapter 8. The Quest for Justice  (p. 31)

  Chapter 9. 'Social' or Distributive Justice  (p. 62)

  Appendix to Chapter 9. Justice and Individual Rights (p. 101)

  Chapter 10. The Market Order or Catallaxy  (p. 107)

  Chapter 11. The Discipline of Abstract Rules and the Emotions of the Tribal Society  (p. 133)

  Notes (p. 153)

  Index (p. 193)

Vol. 3: The Political Order of a Free People (자료: 구글도서)

  Chapter 12. Majority Opinion and Contemporary Democracy  (p. 1)

  Chapter 13. The Division of Democratic Powers (p. 20)

  Chapter 14. The Public Sector and the Private Sector (p. 41)

  Chapter 15. Government Policy and the Market (p. 65)

  Chapter 16. The Miscarriage of the Democratic Ideals: A Recapitulation (p. 98)

  Chapter 17. A Model Constitution (p. 105)

  Chapter 18. The Containment of Power and the Dethronement of Politics (p. 128)

  • Limited and unlimited power (p. 128)
  • Peace, freedom and justice: the three great negatives (p. 130)
  • Centralization and decentralization (p. 132)
  • The rule of majority versus the rule of laws approved by the majority (p. 133)
  • Moral confusion and the decay of language (p. 135)
  • Democratic procedure and egalitarian objectives (p. 137)
  • 'State' and 'society' (p. 139)
  • A game according to rules can never know justice of treatment (p. 141)
  • The para-government of organized interests and the hypertrophy of government (p. 143)
  • Unlimited democracy and centralization (p. 145)
  • The devolution of internal policy to local government (p. 146)
  • The abolition of the government monopoly of services (p. 147)
  • The dethronement of politics (p. 149)
  Epilogue: The Three Sources of Human Values  (p. 153)
  • The errors of sociobiology (p. 153)
  • The process of cultural evolution (p. 155)
  • The evolution of self-maintaining complex systems (p. 158)
  • The stratification of rules of conduct (p. 159)
  • Customary rules and economic order (p. 161)
  • The discipline of freedom (p. 163)
  • The re-emergence of suppressed primordial instincts (p. 165)
  • Evolution, tradition and progress (p. 168)
  • The construction of new morals to serve old instincts: Marx (p. 169)
  • The destruction of indispensible values by scientific error: Freud (p. 173)
  • The tables turned  (p. 175)

2013년 7월 18일 목요일

[발췌] Crisis of Capitalism: Compendium of Applied Economics (2011)

출처: Luciano Vasapollo, Barbato Alessandra, Crisis of Capitalism: Compendium of Applied Economics (Global Capitalism), Vol. 34. of Studies in Critical Social Sciences (BRILL, 2011)
자료: 구글도서

※ 발췌(excerpts): 

Chapter 12. Imperialism and International Trade in Action

(1) The North-South, but also the East-West Conflict (p. 159)

(2) Unequal and Combined Development (p. 162)

(3) Neoliberalism and Unequal Development, even in Mature Capitalist Countries (p. 168)

(4) Imperialism and Financialization in the Current Systemic Crisis (p. 169)

 (4.1) The Productive Fall-Out of Global Competition (p. 169)

 (4.2) Systemic Crisis and the Use of Keynesian Variants (p. 172)

p. 175:

The financialization of the economy has led not to a solution of the crisis, but to a financial bubble with an unprecedented aggravation of the general economic crisis. The privatization of the economy did not provide solutions so that today the progressives, the left, as well as the conservatives want to return to an interventionist, governor and employer State, with an Keynesian form, that is not only military based but also constitutes a strong support for companies, banks, insurance enterprises, which at this stage would be doomed to fail without any support to demand in social spending. This form of Keynesianism is called "Keynesianism of the private" or "business Keynesianism". The third attempt to solve the crisis, through a strong attack on and reduction of the labor costs and the general social direct, indirect and deferred wages, did not help solve the crisis because it has led to a general contradiction of purchasing power, which has added to the crisis of overproduction the content and the effects of a crisis of under-consumption.

2013년 7월 17일 수요일

[발췌: Perspectives on Keynesian Economics] Keynes According to Robbins: A Comment (2011)

출처: Arie Arnon, Jimmy Weinblatt, Warren Young eds., Perspectives on Keynesian Economics (Springer, 2011)
자료: 구글도서 ; 차례

※ 발췌(excerpts):
  • 제목: Keynes According to Robbins: A Comment on Witztum's "Keynes, Robbins and the Nature of Economics
  • 지은이: Mauro Boianovsky
* * *

The difference between Lionel Robbins's and John Maynard Keynes's respective approaches to economic theory and methodology have been occasionally mentioned in the literature (see e.g. Gruchy 1949; Wright 1989; Davis 1991), but an indepth discussion is still wanting. Amos Witztum's critical assessment of Keynes's 1936 ^General Theory^ in the light of Robbins's 1932 ^Essay on the Nature and Significance of Economic Science^ provides an opportunity to tackle the issue upfront. However by attempting to reconstruct what Robbins would have thought about the scientific status of the ^General Theory^, Witztum largely misses the opportunity. In particular, the conclusion that Robbins "implicitly denied Keynes's place in the science of economics" is not warranted by Robbins's ^explicit^ acknowledgement of the relevance of the ^General Theory^, especially after he gave up the Austrian business cycle frameworkㅡwhich had informed his 1934 book on the ^Great Depression^ㅡand endorsed several (althought not all) tenets of Keynesian employment policy (see Robbins, 1947, 1971).

  Despite some important methodological differences, Robbins and Maynard Keynes belonged to what Mark Blaug (1980) ahs aptly called the long "verificationist" tradition in economic method, which was started by J. S. Mill in the 1830s and prevailed until Terence Hutchison (1938) and especially Milton Friedman (1953) brought in Popperian falsificationism to the economic realm. For both Robbins and Keynes, data could and should be used to test whether a theory was applicable to a particular situation, but not to decide the overall validity of the theory itself. Significantly, Robbins (1938, p. 347) quoted a passage from volume 2 of Keynes's 1930 ^Treatise on Money^ to support his own view about the key role of empirical verification in economics. And defended Keynes from the charge (presumably made by Hutchison 1938) of neglecting economic data: " it is curious that the author of this passage and the distinguished contribution to the applied theory of money in which it occurs, should have recently been singled out for publuc censure for 'unscientific' methods of procedure". The two economists parted company when it came to the relation between the science of economics and the objectives of economic policy, which Robbins regarded as strictly separated. True enough, Keynes did not discuss Robbins's methodology in the ^General Theory^ㅡas one might expect, he did refer to Robbins's (1934) instead. However, in an oft-quoted letter he wrote Roy Harrod in 1938 about Harrod's presidential address published that same year, Keynes claimed that "against Robbins, economics is essentially a moral science and not a natural science. That is to say, it employs introspection and judgments of value" (Keynes, 1973, p. 297).

  Keynes's view of economics not as pure science, but as an applied, moral science (see also p. xxii of the preface to the ^General Theory^) reflected his Cambridge Marshallian background (Gruchy 1949; Colander 2009), against which Robbins (1932) put forward his alternative definition of the subject matter of economics. [42] Indeed, as pointed out by Richard Wright (1989), the circumstances surrounding Robbins's participation in the Committee of Economistsㅡset up by Keynes in 1930 to produce a diagnosis and remedies to the economic depressionㅡplayed an important role in prompting him to write his 1932 and 1934 books. Robbins, who at the time disagreed with Keynes's diagnosis and solutions, was unwilling to be bowled over by "the complexity and great aesthetic beauty of the theorems propounded by Mr. Keynes" (Howson and Winch 1977, p. 60, quoting from Robbins's answer to a questionnaire drafted by Keynes). In particular, Robbins was critical of the kind of interplay between theory and policy argued by Keynes, which played a key role in what Hugh Dalton (1986) called Robbins's "feud" with Keynes throughout the 1930s. From that perspective, it is hardly surprising that the ^General Theory^ does not pass the Robbinsian 1932 test as a scientific contributin to economics, as much as a substantial part of modern welfare economics for that matter (see Atkinson 2009).

  However, as it is well-known (Robbins 1971, pp. 150-156; O'Brien 1988, pp. 115-117), although Robbins remained faithful to his 1932 methodological principles,
  • he would recant his 1934 Austrian-like business cycle theory and its policy implications
  • He would regard “this aspect of my dispute with Keynes as the greatest mistake of my professional career, and the book The Great Depression ... as something which I would willing see forgotten” (Robbins 1971, p. 154) [43] 

Robbins's change of mind is reflected in his support and active participation in the elaboration of the famous White Paper on Employment Policy and in the Bretton Woods agreement during the Second World War, when he worked alongside Keynes in the Economic Section of the Treasurer. As pointed out by Robert Skidelsky (2003, p. 651), the "Keynes-Robbins axis" became crucial for the success of domestic and foreign British economic policy in the years 1943-1945 (see also Robbins 1971, Chapter 9).

Although Robbins did not fully convert into Keynesianismㅡhe was very close to Dennis Robertson and accepted many of Robertson's critical points about Keynes's framework (see Boianovsky and Presley 2009)ㅡhe did eventually take in the notion that fluctuations of aggregate demand “must not be left to look after themselves” and that it is an “important function of government” to pay attention to such matters (Robbins 1971, p. 188).

  A few years upon his return to the LSE after the Second World War, Robbins (1952) became engaged in the production of one of his most important investigations into the history of thought. His book about the theory of economic policy in classical economics cleared several issues about the economic role of government that had not been discussed in any detail in his 1932 ^Essay^. In view of Witztum's contrast between the Keynesian and the classical respective treatments of economic policy, it is worth noting that Robbins (1952, pp. 37-38) stressed the similarities between Maynard Keynes's ([1926] 1972) and Adam Smith's formulation of the economic role of the state. Notwithstanding the distinct contents of Keynes's later agenda (e.g. control of aggregate investment) as compared to Smith's, Robbins called attention to their "^formal^ similarity", which he did not regard an accident but an indication of the essential "continuity of thought in the tradition of economic liberalism concerning the positive nature of the co-operation between the state and the individual". In his LSE lecture delivered in 1979-1980 Robbins wondered whether Keynes had involuntarily appropriated Smith's definition of the functions of the state, given that the wording was almost the same (Robbins 1998, p. 153).

  Witztum's suggested distinction between (classical) "endogenous" and (Keynesian) "exogenous" role of the state may be found already under another guise in Richard Musgrave' (1959) well-known classification of the allocative, distributive and macroeconomic stabilization branches of the government, which are not opposed to one another. In the same vein, the notion of "involuntary employment" and its perverse effects on labor supply and growth is not necessarily incompatible with Keynes's concept of involuntary unemployment, as illustrated by Barro and Grossman's (1971, pp.90-91) treatment of the determination of output and employment under conditions of excess demand for labor and goods, which they distinguished from involuntary unemployment associated with excess supply. Hence, the supposed unscientific character of the ^General Theory^ remains unproven.


Atkinson, A. B. (2009). Economics as a moral science. ^Economica^, 76, 791-804.
Blaug, M. (1980). ^The Methodology of Economics^. Cambridge: University Press.

[책] Perspectives on Keynesian Economics (2011)

출처: Arie Arnon, Jimmy Weinblatt, Warren Young eds., Perspectives on Keynesian Economics (Springer, 2011)
자료: 구글도서



Part I. History, Methodology, and their Current Relevance
  • Making the Most Anomaly in the History of Economic Thought: Smith, Marx-Engels, and Keynes (Samuel Hollander)
  • Reason and Reasonableness in Keynes: Lessons from The Economic Consequences of the Peace 90 Years Later (Maria Cristina Marcuzzo)
  • The Marshallian Roots of Keynes's General Theory (Michel De Vroey)
  • Was Patinkin a Keynesian Economist? (Mauro Boianovsky)
  • Keynes, Robbins and the Nature of Economics (Amos Witztum)
  • Johnson's Conversion from Keynesianism at Chicago (Russel S. Boyer)
  • Appendix

Part II. Models, Pedagogy, Policy and Crisis
  • The Keynesian Revolution and IS-LM: From Enigma to Conundrum (Warren Young)
  • The Keynesian Method, Complexity, and the Training of Economists (David Colander)
  • Keynes, Wicksell and Active Monetary Policy (Arie Arnon)
  • "The Consequences to the Banks of the Collapse of Money Values", 1931 and 2009 (Robert W. Dimand)
  • The Great Depression, the Global Financial Crisis and Old Versus New Keynesian Thinking: What Have We Learded and What Remains To Be Learned?: Dicussion
  • Lucas, Keynes, Animal Spirits, Co-ordination and the Recent Crisis (David Laidler)

2013년 7월 16일 화요일

[발췌: Hayek's Constitution of Liberty] Chapter 3. The Common Sense of Progress

출처: F. A. Hayek, The Constitution of Liberty: The Definitive Edition (University of Chicago Press, 2011)
자료: 구글도서

※ 발췌(excerpts):

Chapter 3. The Common Sense of Progress

Man never mounts higher than when he knows not where he is going. ─ Oliver Cromwell

( ... some long words about this quote ... )

1. ( p. 92 )

2. ( p. 93 )

3. ( p. 96 )

4. ( p. 98 )

  In a progressive society as we know it, the comparatively wealthy are thus merely somewhat ahead of the rest in the material advantages which they enjoy. They are already living in a phase of evolution that the others have not yet reached. Poverty has, in consequence, become a relative, rather than an absolute, concept. This does not make it less bitter. Although in an advanced society the unsatisfied wants are usually no longer physical needs but the results of civilization, it is still true that at each stage some of the things most people desire can be provided only for a few and can be made accessible to all only by further progress. Most of what we strive for are things we want because others already have them.[12] Yet a progressive society, while it relies on this process of learning and imitation, recognizes the desires it creates only a spur to further effort. It does not guarantee the results to everyone. It disregards the pain of unfulfilled desire aroused by the example of others. It appears cruel because it increases the desire of all in proportion as it increases its gift to some. Yet so long as it remains a progressive society, some must lead, and the rest must follow.

  The contention that in any phase of progress the rich, by experimenting with new styles of living not yet accessible to the poor, perform a necessary service without which the advance of the poor would be very much slower will appear to some as a piece of far-fetched and cynical apologetics. Yet a little reflection will show that it is fully valid and that a socialist society would in this respect have to imitate a free society. It would be necessary in a planned economy (unless it could simply imitate the example of other more advanced societies) to designate individuals whose duty it would be to try out the latest advances long before they were made available to the rest. There is no way of making generally accessible new and still expensive ways of living except by their being initially practiced by some. It would not be enough if individuals were allowed to try out particular new things. These have their proper use and value only as an integral part of general advance in which they are the next thing desired. In order to know which of the various new possibilities should be developed at each stage, how and when particular improvements ought to be fitted into the general advance, a planned society would have to provide for a whole class, or even a hierarchy of classes, which would always move some steps ahead of the rest. The situation would then differ from tht in a free society merely in the fact that the inequalities would be the result of design and that the selection of particular individuals or groups would be done by authority rather than by the impersonal process of the market and the accidents of birth and opportunity. It should be added that only those kinds of better living approved by authority would be permissible and that they would be provided only for those specially designated. But, in order for a planned society to achieve the same rate of advance as a free society, the degree of inequality that would have to prevail would not be very different.

  There is not practicable measure of the degree of inequality that is desirable here. We do not wish, of course, to see the position of individuals determined by arbitrary decision or a privileged conferred by human will on particular persons. It is difficult to see however, in what sense it could ever be legitimate to say that any one person is too far ahead of the rest or that it would be harmful to society if the progress of some greatly outstripped that of others. There might be justification for saying this if there appeared great gaps in the scale of advance; but, as long as the graduation is more or less continuous and all the steps in the income pyramid are reasonably occupied, it can scarcely be denied that those lower down profit materially from the fact that others are ahead.

  The objections spring from the misconception that those in the lead claim the right to something that otherwise would be available to the rest. This would be true if we thought in terms of a single redistribution of the fruits of past progress and not in terms of that continuous advance which our unequal society fosters. In the long run, the existence of groups ahead of the rest is clearly an advantage to those who are behind, in the same way that, if we could suddenly draw on the more advanced knowledge which some other men on a previously unknown continent or on another planet had gained under more favorable conditions, we would all profit greatly.

5. ( p. 100 )

  The problems of inequality are difficult to discuss dispassionately when members of our own community are affected. They stand out more clearly when consider them in their wider aspect, namely, the relation between rich and poor countries. We are then less apt to be misled by the conception that each member of any community has some natural right to a definite share of income of his group. Although today most of the people of the world benefit from one another's efforts, we certainly have no reason to consider the product of the world as the result of a unified effort of collective humanity.

  Although the fact that the people of the West are today so far ahead of the others in wealth is in part the consequence of a greater accumulation of capital, it is mainly the result of their more effective utilization of knowledge.
  • There can be little doubt that the prospect of the poorer, "undeveloped" countries reaching the present level of the West is very much better than it would have been, had the West not pulled so far ahead
  • Furthermore, it is better than it would have been, had some world authority, in the course of the rise of modern civilization, seen to it that no part pulled too far ahead of the rest and made sure at each step that the material benefits were distributed evenly throughout the world
  • If today some nations can in a few decades acquire a level of material comfort that took the West hundreds of thousands of years to achieve, is it not evident that their path has been made easier by the fact that the West was not forced to share its material achievements with the restthat it was not held back but was able to move far in advance of the others?
  Not only are the countries of the West richer because they have more advanced technological knowledge, but they have more advanced technological knowledge because they are richer. ( .... p. 100 )

2013년 7월 12일 금요일

[기록 삼아 보관하는] 어떤 전자우편

인터넷 환경의 전자우편 사례로 견본 삼아 기록해둔다.

Dear Albert,

Emperor penguins, blue whales, fur seals and 10,000 other species of wildlife live together in the near pristine waters around Antarctica.

In less than two weeks, world leaders will be meeting in Germany to decide whether to stop industrial fishing vessels from encroaching on two of the most important areas in the icy Southern Ocean.

Send a message to the members of the meeting: We want you to make history. 

Greenpeace, in a coalition of environmental groups, has been working for several years to help the participants of this meeting (they are called the Commission for the Conservation of Antarctic Marine Living Resources or CCAMLR) understand the value and importance of officially creating the largest protected ocean sanctuaries in the world.Some of the members of the meeting still aren't convinced this is important, so they need to hear from us.

Say "yes" to creating the two largest protected ocean sanctuaries in the world. 

What’s at stake are key areas in the Ross Sea and East Antarctica, covering more than 3.5 million square kilometres of waters around Antarctica that are teaming with life and as yet, still largely untouched. Let's keep them that way.

The meeting starts on July 11th. Between now and then we will collect petition signatures and keep the dialogue going with CCAMLR members, but we need more. We need to keep the spotlight on this meeting. Please forward this message, sign the petition, share the petition everywhere and help us keep cheering for the CCAMLR members, so they will do what is right.


Richard Page
Greenpeace International
Oceans Campaigner

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[기록 삼아 보관하는] 어떤 전자우편

인터넷 환경의 전자우편 사례로 견본 삼아 기록해 둔다.

 정암학당 플라톤 전집 신작
 소크라테스의 마지막 순간 <파이돈>
 안대회 <북학의> 완역정본
 최초의 원문 교감 작업
 자유롭게 카피하기를 권함
 복제는 힘이다 <복제예찬>
강신주, 고미숙, 박웅현
인문학 명강 동양고전
강신주, 고미숙 외 지음 /

16,200원 (10%할인)
박원순의 최종 목표는?
정치의 즐거움
박원순, 오연호 지음 /

13,500원 (10%할인)
정재승 추천! 신경건축학
공간이 마음을 살린다
에스더 M. 스턴버그 지음 /

15,300원 (10%할인)
프랑스 대혁명의 재현
프랑스 대혁명 1
막스 갈로 지음
/ 민음사

16,200원 (10%할인)
이탈리아 사람들은 왜
음식 이야기를 좋아할까?

엘레나 코스튜코비치 지음 /

11,500원 (50%할인)
감정 자본주의
에바 일루즈 지음 /

7,000원 (50%할인)
철학의 책
윌 버킹엄 외 지음 /

19,000원 (50%할인)
마이클 콜린스 지음 /

34,000원 (50%할인)
나의 문화유산답사기 일본편 세트
유홍준 지음 / 창비

유홍준의 8번째 목적지, 새로운 일본을 만나다 [친필 서화 부채+적립금 3000원]
한국 인문서 최초의 밀리언셀러가 된 유홍준의 <나의 문화유산답사기> 일본편. 1권 규슈 편에서는 일본이 고대문화를 이룩하는 데 한반도 도래인이 전해준 문명의 영향, 조선 도공들이 일본에 터를 잡고 눈부신 자기 문화를 만들어낸 감동적인 이야기를 역사적인 흐름에 따라 답사한다. 2권 아스카·나라 편에서는 아스카와 나라 지역에 위치한 주요한 옛 절을 답사하면서 한반도와 일본문화의 친연성과 영향 관계, 그리고 자생적으로 꽃피운 일본문화의 미학을 돌아본다.
왕과 나
이덕일 지음 / 역사의아침 

이덕일 신작, 왕은 스스로 탄생한 것이 아니라 만들어진 것이다!
시대와 인물을 읽어내는 뛰어난 통찰력으로 우리 역사를 바로잡는 저술에 힘쓰고 있는 이덕일이 이번에는 권력의 2인자, 왕을 만든 사람들을 재조명했다. 김유신부터 홍국영까지 세상을 움직이는 본질을 꿰뚫은 킹메이커들을 살펴보면서, 시대의 변화를 이끈 핵심 코드가 무엇인지 하나씩 밝히고 있으며, 한 시대의 권력은 단지 군주의 선택과 결정으로만 이루어진 것이 아니었음을 보여주고 있다.
서민의 기생충 열전
서민 지음 / 을유문화사 

우리 시대 최고의 기생충 전도사, 서민 교수 신작
이상한 기생충들의 특이한 생존기. 착하거나 나쁘거나 이상한 기생충들에 얽힌 신비하고 독특한 이야기를 재미있게 풀어 가는 이 책은 100명 중 2.6명~3명이 감염된 결코 낮지 않은 현재의 감염률로 보거나 회나 정력 음식을 좋아하는 우리나라 식문화를 볼 때 꼭 필요한 교양서이다. 사람에게 감염되어 병을 일으키는 기생충들을 중심으로 소개하면서 기생충이 어떻게 태어나 자라고, 어디로 이동하며, 어떤 경로로 감염되고, 어떤 증상을 일으키며, 감염 여부는 어떻게 알아내는지, 치료 방법은 뭔지 등을 재미있게 알려 준다.
인문학 개념 정원
서영채 지음 / 문학동네

원전 속에서 주도면밀 추려낸 신개념 인문학 개론서 
문학평론가 서영채의 ‘신개념 인문학 개론서’. 정신분석학, 맑시즘, 구조주의, 후기구조주의, 모더니즘, 포스트모더니즘, 기호학, 현상학, 해석학, 해체론 등 주요 문학이론의 개념어들은 물론 칸트, 헤겔, 니체, 마르크스, 프로이트, 루카치 등 근대를 열어젖힌 거인들의 핵심 사상이 책 한 권 속에 가지런히 정리되어 있고 또 맥락 속에서 사통팔달 연결되어 있다. 난해하기 짝이 없는 ‘학문 사투리(jargon)’ 때문에 그간 인문학 읽기를 멀리해왔다면, 독자는 저자의 초대장을 들고 일단 ‘인문학 개념정원’으로 입장해볼 일이다.
이종수 지음 / 생각정원

그림이 시대의 정신을 담을 수 있을까?
그림으로 조선 문화 지형도를 완성해볼 수 있을까. 저자 이종수는 이 책에서 작품의 감상 수준을 뛰어넘어 역사의 거대한 흐름 속에서 그림의 존재 이유와 의미를 추적했다. 이념과 권력을 따라 모이고 또 흩어졌던 16세기 사림의 시대, 붕당의 혼란 속에 진지하게 자아를 돌아보았던 숙종 시대 그리고 사라져가는 전통을 회고하고 연민하는 고종 시대까지. 당대의 물음을 치열하게 고민하며 시대의 정신과 지향을 그림으로 답한 화가들과 교감하고 해석과 상상을 넘나들어 조선 역사를 생생하게 되살려냈다.
처음 읽는 프랑스 현대철학
철학아카데미 엮음 / 동녘

12명의 프랑스 현대철학자, 우리 눈으로 다시 읽는다!
프랑스 철학이 적극적으로 수입된 지 20년, 철학아카데미는 그들의 이론을 한 자리에 모아 이러한 질문을 풀어갈 필요가 있다고 느껴 국내 연구자가 프랑스 철학자들을 소개하는 강의를 기획했다. 강의는 프랑스 현대철학의 문을 연 사르트르, 메를로-퐁티부터 레비나스, 바르트, 블랑쇼에 이어 국내에서 많은 사랑을 받는 라캉, 알튀세르, 푸코, 데리다, 들뢰즈 그리고 아직 생존하는 크리스테바, 바디우 순으로 이어졌다. 강의 내용을 바탕으로 엮은 이 책이 꼼꼼하고 체계적인 프랑스 철학 입문서 역할을 해낼 거라 기대한다.

본 메일은 고객님의 알라딘 뉴스레터 수신동의 하에 발송되고 있습니다. 본 메일의 수신을 더 이상 원하지 않으시면 수신거부를 클릭해주세요.
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[발췌] Keynes and the logic of econometric method (1995)

지은이: Hugo A. Keuzenkamp (1995)

※ 발췌(excerpts)

1. Introduction

Keynes disliked econometrics. Moreover, he did not understand much of it. This, at least, is the view of many economists and econometricians who recall their vague, and usually indirect, knowledge of the Keynes-Tinbergen controversy. ( ... ) The controversy with Tinbergen is frequently regarded as a deplorable clash between an old and a new era in economics. Occasionally, Keynes is credited with raising the problem of misspecification, without having an established vocabulary in which to formulate the problem. However, in this paper I will argue that Keynes' critique is not primarily one of mis-specification. It is neither based on an objection to econometrics and probabilistic inference in general, nor does it follow from an outdated misunderstanding of the crucial issues at stake. Keynes understoot them all to well.

  The debate between Keynes and Tinbergen has its roots in one of the first and most ambitious efforts to test economic theories statistically. On request of the League of Nations, Haberler([1937] 1958) had provided an overview of business cycle theories. As a follow-up, Tinbergen was asked to confront those rival theories with data. The resulting work(Tinbergen, 1939a, b) roused strong sentiments. The debate concentrated on the question whether statistical methods are proper tools for testing economic theories.

  The basic issue at stake was: is the multiple regression model,
a valid or fruitful tool for testing economic hypotheses? This question has to be answered taking into consideration the possibility of serious specification uncertainly and a limited set of (unique, non-experimental) data, where k (the potential number of regressors) may well exceed n (the given number of observations). Is this a practical, or is it a logical problem? Once started, the debate on those questions never concluded.[3]

[3] See Leamer (1978) for a recent perspespective.

  Unlike Tinbergen, who was a very pragmatic research worker, Keynes was preoccupied with the ^logical^ conditions for probabilistic inference, as may be clear from his earlier work, Keynes([1921] 1973a). Keynes argued that the application of statistical methods to the analysis of investment behaviour (the example presented by Tinbergen, 1939a, to clarify his method) was was the least promising starting point as this is a case where those logical conditions were not even remotely met. In his paper I aim at clarifying why not. I will focus on the logical issue raised by Keynes, which does not seem to be generally understood or appreciated. This logical point may have been phrased obscurely, but it is worth further investigation for a better understanding of the foundations of econometric inferenceㅡeven today.

  ( ... 

2013년 7월 10일 수요일

[발췌] Keynes and Econometrics: on the Interaction between the Macroeconomic Revolutions of the Interwar Period

  • 지은이: Don Patinkin
  • 출처: Econometrica, Vol. 44, No. 6, November 1976
  • 제목: Keynes and Econometrics: on the Interaction between the Macroeconomic Revolutions of the Interwar Period.[주1]

※ 발췌(excerpts): 
* * *

Keynes's general attitude toward mathematical economics and econometrics, respectively, is discussed in Sections 2-3. The remainder of the paper is devoted to a description and analysis of the interaction between the Keynesian revolution of the mid-1930s and the revolution that actually started somewhat earlier with respect to the preparation of current official estimates of national incme. In this connection an attempt is made to explain why Kuznets' work in the U.S. in the early 1930s was immediately integrated into official national income estimates in the U.S., where Colin Clark's work in Britain was notㅡwith the result that official British national income estimates did not begin to appear until almost a decade later.
[주1] Presidential Addres delivered before the Econometric Society meetings in San Francisco in December 1974, with subsequent elaborations.
  A preliminary version of this paper was presented in December 1974 before the Economics Department Seminar at the Hebrew University of Jerusalem, and I am grateful to my colleagues for the many helpful and stimulating comments and suggestions which they then provided. ( ... ) Similarly, I have benefited from stimulating discussions with Simon Kuznets to whom I am also indebted for permission to quote from his correspondence with Keynes. ( ... ) 
* * *

( ... ) The title will lead me to a discussion of the attitudes and practices of John Maynard Keynes with respect to econometrics. And quite apart from the renewed interest of the last few years in the work of Keynes, there is ample justification for discussing this subject on this occasion. [:]
  • First, as we shall see, Keynes was indeed concerned with the econometrics of his timeㅡin the broad sense of empirically oriented economic analysis. 
  • Second, and more significant, Keynes's General Theory of Employment, Interest, and Money ("General Theory") almost 40 years ago defined the framework of research in macroeconomics for many decades which followed; and the relation of this book to econometrics is amply attested by the fact that, for example, the most influential interpretation of itㅡthe IS-LM interpretation which John Hicks presented in his "Mr. Keynes and the Classics"ㅡappeared as an article in ^Econometrica^(1937). 
  • Furthermore, and most important in the present context, the desire to quantify the General Theory provided the major impetus for the exponentially-growing econometric work that began to be carried out in the later 1930's on the consumption, investment, and liquidity-preference functions individually and, even more notably, on econometric models of the Keynesian system as a whole.
  • But in addition to, and as a reflection of, the impetus that he gave to econometric work, Keynes also had some very important formal connections with the Econometric Society. Thus he was one of the thirty economists from all over the world selected by the Council in 1933 to constitute the first group of Fellows of the Society[Econometrica, 1 (1933), p. 445]. And a year later, at the initiative of Ragnar Frisch, Keynes was elected to the Council itself, and remained a member of it until his death.
  All this might be as expected for one who was a world-outstanding economist of his time. But what was to me less expected was to learn recently that, in 1944, Keynes was elected President of the Econometric Society, though not without first politely protesting[2] that "whilst I am interested in econometric work and have done something at it at different times in my life, I have not recently written anything significant or important along these lines" (from which I infer that Keynes saw himself as one who ^had^ at one time made contribution to the field!).  And do, if we want to, we can regard my address today as a commemorative one, marking the 30th anniversary of John Maynard Keynes's having served as President of the Econometric Society.

  But my talk also has a subtitle. And the subject described by this subtitle is as broad and complex as it is fundamental, for it deals with the interaction of ideas, and with the subtle and mysterious ways in which such interactions take place. And it also deals with the equally, if not more, complicated question of the interaction between ideas and institutions.

  Let me be more specific: for many years now we have become accustomed to using the term "Keynesian Revolution" to denote the dramatic changes which Keynes' ^General Theory^ effected with respect to macroeconomic theory. I feel, however, that we are much less aware than we should be of the no less significant (though quieter) revolution that began to take place even before the ^General Theory^ with respect to macroeconomic measurement or, more specifically, with respect to the measurement of national income, which is the general term I shall for simplicity frequently use to denote the measurement of any one or more of the national aggregates (income, product, expenditure), broken down by their respective components. In Section 5 below I shall justify the use of the term "revolution" in this context; for the moment let me simply note that it is the one associated primarily with the names of Simon Kuznets in the United States and Colin Clark in England. And it is to the interrelationships between these two revolutions that my subtitles refers. ( .... ) What I hope to do, however, is to highlight the major aspects of this question, with particular emphasis on the way the aforementioned interrelationships manifest themselves in the work of Keynes.

2. Keynes and Mathematical Economics

  Though this is my main concern, I cannot discuss the subject of Keynes and econometrics without first digressing briefly on two other points that always arise in this context: the first is Keynes' attitude toward mathematical economics, and the second is Keynes's famous 1939 debate with Tinbergen.

  On the first point, I can only repeat what I have already said elsewhere:[3] We are all familiar with Keynes' oft-cited criticism in the General Theory of "symbolic pseudo-mathematical methods of formalizing a system of economic analysis ... which allow the author to lose sight of the complexities and interdependencies of the real world in a maze of pretentious and unhelpful symbols" (GT, pp. 297-298). We should not, however, uncritically accept this statement as if it were an expression of Keynes' unchanging and definitive rejection of mathematical methods. First of all, Keynes' own analysis in the Treatise on Money was in fact largely based on fairly mechanical applications of the so-called "fundamental equations" . Furthermore, the Treatise devoted an entire chapter (20) to "An Exercise in the Pure Theory of the Credit Cycle", in which Keynes explored in a very formalistic manner, and under a variety of alternative assumptions, the mathematical properties of his model of the cycle. Indeed, if ever an author "lost sight of the complexities of the real world in a maze of pretentious and unhelpful symbols", that author was Keynes of the Treatise (see Patinikin (1976, Ch. 4-7).
[3] See Patinkin (1975, pp. 265-266) or (1976, pp. 21-23) from which this and the following three paragraphs are, with minor changes, reproduced.
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3. The Keynes-Tinbergen Debate

Keynes' famous debate with Tinbergen began with Keynes' review in September, 1939 Economic Journal[5] of the pioneering statistical study of business cycles which Tinbergen carried out on behalf of the League of Nations in 1939 as a complement to Haberler's earlier study (1937) of business-cycle theory. In order to place this debate in its proper context however, I must first of all emphasize that Keynes' review-article was entitled "Professor Tinbergen's Method" and was devoted not to the much better-known second volume of this study on ^Business Cycles in the United States of America, 1919-1932^, but to the first volume (which was published a few months earlier) on ^A Method and Its Application to Investment Activity^, in which Tinbergen set out and exemplified the principles of multiple-correlation analysis. Accordingly, the criticisms which Keynes presented in this review were levelled not at Tinbergen's ambitious 46-equation model of the United States economy, but at the use of correlation analysis to estimate even a single equation.

  Let me also confess that, though not all of Keynes' criticisms were well taken (e.g., his "suspicion that the assumption of linearity rules out cyclical factors" (^JMK^ vol. 14, p. 313; see also Tinbergen's reply, 1940, p. 150)), I find it somewhat depressing to see how many of them are, in practice, still of relevance today. Thus Keynes wrote:
Am I right in thinking that the method of multiple correlation analyses essentially depends on the economist having furnished not merely a list of the significant causes, which is correct so far as it goes, but a ^complete^ list? For example suppose three factors are taken into account, it is not enough that these should be in fact ^verae causae^; there must be no other significant factor. If there is a further factor, not taken account of, then the method is not able to discover the relative quantitative importance of the first three. If so, this means that the method is only applicable where the economist is able to provide beforehand a correct and indubitably complete analysis of the significant factors. (^JMK^ vol. 14, p. 308, italics in original).
What could be a better description of specification bias? Or, again,
... Professor Tinbergen is concerned with "sequence analysis"; he is dealing with non-simultaneous events and time lags. What happens if the phenomenon under investigation itself reacts on the factors by which we are explaining it? For example, when he investigates the fluctuations of investment, Professor Tinbergen makes them depend on the fluctuations of profit. But what happens if the fluctuations of profit partly depends (as, indeed, they clearly do) on the fluctuations of investment? (^JMK^ vol. 14, pp. 309-310).
In brief, what we now call the simultaneous-equation bias.

  In his review article, Keynes also referred to the basic difficulty of measuring expectations (^JMK^, vol. 14, p. 309), to the restrictive nature of the assumption of universal linearity (^JMK^ vol. 14, pp. 311-315), as well as to "the frightful inadequacy of most of the statistics employed" (^JMK^ vol. 14, p. 317). And, in what I interpret as an allusion to his ^Treatise on Probability^, he stated: "thirty years ago I used to be occupied in examining the slippery problem of passing from statistical description to inductive generalization in the case of simple correlation; and today in the era of multiple correlation I do not find that in this respect practce is much improved" (^JMK^ vol. 14, p. 315). [6]

  Keynes concluded his review of Tinbergen's work with the following comment:
I hope that I have not done injustice to a brave pioneer effort. The labor it involved must have been enormous. The book is full of intelligence, ingenuity and candor; and I leave it with sentiments of respect for the author. But it has been a nightmare to live with, and I fancy that other reader will find the same. I have a feeling that Professor Tinbergen may agree with much of my comment, but that his reaction will be to engage another ten computer and drown his sorrows in arithmetic. (^JMK^ vol. 14, p. 318).
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4. The Use of National Income Estimates in the General Theory

Let me now return to my main concernㅡthe interaction between the macroeconomic revolutions of the interwar period. Appropriately enough for this purpose, the impact of the revolution that took place with respect to the availability of national income data can be illustrated most dramatically by contrasting Keynes' two famous work on macroeconomics: his Treatise on Money published October 1930, and the General Theory published in February, 1936.

  The ultimate purpose of the Treatise was to explain the fluctuations in output that characterized the business cycle or, as Keynes called it in the Treatise, the credit cycle. The vehicles for this explanation were the famous "fundamental equations," in which a crucial role was played by the relation between investment and saving. As is well known, according to Keynes' definitions in the Treatise, these two quantities are not generally equal. Indeed, the excess of investment over saving equals the excess profits of firms, and the existence of such profits leads firms to expand output. Conversely, when savings exceed investment, there are losses, and output declines. This, in a highly oversimplified form, is the cycle theory of the Treatise.[8]
[8] For details, see Patinkin (1976, Chapters 4-6).
  Now the Treatise was not only a book on theory; as its title indicates, it was intended to be a comprehensive treatment of monetary economics, dealing with the applied aspects (which is the subject of Volume II of the Treatise) as well as the theoretical ones (the subject of Volume I). Correspondingly, in this second volume, Keynes attempts to presents empirical estimates of the variables that played a key role in the theory presented in the first one.

  In this context he presents an index of total output (for the period of 1920-29) which, for lack of anything better (and Keynes bemoans "the present deplorable state of our banking and other statistics"(TM II, p. 78) which leaves no alternative to such estimates), is simply the average of two existing indices of employment and industrial use of raw materials, respectively(TM II, p. 79 last column of table).

  The situation is far worse, and Keynes' complaints correspondingly greater ("the relevant statistics ... are few and unsatisfactory. There is no single set of figures which measures accurately what should be capable of quite precise measurement" (TM II, p. 87)) with respect to estimates of total investment in fixed capital. Keynes rejects the use of data on the volume of new issues for this purpose both because these do not reflect residential construction, a major component of such investment was actually carried out. Accordingly, Keynes suffices with a general reference to Wesley Mitchell's summary in his ^Business Cycle^(1927) of various time series connected with different aspects of investment activity, and claims that this summary shows that "the fluctuations [in the rate of investment in fixed capital] are substantial and that they are correlated with the phases of the credit cycle in quite as high a degree as our theory would lead us to expect" (TM II, pp. 88-89). Keynes then uses a variety of a prioristic assumptions in order to derive an estimate of investment in "working capital" (TM II, pp. 92-100). Finally, he combine his estimates of investment in fixed and working capital, as well as of investment abroad, in order to present a table of total net investment in Britain for the period of 1919-1924, which he describes in the following words: "The following calculation is not based on statistical data, but is a not plausible guess as to what may have happenㄷdㅡintended to illustrated my argument rather than to state an historical data" (TM II, p. 101).

  In less than 6 years all this is changed. In particular, when in the General Theory Keynes came to deal with the same basic contentionㅡthe crucial role of the fluctuating volume of investment in generating business cyclesㅡhe was able to support his views by citing the estimates of total investment that Colin Clark had presented for Britain for the period 1928-1931 in his book on ^The National Income: 1924-1931^(1932, pp. 117, 138)[9] as well as the preliminary estimates for the United States for the period 1925-1933 which Simon Kuznets had presented in his NBER Bulletin on ^Gross Capital Formation, 1919-1933^(Bulletin 52, November 15, 1934).[10] Keynes also cites these tables in support of his contention that depreciation allowances and the like "normally" bear a high proportion to the value of gross investment; but at the same time he expresses the view that "Mr. Kuznets' method must surely lead to too low an estimate of the annual increase in depreciation" (GT, pp. 102-104).

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Let me at this point note that, to the best of my knowledge, this was the first estimate of the marginal propensity to consume that was based on an examination of statistical time series.[17] And in any event, the members of this audience will be particularly interested to note that by virtue of his having derived his estimate of the marginal propensity indirectly from an estimate of the multiplier, Keynes might be said to have been the first person to have essentially made use (even if unintentionally) of something like the reduced-form method of estimation! And all this several years before Trygve Haavelmo's painstaking work (1943, 1944, and 1947) on the methodological need and justification for such a method.

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5. On the Nature of the Statistical Revolution

From the sequence of events that I have described above, it is obvious that the statistical revolution as represented by Clark's and Kuznets' national income estimates preceded the "Keynesian Revolution" as represented by the General Theory. Let us now look into this story in somewhat greater detail.

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I have elaborated on all this in order to bring out the fundamental point that these national product estimates of the early 1930s were not the outcome of idle curiosity satisfying itself by the mechanical collection of dataㅡnot an exercise in measurement for the sake of measurementㅡbut were in varying degrees motivated by the desire to quantify those macroeconomic variables to which the pre-General Theory theories of the business cycle had already attached crucial significance.

  At the same time, it must be emphasized that the subsequent appearance of the General Theory, with its revolutionary analysis of the determination of the equilibrium level of output by means of the aggregate demand for consumption and investment goods, gave a further and decisive impetus to the preparation of national income estimates by these categories. For though Colin Clark had first provided such an estimte in 1932 (p. 117, Table XLV), it is only after the Keynesian Revolution that we find national income estimates widely presented in the C+I+G=Y rubric which is the cornerstone of Keynesian economics.[32]

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  And as is so frequently the case with technological improvements, on certain fronts the newcomer to the process surged ahead for a time. I say this especially with respect to the development by Meade and Stone(1941) of the broad conceptual framework of social accounting within which the national income estimates were place. But I also say it with reference to the estimation of national income by the final-product C+I+G=Y rubric which Keynes has developed in his General Theory(1936) and applied empirically in his ^How to Pay for the War^(1940).[37] ( ... ... )
[37] Which, in turn, drew from his earlier article in the Economic Journal on "The Income and Fiscal Potential of Great Britain"(1939); see also his supplementary note a year later on "The Concept of National Income"(1940)
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