[발췌: Hayek's Individualism and Economic Order] Economics and Knowledge

출처: F.A. Hayek, Individualism and Economic Order (Univ. of Chicago Press 1948; Reprinted by the Mises Institute 2009)
자료: 구글도서, Mises Institute(PDF)

※ This is a reading note, with some personal annotations or remarks added, in trying to understand the above text . So visit the source links above to see the original.

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차례:

1. Individualism: True and False
2. Economics and Knowledge
3. The Facts of the Social Sciences
4. The Use of Knowledge in Society ─ 발췌/독서메모
5. The Meaning of Competition
6. "Free" Enterprise and Competitive Order
7. Socialist Calculation I: The Nature and History of Problem
8. Socialist Calculation II: The State of the Debate
9. Socialist Calculation III: The Competitive "Solution"
10. A Commodity Reserve Currency
11. The Ricardo Effect
12. The Economic Conditions of Interstate Federalism

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※ 발췌(excerpts):

Chapter 2_ Economics and Knowledge ( 다른 자료: http://mises.org/page/1411 )

[The] main subject is the role which assumptions and propositions about the knowledge possessed by the different members of society play in economic analysis. This is by no means unconnected with the other question[─]to what extent formal economic analysis conveys any knowledge about what happens in the real world. Indeed, my main contention will be that the tautologies, of which formal equilibrium analysis in economics essentially consists, can be turned into propositions which tells us anything about causation in the real world only in so far as we are able to fill those formal propositions with definite statements about how knowledge is acquired and communicated. In short, I shall contend that the empirical element in economic theory [...] consists of propositions about the acquisition of knowledge.[1]

Perhaps I should begin by reminding you of the interesting fact that in a quite a number of the more recent attempts made in different fields to push theoretical investigation beyond the limits of traditional equilibrium analysis, the answer has soon proved to turn on the assumptions which we make [...] with regard to foresight.

• I think that the filed in which ... the discussion of the assumptions concerning foresight first attracted wider attention was the theory of risk.[2] (...) 
• Not much later the assumption to be made concerning foresight proved to be of fundamental importance for the solution of the puzzles of the theory of imperfect competition, the questions of duopoly and oligopoly. 
• Since then, it has become more and more obvious that, in the treatment of the more "dynamic" questions of money and industrial fluctuations, the assumptions to be made about foresight and "anticipations" play an equally central role and that in particular the concepts which were taken over into these fields from pure equilibrium analysis, like those of an equilibrium rate of interest, could be properly defined only in terms of assumptions concerning foresight. 

The situation seems here to be that, before we can explain why people commit mistakes, we must first explain why they should ever be right.

( ... ... )

As I have already suggested, the reason for this seems to me to be that we have to deal here only with a special aspect of a much wider question which we ought to have faced at a much earlier stage. Questions essentially similar to those mentioned arise in fact as soon as we try to apply the system of tautologies--those series of propositions which are necessarily true because they are merely transformations of the assumptions from which we start and which constitute the main content of equilibrium analysis--to the situation of a society consisting of several independent persons. I have long felt that the concept of equilibrium itself and the methods which we employ in pure analysis have a clear meaning only when confined to the analysis of the action of a single person and that we are really passing into a different sphere and silently introducing a new element of altogether different character when we apply it to the explanation of the interactions of a number of different individuals.

I am certain that there are many who regard with impatience and distrust the whole tendency, which is inherent in all modern equilibrium analysis, to turn economics into a branch of pure logic, a set of self-evident propositions which, like mathematics or geometry, are subject to no other test but internal consistency. But it seems that, if only this process is carried far enough, it carries its own remedy with it. In distilling from our reasoning about the facts of economic life those parts which are truly a priori, we not only isolate one element of our reasoning as a sort of Pure Logic of Choice in all its purity but we also isolate, and emphasize the importance of, another element which has been too much neglected. My criticism of the recent tendencies to make economic theory more and more formal is not that they have gone too far but that they have not yet been carried far enough to complete the isolation of this branch of logic and to restore to its rightful place the investigation of causal processes, using formal economic theory as a tool in the same way as mathematics.

2

But before I can prove my contention that the tautological propositions of pure equilibrium analysis as such are not directly applicable to the explanation of social relations, I must first show that the concepts of equilibrium has a meaning if applied to the actions of a single individual and what this meaning is. [※ 순수 균형분석의 동어반복적 명제들은 사회관계를 설명하는 데 곧바로 적용될 수 없다는 내 주장을 입증하려면, 그 전에 균형이란 개념들은 단 한 사람의 행동에 적용하더라도 의미가 있으며 그 의미 무엇인지를  먼저 설명해야 한다.]

• Against my contention it might be argued that it is precisely here that the concept of equilibrium is of no significance, because, if one wanted to apply it, all one could say would be that an isolated person was always in equilibrium. But this last statement, although a truism, shows nothing but the way in which the concept of equilibrium is typically misused. 
• What is relevant is not whether a person as such is or is not in equilibrium but which of his actions stand in equilibrium relationships to each other. All propositions of equilibrium analysis, such as the proposition that relative values will correspond to relative costs, or that a person will equalize the marginal returns of any one factor in its different uses, are propositions about the relations between actions.
• Actions of persons can be said to be in equilibrium in so far as they can be understood as part of one plan. Only if this is the case, only if all these actions have been decided upon at one and the same moment, and in consideration of the same set of circumstances, have our statements about their interconnections, which we deduce from our assumptions about the knowledge and the preferences of the person, any application.
• It is important to remember that the so-called "data," from which we set out in this sort of analysis, are (apart from his tastes) all facts given to the person in question, the things as they are known to (or believed by) him to exist, and not, strictly speaking, objective facts. It is only because of this that the propositions we deduce are necessarily a prior valid and  that we preserve the consistency of the argument.[3]

The two main conclusions from these considerations are,[:]

• first, that, since equilibrium relations exist between the successive actions of a person only in so far as they are part of the execution of the same plan, any change in the relevant knowledge of the person, that is, any change which leads him to alter his plan, disrupts the equilibrium relation between his actions taken before and those taken after the change in his knowledge. In other words, the equilibrium relationship comprises only his actions during the period in which his anticipations prove correct. 
• Second, that, since equilibrium is a relationship between actions, and since the actions of one person must necessarily take place successively in time, it is obvious that the passage of time is essential to give the concept of equilibrium any meaning. This deserves mention, since many economists appear to have been unable to find a place for time in equilibrium analysis and consequently have suggested that equilibrium must be conceived as timeless. This seems to me to be a meaningless statement.

3

(...) All I have argued so far is that the sense in which we use the concept of equilibrium to describe the interdependence of the different actions of one person does not immediately admit of application to the relations of different people. The question really is what use we make of it[the concept of equilibrium] when we speak of equilibrium with reference to a competitive system.

(... ...)

The situation is, however, different with plans determined upon simultaneously but independently by a number of persons. In the first instance, in order that all these plans can be carried out, it is necessary for them to be based on the expectation of the same set of external events, since, if different people were to base their plans on conflicting expectations, no set of external events could make the execution of all these plans possible. And, second, in a society based on exchange their plans will to a considerable extent provide for actions which require corresponding actions on the part of other individuals. This means that the plans of different individuals must in a special sense be compatible if it is to be even conceivable that they should be able to carry all of them out.[4] Or, to put the same thing in different words, since some of the data on which any one person will base his plans will be the expectation that other people will act in a particular way, it is essential for the compatibility of the different plans that the plans of the one contain exactly those action which form the data for the plans of the other.

In the traditional treatment of equilibrium analysis part of this difficulty is apparently avoided by the assumption that the data, in the form of demand schedules representing individual tastes and technical facts, are equally given to all individuals, and that their acting on the same premises will somehow lead to their plans becoming adapted to each other. That this does not really overcome the difficulty created by the fact that one person's actions are the other person's data, and that it involves to some degree circular reasoning, has often been pointed out. What, however, seems so far to have escaped notice is that this whole procedure involves a confusion of a much more general character, of which the point just mentioned is merely a special instance, and which is due to an equivocation of the term "datum." The data which here are supposed to be objective facts and the same for all people are evidently no longer the same thing as the data which formed the starting-point for the tautological transformations of the Pure Logic of Choice. There "data" meant those facts, and only those facts, which were present in the mind of the acting person, and only this subjective interpretation of the term "datum" made those propositions necessary truths. "Datum" meant given, known, to the person under consideration. But in the transition from the analysis of the action of an individual to the analysis of the situation in a society the concept has undergone an insidious change of meaning.

4

The confusion about the concept of a datum is at the bottom of so many of our difficulties in this field that it is necessary to consider it in somewhat more detail. Datum means, of course, something given, but the question which is left open, and which in the social sciences is capable of two different answers, is to whom the facts are supposed to given. Economists appear subconsciously always to have been somewhat uneasy about this point and to have reassured themselves against the feeling that they did not quite know to whom the facts were given by underlining the fact that they were given, even by using such pleonastic expressions as "given data." But this does not answer the question whether the facts referred to are supposed to be given to (1) the observing economist or (2) to the persons whose actions he wants to explain, and, if to the latter, whether it is assumed that the same facts are known (3) to all the different persons in the system or (4) whether the "data" for the different persons may be different.

There seems to be no possible doubt that these two concepts of "data," on the one hand, in the sense of the objective real facts, as the observing economist is supposed to know them, and, on the other, in the subjective sense, as things known to the persons whose behavior we try to explain, are really fundamentally different and ought to be carefully distinguished. And, as we shall see, the question why the data in the subjective sense of the term should ever come to correspond to the objective data is one of the main problems we have to answer.

The usefulness of the distinction becomes immediately apparent when we apply it to the question of what we can mean by the concept of a society being at any one moment in a state of equilibrium. There are evidently two senses in which it can be said that the subjective data, given to the different persons, and the individual plans, which necessarily follow from them, are in agreement.

(1) We may mean merely that these plans are mutually compatible and that there is consequently a conceivable set of external events which will allow all people to carry out their plans and not cause any disappointments. If this mutual compatibility of intentions were not given, and if in consequence no set of external events could satisfy all expectations, we could clearly say that this is not a state of equilibrium. We have a situation where a revision of the plans on the part of at least some people is inevitable, or, to use a phrase which in the past has had a rather vague meaning, but which seems to fit this case perfectly, where "endogenous" disturbances are inevitable.

(2) There still remains, however, the other question of whether the individual sets of subjective data correspond to the objective data and whether, in consequence, the expectations on which plans were based are borne out by the facts. If correspondence between data in this sense were required for equilibrium, it would never be possible to decide otherwise than retrospectively, at the end of the period for which people have planned, whether at the beginning the society has been in equilibrium. It seems to be more in conformity with established usage to say in such a case that the equiibrium, as defined in the first sense, may be disturbed by an unforeseen development of the (objective0 data and to describe this as an exogenous disturbance. In fact, it seems hardly possible to attach any definite meaning to the much used concept of a change in the (objective) data unless we distinguish between external developments in conformity with, and those different from, what has been expected, and define as a "change" any divergence of the actual from the expected development, irrespective of whether it means a "change" in some absolute sense. If, for example, the alterations of the seasons suddenly ceased and the weather remained constant from a certain day onward, this would certainly represent a change of data in our sense, that is a change relative to expectations, although in an absolute sense it would not represent a change but rather an absence of change. But all this means that we can speak of a change in data only if equilibrium in the first sense exists, that is, expectations coincide. If they conflicted, any development of the external facts might bear out somebody's expectations and disappoint those of others, and there would be no possibility of deciding what was a change in the objective data.[5]

5

For a society, then, we can speak of a state of equilibrium at a point of timeㅡbut it means only that the different plans which the individuals composing it[=equilibrium] have made for action in time are mutually compatible. And equilibrium will continue, once it exists, so long as the external data correspond to the common expectations of all the members of the society. The continuance of a state of equilibrium in this sense is then not dependent on the objective data being constant in an absolute sense and is not necessarily confined to a stationary process[*]. Equilibrium analysis becomes in principle applicable to a progressive society and to those intertemporal price relationships which have given us to much trouble in recent times.[6]

These considerations seem to throw considerable light on the relationship between equilibrium and foresight, which has been somewhat hotly debated in recent times.[7]

• It appears that the concept of equilibrium merely means that the foresight of the different members of the society is in a special sense correct. It[=foresight...] must be correct in the sense (1)that every person's plan is based on the expectation of just those actions of other people which those other people intend to perform and (2)that all these plans are based on the expectation of the same set of external facts, so that under certain conditions nobody will have any reason to change his plans. 
• Correct foresight is then (1)not, as it has sometimes been understood, a precondition which must exist in order that equilibrium may be arrived at. It is rather the defining characteristic of a state of equilibrium. (2)Nor need foresight for this purpose be perfect in the sense that it need extend into the indefinite future or that everybody must foresee everything correctly. We should (3)rather say that equilibrium will last so long as the anticipations prove correct and that they need to be correct only on those points which are relevant for the decisions of the individuals. But on this question of what is relevant foresight or knowledge, more later.

{{

Before I proceed further I should probably stop for a moment to illustrate by a concrete example what I have just said about the meaning of a state of equilibrium and how it can be disturbed. Consider the preparations which will be going on at any moment for the production of houses.[:] 

1. Brickmakers, plumbers, and others will all be producing materials which in each case will correspond to a certain quantity of houses for which just this quantity of the particular material will be required. 
2. Similarly we may conceive of prospective buyers as accumulating savings which will enable them at certain dates to buy a certain number of houses. 
3. If all these activities represent preparations for the production (and acquisition) of the same amount of houses, we can say that there is equilibrium between them in the sense that all the people engaged in them may find that they can carry out their plans.[8] 
4. This need not be so, { because other circumstances which are not part of their plan of action may turn out to be different from what they expected. Part of the materials may be destroyed by an accident, weather conditions may make building impossible, or an invention may alter the proportions in which the different factors are wanted. This is what we call a change in the (external) data, which disturbs the equilibrium which has existed. But if the different plans were from the beginning incompatible, it is inevitable, whatever happens, that somebody's plans will be upset and have to be altered and that in consequence the whole complex of actions over the period will not show those characteristics which apply if all the actions of each individual can be understood as part of a single individual plan }, which he has made at the beginning[9] 

}}

6

When in all this I emphasize the distinction between (1)mere intercompatibility of the individual plans[10] and (2)the correspondence between them and the actual external facts or objective data, I do not, of course, mean to suggest that the subjective interagreement is not in some way brought about by the external facts.

• There would, of course, be no reason why the subjective data of different people should ever correspond unless they were due to the experience of the same objective facts. 
• But the point is that pure equilibrium analysis is not concerned with the way in which this correspondence is brought about. In the description of an existing state of equilibrium which it provides, it is simply assumed that the subjective data coincide with the objective facts. [Why? Because:]
  (a) The equilibrium relationships cannot be deduced merely from the objective facts, since the analysis of what people will do can start only from what is known to them.
  (b) Nor can equilibrium analysis start merely from a given set of subjective data, since the subjective data of different people would be either compatible or incompatible, that is, they would already determine whether equilibrium did or did not exist. 

  We shall not get much further here unless we ask for the reasons for our concern with the admittedly fictitious state of equilibrium. Whatever may occasionally have been said by overpure economists, there seems to be no possible doubt that the only justification for this is the supposed existence of a tendency toward equilibrium. It is only by this assertion that such a tendency exists that economics ceases to be an exercise in pure logic and becomes an empirical science; and it is to economics as an empirical science that we must now turn.

In the light of our analysis of the meaning of a state of equilibrium it should be easy to say what is the real content of the assertion that a tendency toward equilibrium exists. It can hardly mean anything but that, under certain conditions, the knowledge and intentions of the different members of society are supposed to come more and more into agreement or, to put the same thing in less general and less exact but more concrete terms, that the expectations of the people and particularly of the entrepreneurs will become more and more correct. In this form the assertion of the existence of a tendency toward equilibrium is clearly an empirical proposition, that is, an assertion about what happens in the real world which ought, at least in principle, to be capable of verification. And it gives our somewhat abstract statement a rather plausible common-sense meaning. The only trouble is that we are still pretty much in the dark about (a) the conditions under which this tendency is supposed to exist and (b) the nature of the process by which individual knowledge is changed.

7

In the usual presentations of equilibrium analysis it is generally made to appear as if these questions of how the equilibrium comes about were solved. But if we look closer, it soon becomes evident that these apparent demonstrations amount to no more that the apparent proof of what is already assumed.[11] [:]

• The device generally adopted for this purpose is the assumption of a perfect market where every event become known instantaneously to every member. It is necessary to remember here that the perfect market which is required to satisfy the assumptions of equilibrium analysis must not be confined to the particular markets of all the individual commodities; the whole economic system must be assumed to be one perfect market in which everybody knows everything. The assumption of a perfect market, then, means nothing less than that all the members of the community, even if they are not supposed to be strictly omniscient, are at least supposed to know automatically all that is relevant for their decisions. It seems that that skeleton in our cupboard, the "economic man," whom we have exorcised with prayer and fasting, has returned through the back door in the form of quasi-omniscient individual.

  The statement that, if people know everything, they are in equilibrium is true simply because that is how we define equilibrium. The assumption of a perfect market in this sense is just another way of saying that equilibrium exists but does not get us any nearer an explanation of when and how such a state will come about. It is clear that, if we want to make the assertion that, under certain conditions, people will approach that state, we must explain by what process they will acquire the necessary knowledge. Of course, any assumption about the actual acquisition of knowledge in the course of this process will also be of a hypothetical character. But this does not mean that all such assumptions are equally justified. We have to deal here with assumptions about causation, so that what we assume must not only be regarded as possible (which is certainly not the case if we just regard people as omniscient) but must also be regarded as likely to be true; and it must be possible, at least in principle, to demonstrate that it is true in particular case.

  The significant point here is that it is these apparently subsidiary hypotheses or assumptions that people do learn from experience, and about how they acquire knowledge, which constitute the empirical content of our propositions about what happens in the real world. They usually appear disguised and incomplete as a description of the type of market to which our proposition refers; but this is only one, though perhaps the most important, aspect of the more general problem of how knowledge is acquired and communicated. The important point of which economists frequently do not seem to be aware is that the nature of these hypotheses is in many respects rather different from the more general assumptions from which the Pure Logic of Choice starts. The main differences seem to me to be two:

  First, (... ...) But the assumptions or hypotheses, which we have to introduce when we want to explain the social processes, concern the relation of the thought of an individual to the outer world, the question to what extent and how his knowledge corresponds to the external facts. And the hypotheses must necessarily run in terms of assertions about causal connections, about how experience creates knowledge.

  Second, (... ...)

8

(... ...) But I am afraid that I am now getting to a stge where it becomes exceedingly difficult to say what exactly are the assumptions on the basis of which we assert that there will be a tendency toward equilibrium and to claim that our analysis has an application to the real world.[13] (...) all I can do is to ask a number of questions to which we shall have to find an answer if we want to be clear about the significance of our argument.

The only condition about the necessity of which for the establishment of an equilibrium economists seem to be fairly agreed is the "consistancy of the data." (... ...)

9

(...) But there is further question which seems to me to be at least equally important but which appears to have received no attention at all, and that is how much knowledge and what sort of knowledge the different individuals must possess in order that we may be able to speak of equilibrium. It is clear that, if the concept is to have any empirical significance, it cannot presuppose that everybody knows everything. I have already had to use the undefined term "relevant knowledge," that is, the knowledge which is relevant to a particular person. But what is this relevant knowledge? (... ...)

  Clearly there is here a problem of the division of knowledge[16] which is quite analogous to, and at least as important as, the problem of the division of labor. (...) it seems to me to be the really central problem of economics as a social science. The problem which we pretend to solve is how the spontaneous interaction of a number of people, each possessing only bits of knowledge, brings about a state of affairs in which prices correspond to costs, etc., and which could be brought about by deliberate direction only by somebody who possessed the combined knowledge of all those individuals. (...)

( ... ...)

  There is only one more point in this connection which I should like to mention. This is that, if the tendency toward equilibrium [...] is only toward an equilibrium relative to that knowledge which people will acquire in the course of their economic activity, and if any other change of knowledge must be regarded as a "change in the data" in the usual sense of the term, which falls outside of the sphere of equilibrium analysis, this would mean that equilibrium analysis can really tell us nothing about the significance of such changes in knowledge, and it would also go far to account for the fact that pure analysis seems to have so extraordinarily little to say about institutions, such as the press, the purpose of which is to communicate knowledge. It might even explain why the preoccupation with pure analysis should so frequently create a peculiar blindness to the role played in real life by such institutions as adevertising.

10

(... ...)

Dic: a bone of contention

• The main bone of contention is the temperature level of the air-conditioners.
• The examination system has long been a serious bone of contention in this country.
• The main bone of contention between us is our children's education.
• We've fought for so long that we've forgotten what the bone of contention is. 
• The question of a fence between the houses has become quite a bone of contention.

* * *

■ If a particular matter or issue is a bone of contention, it is the subject of a disagreement or argument.

■ something that causes arguments between people.

■ something that people disagree or argue about.

■ Fig. the subject or point of an argument; an unsettled point of disagreement.

... Cobuild, LDOCE, Macmillan, McGraw-Hill Dictionary of American Idioms and Phrasal Verbs.

Dic: (be) in the air

• There was great excitement in the air.
• Love/Change/Spring is in the air.
• Christmas was in the air. 
• There was a sense of excitement in the air.
• Change is in the air. 
• Excitement was in the air.
• There was a feeling in the air that it was time for a change.
• Spring is in the air.
• There's romance in the air.

* * * 

■ If something is in the air it is felt to be present, but it is not talked about.

■ a) in circulation; current, b) in the process of being decided; unsettled.

■ If something is in the air, you feel that it is happening or about to happen.

■ adv. on everybody's mind; in everyone's thoughts

■ a) if a feeling is in the air, a lot of people feel it at the same time. b) to be going to happen very soon.

■ Abroad; prevalent.

■ something is in the air: used for saying that people all have a similar feeling, especially a feeling that something exciting or new is happening.

■ felt by a number of people to exist or to be happening.

.... Cobuild, Collins, CALD, Wordnet, LDOCE, The American Heritage, Macmillan, OALD

[발췌] Keynes and the LSE Economists (Susan Howson, 2009)

지은이: Susan Howson
자료: Journal of the History of Economic Thought, Volume 31, Issue 03, 2009년 9월, pp 257-280.

※ 발췌(excerpts):

(... ...)

Enter Hayek. On 27 January 1931 the door of Robbins's office at LSE “open[ed] to admit the tall, powerful, reserved figure which announced itself quietly and firmly as ‘Hayek’” (Robbins 1971, p. 127). He had been invited in the spring of 1930 to give four public lectures in the University of London Advanced Lectures in Economics series during the 1930-1 academic year; for the following year Robbins invited Keynes (who declined because he was too busy). Hayek liked to claim that Robbins, “an almost unique … English professor who could read German literature … pounced on my subject: This is the thing we need at the moment, to fight Keynes” (Hayek 1994, p. 77). But Hayek had in fact received and accepted his invitation from Beveridge before Robbins had his row with Keynes. Hayek himself, however, was very keen to fight Keynes, whose Treatise on Money had by now been published. He heard Keynes's (1931a) radio broadcast on the problem of unemployment shortly before he traveled to England. He preceded his visit to London with one to Cambridge, where he stayed with Dennis Robertson at Trinity and gave a lecture to the Marshall Society and also attended Keynes's Monday Club the night before he went to London. Richard Kahn, who was present at the Marshall Society meeting, attributes the “breach” between LSE and Cambridge economists to Hayek not to Robbins (Kahn 1984, pp. 180–2).

(... ...)

Lerner then spent six months in Cambridge in 1934-5, when he became a Keynesian, later (1934, p. viii) thanking Joan and Richard “for the great pains they took in getting me to overcome my prejudices against Mr Keynes's great advancement of economic understanding.”31 Kaldor's conversion came a year later, when he went to the United States on a Rockefeller Travelling Fellowship in 1935/6 and there read the General Theory just after it was published. He came back to the School a Keynesian. His acrimonious debates with Hayek in LSE seminars are remembered by many participants. He also began to publish on Keynesian macroeconomic topics.32

When the General Theory was published in February 1936 Keynes sent copies to some 80 professional economists including Hayek and Robbins. When they thanked him, they both said they would read it soon. Robbins said he would read it in the Easter vacation. Hayek told Keynes on 2 February that he had started reading it but had not got very far.

I have immediately started reading it, but as you will expect, have not yet got very far. I fully agree about the importance of the problem which you outline at the beginning [i.e. the determination of the actual level of employment], but I cannot agree that it has always been as completely neglected as you suggest.
I have also glanced at the central later sections of whose main argument I had some idea from the expositions of Bryce and Mrs Robinson. I am still puzzled by the treatment of the saving-investment relationship, of liquidity preference and some other points. But probably all that will be cleared up when I have worked through the whole systematically. But if my present doubts remain I shall probably ask your hospitality for some notes on particular points in the E.J. [of which Keynes was editor].33

[33] Robbins to Keynes, 6 February 1936, Keynes Papers EJ/13, King's College Cambridge; Hayek to Keynes, 2 February 1936, reproduced in Keynes (1979, pp. 207–8). Bryce had given an evangelical presentation of Keynes's ideas to Hayek's graduate seminar at LSE in the spring of 1935. Hayek had generously allowed the discussion to last over four weeks. Bryce also told Keynes: “I might add that their chief difficulties were with the definitions of income and investment, with the concept of the propensity to spend, and with the way in which equilibrium would establish itself again after, say, an increase in the quantity of money. On the whole, however, they seemed able to understand it and were quite interested” (Bryce to Keynes, 3 July 1935, and Bryce, “An introduction to a monetary theory of employment,” Keynes 1979, pp. 131–50). Robinson's article, “A parable of savings and investment,” had been published in Economica (1933).

Two weeks later, however, he admitted to Gottfried Haberler that he was “hopelessly stuck” in chapter 6 (The definition of income, saving and investment).

A month later Hayek wrote to Haberler again, telling him he was going to Austria next week and Robbins was leaving tomorrow for a long lecturing and skiing trip to Finland and Scandinavia. The next day an article by Haberler on the multiplier arrived for Economica. Robbins on the point of departure handed it to Hayek who returned it to Haberler as there were “difficulties” with Economica. The editors had asked Pigou to review the General Theory, his review had come in and was very critical, and in these circumstances they wanted to avoid anything that could give the impression of a planned campaign against Keynes. He himself had for that reason determined to submit a note to the Economic Journal which Keynes could not very well refuse. He recommended Haberler to send his note to the EJ too. “I hope you will really understand our difficulties” he went on, “The chance exists just now to isolate Keynes and to bring to a stand a common front of other Cambridge and London [economists]. These possibilities we would not jeopardize by putting Economica in the forefront of the attack. Pigou's article will cause enough sensation.”34

[34] Hayek to Haberler, 15 February, 14 and 15 March 1936, translated by and quoted in Howson (2001, pp. 371–2).

Hayek did not in fact submit a note or article on the General Theory to the EJ. He decided instead to get on with his own book, which I have already mentioned. He did, however, comment to Haberler when he had finished reading the General Theory. He was “awfully annoyed,” especially because “through his formulation he discredits many important ideas, which now lie in the air, among many people, and it will make it hard to try to persuade them without tackling all the other nonsense.”35

[35] Hayek to Haberler, 3 May 1936, translated by and quoted in Howson (2001, p. 372). Haberler sent his note to Keynes, who admitted the awkward position he was in as editor, and Haberler published it in the Zeitschrift für Nationalökonomie instead (Keynes 1979, pp. 248–54; Haberler 1936).

Robbins's trip took up almost all of the Easter vacation. I do not know whether he found the time to read the General Theory then nor what he thought of it when he did. In the summer term he was, like Hayek, concentrating a book of his own (Robbins 1937). In his teaching in the next three years (1936/7 to 1938/9) his Principles of Economic Analysis lectures concentrated on microeconomics, and although he included Hicks's 1937 article, “Mr. Keynes and the Classics,” at the end of his Principles reading list for 1938-9, he left macroeconomics to Hayek and their younger colleagues, especially Durbin and Kaldor. Durbin's first reaction to the General Theory had been rather different from Hayek's—in spite of the fact that his recently published second book, The Problem of Credit Policy, had used Hayekian analysis. In April 1936 he told Keynes “how very much” he had enjoyed it: “I have read almost nothing else since it came out and I have immensely enjoyed my labours. I find myself in profound disagreement with the political notes in the last chapter [‘Concluding notes on the social philosophy towards which the general theory might lead’] and I do not understand which monetary policy you are advocating for the cure of the trade cycle—but the main argument of the book has been most stimulating to me.”3

(... ...)

Dic: a handle on someone or something

• When you got a handle on your anxiety you can begin to control it.
• I can't get a handle on these sales figures.
• Visiting the country should give us a better handle on understanding the problems.
• It is difficult to get a handle on how widespread this problem is.
• I was finally able to get a handle on the true nature of the problem.
• I soon began to get a handle on the new software.

* * *

■ If you have a handle on a subject or problem, you have a way of approaching it that helps you to understand it or deal with it. (informal)

■ get/have a handle on someone/something: (informal) to understand or know about someone or something, especially so that you can deal with it or them later.

■ give someone a handle (on something): (informal) to give someone enough facts or knowledge for them to be able to deal with something.

■ get a handle on it: to start to understand a situation, subject etc:

■ get a handle on, have a handle on: (informal) to achieve an understanding of.

■ have/got a handle on something: (informal) to understand something well.

... Cobuild, OALD, LDOCE, The American Heritage, Macmillan

[발췌: B. Caldwell's introduction to] Contra Keynes And Cambridge

• 출처: The Collected Works of F.A. Hayek, Vol. 9: Contra Keynes And Cambridge: Essays, Correspondeces. Bruce Caldwell ed., Univ. of Chicago Press 1989. 
• 자료: 구글도서

OF WHICH the Introduction by Bruce Caldwell:

※ 발췌(excerpts):

p. 40:

The Riddle of the Review

A riddle remain: Why did Hayek failed to write a review of The General Theory? Keynes has sent him an advance copy. In his letter of thanks, Hayek mentioned that he was puzzled by some parts, and found other parts troubling, and concluded that “if my present doubts remain I shall probably ask for your hospitality for some notes on particular points in the E. J. [Economic Journal]”[89] One suspects that his doubts were not dispelled by further study. So why did he never produce a review?

[89] Letter, Hayek to Keynes, February 2, 1936, reprinted in ^The General Theory and After: A Supplement^, ed. Donald Moggridge, vol. 29(1979) of ^The Collected Writings of J.M. Keynes^, op. cit., p. 208.

Hayek suggested some answer in three of the retrospective pieces included in this volume.[90] He returned to the question often, probably because, as he put it, "I have to the present day not quite got over a feeling that I then shirked what should have been a plain duty."[91] What reasons did Hayek offer to explain his uncharacteristic shirking?

[90] See "The Economics of the 1930s as Seen from London", pp.59-61, this volume; "Personal Recollections of Keynes and the Keynesian Revolution", pp. 240-241, this volume; "The Keynes Centenary: The Austrian Critique", pp. 251-252, this volume.
[91] "The Economics of the 1930s as Seen from London", p. 60, this volume

The first invokes Hayek's experience with his review of Keynes's Treatise. Having spent a good deal of time preparing his critique, and having felt that he had demolished Keynes's position in his review,

p.41:

Hayek was quite disappointed to receive a letter from Keynes saying that he had changed his mind and was working out a new model. Hayek wrote no review of The General Theory then because he assumed that by the time he had completed the task, Keynes would have changed his mind again.

On the face of it, this makes some sense. Keynes was famous, and not just among economists, for changing his mind. Indeed, mutability was part and parcel of his public persona: He was dubbed "the boneless man" in the press for his vacillation on free trade; despite his earnest (though unsuccessful) efforts on behalf of Lloyd George in the 1929 General Election, Keynes four years later released a scathing portrait of the "goat-footed bard" at Versailles in his ^Essays in Biography^, and one must not forget the Thomas Jones barb about five economists with six conflicting opinions. For many observers, Keynes was more mercury than Cassandra.[92]

But if Keynes's inconsistency in regard to theory were Hayek's sole reason for holding back criticism, then he was guilty of a serious misjudgement. Keynes manifestly had not changed his mind about the necessity of saving capitalism from itself. And given that Keynes called his book, in his own modest way, The General Theory, his intent should have been clear enough. Keynes's theoretical promiscuity is not, by itself, sufficient to account for Hayek's diffidence. If anything, it could well have provided just the ammunition that was needed for an effective counterattack.

In "The Economics of the 1930s as Seem from London", Hayek linked the 'Keynes-would-change-his-mind' argument to another: his own "tiredness from controversy".[95] This clearly constitutes a separate reason. To be sure, Hayek had good reason to be tired by 1936: He had been the centre of other controversies, fighting with Frank Knight over capital theory and with market socialists over planning; he had been unable to (... ...)

* * *

CF. similar topic in another book

자료: [구글도서] A Tiger by the Tail: The Keynesian Legacy of Inflation
지은이: Friedrich August Hayek

VI. Main Themes Restated

18. Personal Recollections of Keynes

Even to those who knew Keynes but could never bring themselves to accept his monetary theories, and at times thought his pronouncements somewhat irresponsible, the personal impression of the man remains unforgettable. And especially to my generation (he was my senior by 16 years) he was a hero long before he achieved real famous an economist theorist. Was he not the man who had had courage to protest against the economic clauses of the peace treaties of 1919? We admired the brilliantly written books for their outspokeness and independence of thought, even though some older and acuter thinkers at once pointed out certain theoretical flaws in his argument. And those of us who had the good fortune to meet him personally soon experienced the magnetism of the brilliant conversationalist with his wide range of interests and his bewitching voice.

I met hims first in 1928 in London at some meeting of institutes of business cycle research, and though we had at once our first strong disagreement on some point of interest theory, we remained thereafter friends who had many interests in common, although we rarely could agree on economics. He had a somewhat intimidating manner in which he would try to ride roughshod over the objections of a younger man, but if one stood up to him he would respect him forever afterwards even if he disagreed. After I moved from Vienna to London in 1931 we had much occasion for discussion both orally and by correspondence.

Keynes Changes His Mind

I had undertaken to review for Economica his Treasitse on Money which had then just appeared, and I put a great deal of work into two long articles on it. To the first of these he replied by a counterattack on my ^Prices and Production^. I felt that I had largely demolished his theoretical scheme (essentially Vol. I), though I had great admiration for the many profound but unsystematical insights contained in Volume II of the work. Great wa my disappointment when all this effort seemed wasted because after the appearance of the second part of my article he told me that he had in the meantime changed his mind and no longer believed what he said in that work.

This was one of the reasons why I did not return to the attack when he published his now famous General Theoryㅡa factor for which I later much blamed myself. But I feared that before I had completed my analysis he would again have changed his mind. Though he had called it a 'general theory', it was to me too obviously another tract for the times, conditioned by what he thought were the momentary needs of policy. But there was also another reason which I then only dimly felt but which in retrospect appears to me the decisive one: [:]

my disagreement with that book did not refer so much to any detail of the analysis as to the general approach followed in the whole work. The real issue was the validity of what we now call macro-analysis, and I feel now that in a long-run perspective the chief significance of the General Theory well appear that more than any other single work it decisively furthered the ascendancy of macro-economics and the temporary decline of micro-economic theory.

I shall later explain why I think that this development is fundamentally mistaken. But first I want to say that it is rather an irony of fate that Keynes should have become responsible for this swing to macro-theory. Because he thought in fact rather little of the kind of econometrics which was just then becoming popular, and I do not think that he owed any stimulus to it. His ideas were rooted entirely in Marshallian economics, which was in fact the only economics he knew. Widely read as Keynes was in many fields, his education in economics was somewhat narrow. He did not read any foreign language except Frenchㅡor, as he once said of himself, in German he could understand only what he knew already. It is a curious fact that before WWI he had reviewed Ludwig von Mises's ^Theory of Money^ for the ^Economic Journal^ (just as A.C. Pigou had a little earlier reviewed Wicksell) without in any way profiting from it. I fear it must be admitted that before he started to develop his own theories, Keynes was not a highly trained or a very sophisticated economic theories. He started from a rather elementary Marshallian economics and what had been achieved by Walras and Pareto, the Austrians and the Swedes was very much a closed book to him. I have reason to doubt whether he ever fully mastered the theory of international trade; I don't think he had ever thought systematically on the theory of capital, and even in the theory of the value of money his starting pointㅡand later the object of his criticismㅡappears to have been a very simple, equation-of-exchange-type of the quantity theory rather than the much more sophisticaed cash-balances approach of Alfred Marshall.

Thinking in Aggregates

(...)

Dic: De haut en bas

loc. adv.

a) En allant du haut vers le bas. (＝vieilli. du haut en bas; ≠ de bas en haut.) 

• Regarder de haut en bas (mouvement, position, orientation). 
• Ensuite il m'a remis une grosse enveloppe jaune, dûment scellée, de haut en bas et de long en large, ce qui la rend parfaitement inviolable (Bosco, Mas Théot.,1945, p. 119).
• On y place les morts qui se présentent, en allant de gauche à droite et de haut en bas, comme on lit un livre (T'Serstevens, Itinér. esp.,1963, p. 127).

SYNT. 

• Coup d'œil, geste, mouvement de haut en bas; 
• hocher, secouer la tête de haut en bas; 
• (se) fendre, (se) déchirer de haut en bas; 
• couler, glisser, se mouvoir, aller de haut en bas; 
• traversé, strié, zébré de haut en bas.

− En partic. Complètement, à fond, dans le détail. (＝ de la tête aux pieds.) 

• Examiner qqn de haut en bas. 
• Il s'écarta légèrement, sans retirer ses mains, et la contempla, de haut en bas, en possesseur (Martin du G., Thib., Été 14, 1936, p. 215).
• Ce coup d'œil de haut en bas, déjà distrait, même pour les plus chers, et puis brusquement braqué en avant (Gracq, Beau tén.,1945, p. 129).
• Visiter une maison de haut en bas. (＝ de fond en comble, de la cave au grenier.) 
• La marchande de beurre et la marchande de fruits continuaient à examiner la maison de haut en bas, épiant chaque ouverture, s'attendant à voir des chapeaux de sergents de ville à toutes les fentes (Zola, Ventre Paris,1873, p. 882).
• Autrefois, elle avait peur de rester seule le soir, et ça en plein Paris, dans une grande maison habitée de haut en bas (Triolet, Prem. accroc,1945, p. 22).V. de1, ex. 10.

− Loc. fig. Regarder, toiser, traiter qqn de haut en bas. Le considérer avec mépris, arrogance, insolence. Cf. du haut en bas (s.v. haut2). 

• Il eût l'air de le renier, de se moquer de lui, de la même façon que, dès que j'eus promis le secret sur les fonctions de son père (...) il me traita de haut en bas (Proust, Sodome, 1922, p. 1011).
• Elle (...) toisa son interlocuteur de haut en bas, avec une grimace de dégoût (Bernanos, Imposture,1927, p. 483).V. bas1III B 2 c, ex. 84.

− [Sur l'échelle des sons] (...)

b) Au fig. [Sur une échelle de valeurs] 

• La prétention de transmettre les croyances de haut en bas dans toute la société religieuse, sans que personne eût le droit de les débattre pour son propre compte (Guizot, Hist. civilisation, 5, 1828, p. 22).
• De haut en bas, du plus grand au plus petit, une même structure visible, dont le dessin, renforcé par la distribution même des ombres et des vides, s'accentue et se prolonge (Teilhard de Ch., Phénom. hum.,1955, p. 151).

..... http://www.cnrtl.fr/definition/haut

[검색: some search on] the Keynesian invasion of the United States in 1930s

■ Robert Bryce: http://en.wikipedia.org/wiki/Robert_Bryce

(...) After graduating with engineering degree from the University of Toronto, Bryce undertook graduate studies in economics at Cambridge, where he was influenced by the ideas of John Maynard Keynes. In the fall of 1935, he left Britain for Harvard where, as a graduate student, he introduced Keynesian economics in the United States, with the help of fellow Canadian Lorie Tarshis. According to John Kenneth Galbraith, Joseph Schumpeter "called Keynes Allah and Bryce his Prophet".[1]

[1] Colander, David; Landreth, Harry (1998), "Political Influence on the Textbook Keynesian Revolution: God, Man, and Laurie (sic) Tarshis at Yale", in O. F. Hamouda and B. B. Price, Keynesianism and the Keynesian Revolution in America: A Memorial Volume in Honour of Lorie Tarshis, Cheltenham: Edward Elgar, pp. 59–72

■ Robert Bryce (Obituary by CARL MOLLINS, 1997)

(...) Bryce became a Keynesian evangelist, first at Harvard and then in Ottawa. In April, 1945, with the end of the Second World War in sight and political thinking geared to postwar reconstruction, the government published a plan devised by Bryce and his colleagues that was to govern federal policy for 40 years, the white paper on employment and income. Henceforth, it proclaimed, the maintenance of a high and stable level of employment and incomes in Canada would be a major federal policy and "a great national objective."

The 1945 document declared: "The government will be prepared, in periods when unemployment threatens, to incur deficits and increases in the national debt resulting from its employment and income policy, ..." But the Keynes-Bryce idea has faded with the disappearance in the 1990s of a Marxist challenge to capitalism.[What does this sentence mean? Curious.]

(...) Recalled Galbraith: "Bob Bryce was part of a revolution at Harvard. In a substantial measure, he brought Keynes to the United States. He was the centre of interest at the university during the time he was here and the focal point of the most intense discussion that I ever remember. He was also a source of great annoyance to some of the older, conservative members of the faculty. Joseph Schumpeter [an economist at Harvard from 1932 to 1950] once said in an indignant way, 'Keynes is Allah and Bryce is his prophet.' He didn’t approve of either.

■ “To Be Young Was Very Heaven”: The Keynesian Revolution in America (by J.W. Nevill)

※ This text appears to be a part of this book: David C. Colander and Harry Landreth (eds). The Coming of Keynesianism to America: Conversation with the Founders of Keynesian Economics, 1996, Cheltenham UK, Edward Elgar, pp. 244+11

[발췌: Samuelson in] New Economics: Keynes' Influence on Theory And Public Policy

편저자: Seymour E. Harris

자료: 구글도서
Kessinger Publishing, 2005

※ 구글도서의 다음 목차에선 목차의 제목을 제대로 알 수 없다.

• Seymoub E Habbis About This Book 3 | Seymoub E Habbis Keynes Influence 12 | Seymoub E Habbis The Appraisal of 37 | Seymoub E Habbis In Relation to Classi 55 | c Public Policy 56 
• 8. R F Harrod 65 | 9. Joseph A Schumpeteb 73 | J E Meade A Simplified Model 92 | 10. Paul M Sweezy 102 
• 11. Abba P Lekneb 113 | 12. Alvin H Hansen 133 | 13. Paul A Samuelson 145 | Gottfbied Habebleb 161 | J M Keynes 181 
• Alvin H Hansen Keynes on Economic 197 | D B Copland Public PolicyThe 208 | b Keynes and Econometrics 219 | Keynes and the Classicists 233 | Seymotjb E Harris International Eco 245 | Ragnar Nurkse Domestic and Interna 264 | Arthur I Bloomfteld Foreign 293 | Randall HmsHAw Keynesian Com 315 | Proposals for an International Clearing 323 | Joan Robinson The International Cur 342 | Lord Keynes The International Clear 359 | Lord Keynes The International Mon 369 | Lord Keynes The AngloAmerican 380 | Lord Keynes The Bank for Recon 396 | Albert G Hart KeynesAnalysis 415 | Alan Sweezy Declining Investment 425 | Lloyd A Metzler Keynes and 436 | Gerhard Colm Fiscal Policy 450 | Benjamin Higgins Keynesian Eco 468 | Richard M Goodwin The Multiplier 482 | Money and Prices 503 | Arthur Smithies Effective Demand 572 | R F Harrod Keynes and Traditional 591 | Keynes System 606 | Abba P Lerneb Saving Equals Invest 619 | Abba P Lebneb Saving and Invest 626 | Abba P Lerneb Alternative Formula 634 | Abba P Lerneb Interest TheorySup 655 | Seymour E Harris and Margarita Willfort 665

* * *

Chapter 11_ The General Theory (1), by Abba P. Lerner

Chapter 12_ The General Theory (2), by Alvin Hansen

※ 발췌(excerpts): 

새뮤얼슨의 이 글은 다른 학술지(아마도 Econometrica)에 실렸던 (아마도) "Lord Keynes and The General  Theory"라는 제목의 소론과 같은 글로 보인다(확인해 보니 같은 글).

Chapter 13_ The General Theory (3), by Paul A. Samuelson

The death of Lord Keynes will undoubtedly afford the occasion for numerous attempts to appraise the character of the man and his contribution to economic thought. The personal details of his life and antecedents very properly receive notice elsewhere in this volume.

It is perhaps not too soon to venture upon a brief and tentative appraisal of Keynes' lasting impact upon the development of modern economic analysis. And it is all the more fitting to to so now that his major work has just completed the first decade of its very long life.

The Impact of the General Theory

I have always considered it a priceless advantage to have been born as an economist prior to 1936 and to have received a thorough grounding in classical economics. It is quite impossible for modern students to realize the full effect of what has been advisably called "The Keynesian Revolution"[1] upon those of us brought up in the orthodox tradition. What beginners today often regard as trite and obvious was to us puzzling, novel, and heretical.

To have been born as an economist before 1936 was a boonㅡyes. But not to have been born too long before!

Bliss was it in that dawn to be alive,

But to be young was very heaven!

The General Theory caught most economists under the age of 35 with the unexpected virulence of a disease first attacking and decimating an isolated tribe of south sea islanders. Economist beyond fifty turned out to be quite immune to the ailment. With time, most economists in-between began to run the fever, often without knowing or admitting their condition.

I must confess that my own first reaction to the General Theory was not at all like that of Keats on first looking into Chapman's Homer. No silent watcher, I, upon a peak in Darien. My rebellion against its pretentions would have been complete, except for an uneasy realization that I did not at all understand what it was about. And I think I am giving away no secrets when I solemnly averㅡupon the basis of vivid personal recollectionㅡthat no one else in Cambridge, Massachusetts, really knew what it was about for some 12 to 18 months after its publication. Indeed, until the appearance of the mathematical models of Meade, Lange, Hicks, and Harrod, there is reason to believe that Keynes himself did not truly understand his own analysis.

Fashion always plays an important role in economic science; new concepts becomes the ^mode^ and then are passe. A cynic might even be tempted to speculate as to whether academic discussion is itself equilibrating: whether assertion, reply, and rejoinder to not represent an oscillating divergent series, in whichㅡto quote Frank Knight's characterization of sociologyㅡ"bad talk drives out good." 

In this case, gradually and against heavy resistance, the realization grew that the new analysis of ^effective demand^ associated with the General Theory was not to prove such a passing fad, that here indeed was part of "the wave of the future." This impression was confirmed by the rapidity with which English economists, other than those at Cambridge, took up the new Gospel: e.g. Harrod, Meade, and others, at Oxford; and still more surprisingly, the young blades at the London School, like Kaldor, Lerner, and Hicks, who threw off their Hayekian garments and joined in the swim.

In this country it was pretty much the same story. Obviously, exactly the same words cannot be used to describe the analysis of income determinants of, say, Lange, Hart, Harris, Ellis, Hansen, Bissell, Haberler, Slichter, J.M. Clark, or myself. And yet he Keynesian taint is unmistakably there upon every one of us

Instead of burning out like a fad, today, ten years after its birth, The General Theory is still gaining adherents and appears to be in business to stay. Many economists who are most vehement in criticism of the specific Keynesian policiesㅡwhich must always be carefully distinguished from the scientific analysis associated with his nameㅡwill never again be the same after passing through his hands.[2]

I has been wisely said that only in terms of a modern theory of effective demand can one understand and defend the so-called "classical" theory of unemployment. It is perhaps not without additional significance, in appraising the long-run prospects of the Keynesian theories, that no individual, having once embraced the modern analysis, hasㅡas far as I am awareㅡlater returned to the older theories. And in universities, where graduate students are exposed to the old and new income analyses, I am told that it is often only too clear which way the wind blows.

Finally, and perhaps most important from the long-run standpoint, the Keynesian analysis has begun to filter down into the elementary text-books; and, as everybody knows, once an idea gets into these, however bad it may be, it becomes practically immortal.

(...)

[발췌: 일반이론 8장] The Propensity to Consume: I. Objective Factors

출처: The General Theory of Employment, Interest and Money (Keynes, 1936)
자료: MIA(html); eBook; single PDF; Gutenberg(html) (cf. my catalog of his writings)

※ This is a reading note with excerpts taken, and personal annotations and remarks added, in trying to understand the above text. So, to see the original please visit the above source links. [일반이론 독서메모 (my reading notes of Keynes's General Theory)

※ 발췌(excerpts):

* * *

(... ...)

IV

(... ...)

That it is investment, rather than net investment, which emerges from the statistics of output, is brought out forcibly and naturally in Mr Colin Clark's ^National Income, 1924-1931^[6]. He also shows what a large proportion depreciation, etc., normally bears to the value of investment. For example, he estimates that in Great Britain, over the years 1928-1931, the investment and the net investment were as follows, though his gross investment is probably somewhat greater than my investment, inasmuch as it may include a part of user cost, and it is not clear how closely his 'net investment' corresponds to my definition of this term.

(...)

Mr Kuznets has arrived at much the same conclusion in compiling the statistics of the ^Gross Capital Formation^ (as he calls what I call investment) in the United States, 1919-1933. The physical fact, to which the statistics of output correspond, is inevitably the gross, and not the net, investment. Mr Kuznets has also discovered the difficulties in passing from gross investment to net investment. 'The difficulty', he writes, 'of passing from gross to net capital formation, that is, the difficulty of correcting for the consumption of existing durable commodities, is not only in the lack of data. The very concept of annual consumption of commodities that last over a number of years suffers from ambiguity.[7] He falls back, therefore, (...)

[발췌] Designing a New America: The Origins of New Deal Planning, 1890-1943

자료: [구글도서] Designing a New America: The Origins of New Deal Planning, 1890-1943
지은이: Patrick D. Reagan
Univ of Massachusetts Press, 1999

* * *

Epilogue: The Abolition and Legacy of New Deal Planning


(...) As the president responsible for dealing with the wreckage of the Great Depression, FDR made possible the only experiment in public-sector national planning in U.S. history. Between 1933 and 1943 the National Planning Board, the National Resources Board, the National Resources Committee, and the National Resources Planning Board retained a remarkable continuity of direction from above. Bringing ideas, institutional support, and money from mainstream areas of American life, FDR's planner instituted a brief, stormy life for an advisory process of American national planning that moved beyond the voluntarism of 19th century America but was never intended to create a European statist form of national planning. In a sense, New Deal planning proved to be an example of America exceptionalism compared with its counterparts elsewhere in fascist Italy, the Soviet Union, Nazi Germany, and a militarized Japan. Exceptionalism, however, should not be taken in an absolute sense, but rather needs clarification in a historical perspective too often missed in the theoretical abstractions of social science models. To fully understand New Deal planning requires the longer-term view made possible through the lens of historical focus, a recognition of who the planners were, how they came to New Deal planning, and a close attention to the primary source records.

The origins of New Deal planning went back to the early 20th century. Planning grew up as part of the creation of the modern organizational society that late 20th century Americans take for granted. Between 1900 and 1933 the groundwork was laid through the building of an organizational nexus for planning on a national scale. In the 1930s five men-all lifelong, independent Republicansㅡbecame FDR's planners, but they did not work alone. Before the FDR's election in 1932 they had the support of complex hierarchical bureaucratic institutions first pioneered by the railroads and taken up soon enough by other industries. Eventually that model permeated associational life in modern America and made possible enormous advances in national economic growth while creating a variegated mix of political, social, and cultural institutions. (...)

[발췌] The 1935 Banking Act & the Fed

자료 1: "Federal Reserve System," in The Concise Encyclopedia of Economics ( 항목 기술자: Richard H. Timberlake )

※ 위 경제백과 속의 연준(연방준비제도) 항목은 연준과 통화정책의 변천을 쭉 개관하는 데 좋은 글로 보인다. 아래는 1935년 은행법 즈음의 상황만 발췌한 것이다.

The Original Federal Reserve System: (...)

The Federal Reserve System during the 1920s:

(...) The downturn in business that became the Great Contraction of 1929–1933 began in 1928. Federal Reserve officials, and many financial analysts and politicians, believed that a financial purging of speculative and nonproductive bank credit was needed. They argued that the slackening of production in the economy indicated a diminished “need” for money. Since they had taken monetary control away from the gold standard, their faulty decision to do nothing to keep the money supply from falling allowed the recession to degenerate into a depression. As it did so through 1930 and 1931, the commercial banking system suffered three major crises. By early 1933, it and the economy were in shambles (see great depression).

The Banking Act of 1935:

In 1935, Congress, at the behest of President Roosevelt, passed the Banking Act of 1935. This act converted the autonomous regional system of reserve-holding banks into a monolithic central bank with positive and deliberate control over the U.S. monetary system.

One major change was the creation of the Federal Open Market Committee (FOMC). This agency included the seven governors (as they were now labeled) of the Fed Board, the president of the New York Fed, and four of the other eleven Fed Bank presidents, who rotated membership on the committee. The FOMC controlled open market operations in government securities, which now became system-wide. Reserve Banks still set their own discount rates, but discounting never again figured prominently in Fed policies.

A 1917 amendment to the original act of 1913 had fixed member bank reserve requirements at 7, 10, and 13 percent for member banks in small to larger cities. The act of 1935 extended these percentages to a range double the original values, that is, to 7–14, 10–20, and 13–26 percent, the exact percentages to be set by decision of the Board of Governors. This change added to the board’s policymaking powers. While the new act gave the Fed these additional monetary controls, it nowhere specified goals or targets for Fed policy beyond the general terms in the original act.

The Banking Act also removed the secretary of the treasury and his second-in-command, the comptroller of the currency, from the Fed Board. (They had been chairman and vice chairman of the board.) However, the board’s decisions were even more under the control of the secretary of the treasury than they had been in the past. From 1935 to 1951, the secretary of the treasury, with the compliance of Fed Board Chairman Marriner Eccles, continued to dominate Fed policies.

Gold kept coming into the United States due to both the higher price (thirty-five dollars per ounce) that Congress had legislated in 1934 and the political instability in Europe. By 1936, the commercial banking system had enormous “excess” reserves—double the required amount of currency and reserve-deposit accounts with Fed Banks, which also had double the amount of required gold reserves. Observing the volume of reserves in the banking system and arguing that it would fuel inflation, the Fed Board—with the approval of the secretary of the treasury, most financial experts, and many academicians—doubled commercial bank reserve requirements in three steps: by 50 percent in August 1936, 25 percent in March 1937, and the final 25 percent in May 1937. This momentous change stifled the recovery and initiated the 1937 recession. In fact, even had the banks used all of their excess reserves to expand credit and the money supply, virtually no inflation was possible. The high unemployment of 1936 and 1937 meant that even a fully expanded banking system could not have created enough money to raise prices more than a few percent above their 1929 level. Complete economic recovery did not occur until after the start of World War II. (...)


자료 2: http://www.spartacus.schoolnet.co.uk/USAecclesM.htm

(...) In 1935 Eccles and Currie drafted a new banking bill to secure radical reform of the central bank for the first time since the formation of the Federal Reserve Board in 1913. It emphasized budget deficits as a way out of the Great Depression and it was fiercely resisted by bankers and the conservatives in the Senate. The banker, James P. Warburg commented that the bill was: “Curried Keynes... a large, half-cooked lump of J. Maynard Keynes... liberally seasoned with a sauce prepared by professor Lauchlin Currie.” With strong support from California bankers eager to undermine New York City domination of national banking, the 1935 Banking Act was passed by Congress.


자료 3: A History of Money and Banking in the United States: The Colonial Era to World War II (Murrary N. Rothbard, 2002 Ludwig von Mises Institute)


In Congress, Eccles’s nomination sailed through, with struggles concentrated on the banking act. In the hearings, particularly interesting in opposition was James P. Warburg of Kuhn, Loeb, and chairman of the board of the Kuhn, Loeb–run Bank of Manhattan. Warburg, who as an old-line banker had been allied with the Morgans at the London Economic Conference, denounced the banking bill as “Curried Keynes.”95 In the
course of the controversy, the highly influential New York Times and the Washington Post (owned and directed by Eugene Meyer) changed their initial opposition to support for the bill. Essentially, Eccles won almost all of his points: the shift of banking control from Morgan’s New York Fed to the non-Morgan Washington politicians had been completed. In the Senate, Eccles only had to make one important concession to Glass: instead of the Federal Open Market Committee consisting solely of the governors of the Federal Reserve Board, it would be instead comprised of the seven members of the Federal
Reserve Board plus five rotating representatives of the Federal Reserve banks (in practice, their presidents) and hence of private bankers.

But despite this compromise, the decisive act had taken place: open market policy would be initiated in, dominated by, and enforced by the Federal Reserve Board in Washington.
Actual open market operations would be carried out, most conveniently, in New York, but strictly under the orders of the Federal Reserve Board–dominated FOMC. Individual Federal Reserve banks (in practice, the New York Fed) were prohibited from buying or selling government securities for their own account, except under the direction, or with the explicit permission, of the FOMC. To further reduce the power of the Federal
Reserve banks, it was explicitly provided that the bank elected members of the FOMC were not to serve in any way as agents of the banks that elected them; indeed, the banks were not to know what was going to happen but only to have a chance to be heard through an advisory committee. Indeed, the bank presidents serving on the FOMC were not even allowed to divulge actions taken at FOMC meetings to their own board of directors! Harrison fought unsuccessfully against this provision; and in a last-ditch and finally failing battle in 1937, Harrison tried to get the FOMC to allow Reserve banks to conduct open market operations on their own in case of individual bank emergencies.
In addition, the Federal Reserve Board was given veto power over the election of the president and first vice president of each district Federal Reserve bank. And, in a symbolic gesture, all district Fed “governors,” the hoary name for heads of the central banks, were demoted to “presidents,” whereas the old ”members” of the Federal Reserve Board in Washington were upgraded to “governors,” while the previous “governor”
of the Federal Reserve Board now became the board’s august “chairman of the board of governors.” Furthermore, cementing Chairman Eccles’s power within Washington, the
Treasury secretary and the comptroller of the currency were both removed as ex officio members of the Federal Reserve Board.

Finally, the last shred of qualitativist restraint upon the Fed’s expansion of credit was removed, as bank assets deemed eligible for Fed rediscounting were broadened totally to
include any paper whatever deemed “satisfactory” by the Fed—that is, any assets the Fed wished to declare eligible.96

The Banking Act of 1935 was important for being the final
settled piece of New Deal banking legislation that consolidated
all the revolutionary changes from the beginning of the
Roosevelt administration. The Morgans tried desperately, for
example, to alter the 1933 Glass-Steagall provision, compelling
the separation of commercial and investment banking, but this
reversion was successfully blocked by Winthrop Aldrich.
Specifically, Senator Glass’s amendment to the Banking Act of
1935, restoring limited securities power to deposit banks,
was able to reach the congressional conference committee;
for a while, it looked like this Morgan maneuver would succeed,
but presumably at the behest of Aldrich, however, FDR personally interceded with the committee to kill the Glass amendment.97

For his part, Aldrich, as a Wall Street banker himself, was not very happy about the permanent shift of power from Wall Street to Washington, but he was content to go along with the overall result, as part of the anti-Morgan coalition with Western banking.
The centralization of power over the banking system in Washington was now complete. It is no wonder that the irrepressible H. Parker Willis, writing the following year, lamented the centralized monetary and banking tyranny that the Federal Reserve had become. Willis wisely perceived that the course of inflationary centralization to have begun in the
1920s as Morgan control in the hands of the New York Fed, and now, with the New Deal, was immeasurably accelerated and shifted to Washington:

The Eccles group which advocated the Act of 1935 sought to
obtain for themselves those powers which the more ambitious
of the banking clique in New York and elsewhere had
already arrogated to the Federal Reserve Bank of New York
and to the small group by which the institution was practically
directed [the House of Morgan]. There was no change in
the conception or notion of centralization, but only in the
agency or personnel through which such centralization should
be put into effect.98

The New Deal, Willis went on, had passed various allegedly temporary and emergency measures in its first three years, which were now permanently consolidated into the Banking Act of 1935, and thus “was built up perhaps the most highly centralized and irresponsible financial and banking machine of which the modern world holds record.”
The result, Willis pointed out, was that the years of “tremendous deficit” from 1931 on were marked by a process of “gradually diverting the funds and savings of the community
to the support of governmentally directed enterprises.” It was “an extraordinary development—an extreme application of central banking which brought the system of the United States to a condition of even higher concentration” than in other countries.
Willis ominously and prophetically concluded, Today, the United States thus stands out as a nation of despotically controlled central banking; one in which, as all now admit, moreover, business paper of every kind is gradually taking the form of government paper which is then financed through a governmentally controlled central banking organization.99

EPILOGUE: RETURN OF THE MORGANS : (...)