History of Thought Alert, and, Why Sumner Is Wrong
Mario Rizzo's colloquium has a very interesting paper on tap for this week, discussing the unacknowledged sources of Keynes's General Theory, "Origins of The General Theory: How Keynes Came to Write a Book on Say’s Law and Why it Still Matters" by Steven Kates.
Here is a quote I found in the paper, which leads us to the "Sumner Is Wrong" portion of my title:
"Spending is good for trade -- the extravagant man benefits his neighbors -- in a society where S > I generally, the young gentleman would perhaps be conferring a benefit..." (Tarshis's notes on Keynes's lectures of Michaelmas, 1932)
The important thing here regarding Sumner's contention that S simply must, must, must equal I is that, well, no it needn't. It depends upon how you define S and I. Above, we see Keynes developing a framework in which S clearly need not equal I. It is one thing for Sumner to argue that, "Well, such a framework (and its concomitant set of definitions) is less useful than one (including its definitions) in which they are necessarily equal." But he made no such argument: He simply wrote several times in capital letters that S has to equal I.
Note well: I am not arguing that Sumner may not have a case, may not have a fantastic case, perhaps -- I don't know! -- that we ought to define S as equal to I. That is just not the question I am addressing. Instead, my target is Sumner's very odd contention which seems to be that God decreed that in all frameworks S must be defined as equal to I, or something of the sort.
Here is a quote I found in the paper, which leads us to the "Sumner Is Wrong" portion of my title:
"Spending is good for trade -- the extravagant man benefits his neighbors -- in a society where S > I generally, the young gentleman would perhaps be conferring a benefit..." (Tarshis's notes on Keynes's lectures of Michaelmas, 1932)
The important thing here regarding Sumner's contention that S simply must, must, must equal I is that, well, no it needn't. It depends upon how you define S and I. Above, we see Keynes developing a framework in which S clearly need not equal I. It is one thing for Sumner to argue that, "Well, such a framework (and its concomitant set of definitions) is less useful than one (including its definitions) in which they are necessarily equal." But he made no such argument: He simply wrote several times in capital letters that S has to equal I.
Note well: I am not arguing that Sumner may not have a case, may not have a fantastic case, perhaps -- I don't know! -- that we ought to define S as equal to I. That is just not the question I am addressing. Instead, my target is Sumner's very odd contention which seems to be that God decreed that in all frameworks S must be defined as equal to I, or something of the sort.
Kates is good - I looked at a lot of his stuff in writing my essay on Say's Law last semester.
ReplyDeleteA brief aside from an admirer of "Keynes, the Man": I always find this talk about "the GT wasn't as original as Keynesians think it was"/"Keynes wasn't a revolutionary" very strange. After all, Keynes dedicated an entire chapter to explaining how his ideas go back centuries. He amply cites precedent for his ideas in the late 19th and early 20th century. His high praise for Malthus as an originator for a lot of these ideas is very well known. Furthermore, the activities of the Cambridge Circus and the cleaning up of the GT by Kahn and Robinson and others is also very well known.
How did people get this idea that Keynes or Keynesians thought that the General Theory sprang forth fully matured from Keynes's head like Athena from Zeus's?? I just don't know. But guys like David Laidler have gotten a lot of mileage out of this strawman (which isn't to say that we don't get good intellectual history from Laidler as a result - we do - it's just poorly framed).
So, I guess that my personal reconciliation of "S=I" about a month ago was lackluster. Oh well, revise and repeat, I guess.
ReplyDeleteLately, I have begun to come to the realization that the ABCT is often the case of an aggregate reality where S<I, and that this is often the source of labeling such theory as an "over-investment" theory. I am still in the process of working it all out into something that makes complete sense (to me). Thanks to Landsburg, I've had savings on the brain for quite some time.
Revise and repeat...
Daniel, you and Kates are both way beyond me on the topic of Keynes historiography. I'll just note that Kates does not merely claim that Keynes was viewed as highly original, he cites people like Moggridge who seem to hold that view.
ReplyDeleteI yield to no man in criticism of Scott Sumner, but in fairness, the people with whom he was arguing would agree that S=I. In other words, if you looked at their responses, they weren't saying, "Are you sure about that, Sumner?" Instead, they were saying, "No kidding Scott. Who the heck denies that S=I? What we're saying is..."
ReplyDeleteBob, I don't care if someone wants to hold S=I by definition or not. The thing is, recognize that's how you are defining them, not a matter of divine decree.
ReplyDeleteAnd, in any case, Glasner certainly rejects that S=I by definition. He mentioned he agreed with my original post on this.
Glasner says S=I is an equilibrium condition, and not a definitional matter.
ReplyDelete"Glasner says S=I is an equilibrium condition, and not a definitional matter."
ReplyDeletePrecisely!!!
I am on board and on the same page in this respect (I think).