More on the Chicago tradition

Abstract

Offers a response to David Laidler’s article “More on Hawtrey, Harvard and Chicago”, in this issue. Asserts that the unique Chicagoan quantity‐theory of the early 1930s embodied a policy framework which left it immune from the Keynesian revolution and contained important linkages with Friedman’s views in its business‐cycle analysis and policy positions. Claims that this tradition explains why Chicago (and not Harvard) originated the monetarist counter‐revolution.

Harvard Meets the Crisis: The Monetary Theory and Policy of Lauchlin B. Currie, Jacob Viner, John H. Williams, and Harry D. White

“…It also stressed the need to widen the range of assets eligible for rediscount by commercial banks through the inclusion, among others, of government securities. Viner underscored the crucial connection among government spending, credit expansion, and the growth of money supply, a typical monetarist argument for fiscal deficits as an effective means to put money into circulation (Tavlas 1998a, 1998b, 2003). This focus on fiscal expenditures as an accompanying measure to open market operations was even clearer in the Harvard memorandum, which stressed the need for government to undertake a “program of public construction on a nationwide scale.” The main argument was to ensure that the money put in circulation would encourage adequate expenditures:Some people feel that an increase in means of payments would have no perceptible effect since, they say, there is plenty of money now; the real difficulty is in getting it spent.…”

New Evidence on Allyn Young’s Style and Influence as a Teacher

“…Perhaps we have in the above character sketches, and those presented below, a clue as to why there was no distinctive, lasting "Harvard tradition", oral or otherwise, comparable, say, to the renowned Chicago tradition (see the exchanges on this subject between Laidler (1998) and Tavlas (1998), for example). Young was extremely openminded, keen to inculcate into his students the art of critical and creative thinking, and insistent that economics should be both abstract and concrete, concerned with the everchanging communal problems of economic life.…”