Ross Gittens wrote an article in The Age last week and I wrote a reply which has not been published. Gittens wrote about how original Keynesian ideas were when first put forward in 1936 and I pointed out that these supposedly original ideas were part of an ancient tradition in economic thought that had until then been universally rejected by the mainstream of the profession.
I cannot blame The Age for not publishing the article since newspapers are not a forum for the history of economics but it nevertheless does make quite a bit of difference where ideas come from and their ancestry as well.
The origins of The General Theory are, as it happens, part of my contribution to economics and without putting too fine a point on it would make the claim that I know more about how that book was written than just about anyone else alive. If you doubt this, google the name Harlan McCracken and see what you get. It was McCracken, it turns out, who coined the phrase “supply creates its own demand” that ended up in The General Theory as Keynes’s own definition of Say’s Law. Ask an economist where the phrase comes from and my guarantee is that they will not know. Now you do, but they don’t. Anyway, this was my response to Gittens. And it is issues like the following which make me a strong advocate of the importance of the history of economic thought in the education of an economist:
Demand deficiency and oversaving was the most common fallacy in economic theory until it became the mainstream. Today, rather than it being seen as fallacious, it is the core theoretical mode in all of macroeconomics. But Keynes was hardly the first to try to bring such ideas into the mainstream.
How far back do we want to go to find some precursor for this bit of nonsense. Well, let us go to Robert Malthus’s Principles which was published in April 1820. I always prefer to go back to Malthus’s version since it was because Keynes was reading Malthus in late 1932 that the idea of demand deficiency even entered his head.
Does it matter that Keynes took his ideas from Malthus? Perhaps not, but it certainly does cast them in a different light. And if you then read Malthus, you will know a lot more about what Keynes in The General Theory was getting at than if you don’t.
Update: Two things have come up from this posting, the first one of which is that the name “Ross Gittens” is spelled Ross Gittins. I am grateful for having had this pointed out and apologise to Ross.
The other matter is why do I write Robert Malthus when his full name is Thomas Robert Malthus which is frequently just written as T.R. Malthus. Even as I wrote it down this time, I thought about it although I do invariably think of him as Robert Malthus and Thomas Malthus seems a bit foreign. But is it a convention of some kind that I am following? The only evidence that I can offer that it is comes from The Reclaiming Malthus website which structures his name as “T. Robert (Bob) Malthus”. Does this make it a convention? I don’t think so since most of the other websites refer to Thomas Malthus but since this one is described as Malthus’s homepage, it may carry that extra bit of authority.