Pascal Bridel

Yet another look at Léon Walras's theory of tâtonnement

Starting with a detailed discussion of the theorem of equivalent redistributions, Part 1 examines the central role played by the distributional neutrality of tâtonnement in Walrass pure theory of exchange. Part 2 extends this discussion to Walrass attempts at reaching a similar result when dealing with the successive versions of his theory of production before 1900. Part 3 contrasts Walrass and Edgeworths respective technologies of exchange in order to demonstrate that a distributionally neutral tâtonnement is an intrinsic part of Walrass theory of exchange. Finally, and besides briefly summarizing the results, the conclusion develops the crucial connection between the necessity of a converging and distributionally neutral tâtonnement in pure economics with Walrass theories of property and justice.

John Maynard Keynes and the French Connection

Very little is known of the influence of overseas economists upon the work of John Maynard Keynes. In this paper, the authors examine how Keynes changed his views as a result of his correspondence with Marcel Labordere over the period from 1911 to 1945. They focus upon a number of areas, including monetary statistics and the psychology of the speculator, the business cycle, and The General Theory of Employment, Interest and Money. Copyright 1997 by Blackwell Publishers Ltd and The Victoria University of Manchester

The “Treasury View”: An (un-)expected return?

Abstract By examining the rhetorical use of an old piece of economic theory by some contemporary economists, this paper intends to report on “how todays economists conduct a public policy debate”. This paper is neither a scholarly history of the interwar debate nor a sophisticated critique of current economic policy. It is an attempt to link the policy and theoretical arguments of two similar debates separated by nearly 80 years. The second part of the paper demonstrates that the (un-)expected return of the Treasury View is a case study illustrating two very different modelling strategies.

On the origin of money, or Menger’s one-sided reading of Genovesi’s Lezioni

Abstract By examining Menger’s interpretation of Genovesi’s arguments on the origin of money, this note shows that Genovesi is a subtle theorist managing to blend the Cartalist with the Mengerian approaches to the origins of money. Far from resting exclusively on the Mengerian unattended consequences of the uncoordinated behaviours of rational agents trying to minimise their transaction costs, Genovesi shows how governments can and do create fiat money with a positive value in connexion with their ability to raise taxes. For Genvesi both trust (à la Menger) and authority (à la Cartalist) are necessary to explain the positive value of money.

Combining Short-Run And Long-Run Analysis: Some Historical Perspectives

The interaction between short-run and long-run adjustments has always been a question of fundamental importance for economics. This question has been raised by different authors who were considered as pioneers of political economy. In recent history of macroeconomics (i.e., after the Second World War), Roy Harrod’s 1939 contribution has played an important role, setting the agenda for both growth and cycles theory for at least two decades (see, for instance, Assous 2016, or Bruno and Dal Pont Legrand 2014, or Hagemann 2009). If economists never totally ceased to be interested in this question, the combination between short-run and long-run economic analyses still represents a theoretical challenge. Understanding how both dynamics intertwine is not only fundamental for growth theory (cf. Solow 1988) but also for a better understanding of large fluctuations (i.e., deep and durable downturns, as emphasized by Stiglitz 2016). Indeed, economists know all too well that one of the major routes to understanding economic instability (and, indeed, large depressions) is rooted in the short-run/long-run interaction, and more precisely in growth cycles dynamics. Considering the renewed interest macroeconomists have shown for growth cycles analysis—and more generally for theories that account for short-run/long-run interactions—a small group of European historians of economic thought put together a workshop on this topic. The purpose of this scientific meeting (which took place in June 2014, generously financed by the Treilles Foundation) was to associate historians of economic thought with macroeconomists at the frontier of their discipline. Our small group of historians of macroeconomics could thus confront more systematically historical insights on the emergence, development, successes, and failures of earlier attempts with current macroeconomic objectives and challenges. In particular, this workshop helped towards a better understanding of the progressive evolution of the

The General Theory and the Principle of Effective Demand

When it comes to the General Theory, and whatever position one might adopt, one is inevitably condemned to be alternately torn between Scylla and Charybdis. On the one hand, there is today no accepted view of what it was exactly that Keynes actually accomplished (be it at the purely theoretical level or even what his Schumpeterian ‘vision’ was). Practically every economist is keen to offer his own idiosyncratic interpretation of Keynes’s magnum opus, differing of course sometimes more than on some find analytical points from the other ‘4,827’ reinterpretations currently available (Weintraub, 1979, p. 38). On the other hand, the ever-rising tide of articles and books devoted to explorations of the remotest corners of Keynes’s analytical framework leaves very little room — if any — for major improvements. Furthermore the relationship between saving and investment is geometrically in the very eye of the maelstrom Keynes started with his principle of effective demand.

Saving, Investment and the Theoretical Framework of the Treatise (1930)

This chapter has two primary aims: to appreciate Keynes’s departure from the Robertsonian ‘forced-saving’ doctrine and to understand the originality of the theoretical framework of the Treatise.

Banking Policy and the Price Level and the ‘Kinds of Savings’

Since the history of the working relationships between Keynes and Robertson, and their mutual theoretical indebteness, has been told several times in recent years,1 only a few remarks are relevant here; particularly in connection with Keynes’s successive adoption, improvement and final rejection of Robertson’s ‘forced-saving’ doctrine.

Marshall’s Monetary Theory

One of the central motivations of Marshall and his pupils in Cambridge (including Keynes up to the Treatise) was the desire to integrate monetary and value theory by means of the cash-balance equation. For Marshall the value of money is determined by the use of ordinary supply-and-demand curves in perfect accord with the same laws on which his general theory of value is based. In his own words ‘the value of [money] is determined by the relation in which the supply of it stands to the demand for it’ (1926, p. 177). Pigou later organised his famous essay on the ‘Value of Money’ (1917) under the successive subtitles ‘The Demand for Legal-Tender Money’, ‘The Supply for Legal-Tender Money’ and ‘Demand and Supply’. In his textbook on Money Robertson stresses the fact that ‘the theory of money [is] a special case of the general theory of value’ (1922, p. vii). Eventually Keynes emphasises approvingly in his 1924 Obituary Memoir that Marshall always taught ‘the quantity theory of money as a part of the general theory of value’ (JMK, x, p. 191, italics removed).1

Early Contributions II: Keynes, Lavington and Pigou (1913–24)

Keynes’s writings on business fluctuations and monetary theory during the period under review are far less original than Robertson’s and well within the Marshallian orthodoxy. From his two strictly theoretical contributions (his 1913 paper given to the Political Economy Club, JMK, xiii, pp. 1–14 and section I of the third chapter of A Tract on Monetary Reform, 1923, JMK, iv, pp. 61–70), the first one only brings new elements of interest to our argument. In the Tract the refinements brought to the Cambridge equation do not alter in any substantial way the conclusions reached earlier by Marshall and Pigou.