Harry G. Johnson as a Chronicler of the Keynesian Revolution

American Journal of Economics and Sociology, The,  July, 2001  

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DIMAND, ROBERT W.

His Search of a Non-Revolutionary Account

ROBERT W. DIMAND [*]

ABSTRACT. Repeatedly throughout his career, and especially when giving special invited lectures to national gatherings of economists, Harry Johnson reexamined the impact of Keynes's General Theory and its parallels with the revival of the quantity theory of money. This paper explores Johnson's changing view of the recent history of macroeconomics and particularly of the Keynesian Revolution, a term that he found problematic.

Introduction

HARRY JOHNSON WAS FIRST OF ALL a historian of economic thought. Not most of all a historian of economic thought, as shown by his contributions to trade theory and macroeconomics (see Courchene 1978; Helliwell 1978; Laidler 1984; Lipsey 1978), but first of all: his first three journal articles were on an error in Ricardo's exposition of his theory of rent, on Malthus's views on wages and the high price of provisions, and on John Stuart Mill's "fourth fundamental proposition of capital," that "demand for commodities is not demand for labour" (Johnson 1949a, 1949b, 1950; Samuelson 1977). 1-le took Joseph Schumpeter's famous Harvard course, History of Economic Analysis, and Schumpeter encouraged Johnson, then a Harvard graduate student, to write up and publish his first note on Ricardo (Johnson 1976a, pp. 94--95).[1] It was as a historian of economics as well as a practicing macroeconomist that Harry Johnson responded to the great changes of macroeconomics which intersected his career: the economics of Keynes and his followers at Cambridge and the revival of the quantity theory of money at the University of Chicago. Repeatedly throughout his career, and especially when giving special invited lectures to national gatherings of economists, Johnson returned to the impact of Keynes's General Theory (1936) and the rise of monetarism, and particularly to what Klein (1947) termed The Keynesian Revolution, a term that Johnson found intriguingly problematic. He delivered a special invited lecture to the American Economic Association on "The General Theory after Twenty-Five Years" (Johnson 1962a) and chose "The Keynesian Revolution and the Monetarist Counter-Revolution" as the topic for his Richard T. Ely Lecture to the MA (Johnson 1971), "Inflation and the Monetarist Controversy" for his De Vries Lectures in the Netherlands (Johnson 1972a), and "Keynes's General Theory: Revolution or War of Independence?" for his Harold A. Innis Lecture to the Canadian Economics Association (Johnson 1976b).

In the preface to The Shadow of Keynes, Elizabeth and Harry Johnson emphasized that they were not writing as professional historians of economic thought but offered "instead, essays written largely in the process of trying to understand Keynes, as a historical personality and as an economist whose work remains influential in both academic economics and popular economic ideas, and particularly to understand him in relation to his habitat of Cambridge and the post-Victorian British society in which he lived" (Johnson and Johnson 1978:x). While only his first three articles were written as professional contributions to the history of economic thought, Harry Johnson's career-long effort to understand Keynes was informed by a historical interest and sensibility unusual among practicing macroeconomists. Having been at Cambridge as a student and teacher after World War II (and hearing Keynes present his last paper), and later taking part (with Jacob Frenkel and Robert Mundell) at Chicago in developing the monetary a pproach to the balance of payments and exchange rates (Johnson and Frenkel 1976; Frenkel and Johnson 1978), Harry Johnson was moved to reflect on the parallels and contrasts between the historical phenomena of Keynes and his followers at Cambridge and of monetarism in Chicago. He wrote that he "made the circuit from the traditional quantity theory of Harold Innis's University of Toronto through the sophisticated Keynesian economics of the Cambridge University of Joan Robinson and Richard Kahn (and later of Nicholas Kaldor) and the much less sophisticated Keynesian economics of Alvin Hansen's Harvard, to my current abodes in Milton Friedman's University of Chicago and Lionel Robbins's London School of Economics" (Johnson 1972a:3). Direct experience of more than one revolution (or counter-revolution or war of independence) in macroeconomics provided a degree of historical perspective unavailable to most economists: a Chicago open-economy macroeconomist who had been a Keynesian in Cambridge, who had been a Cambr idge Apostle who had heard Keynes present his last paper and had taken tea with Keynes's parents, and who was married to and writing with the editor of four volumes of The Collected Writings of John Maynard Keynes was a most exceptional Chicago economist.

II

Some Cambridge Controversies

IN HIS REVIEW OF Roger Middleton's Charlatans or Saviours? Economists and the British Economy from Marshall to Meade (1998), R. C. O. Matthews (2000) notes Middleton's surprise at having to dissent from some of Harry Johnson's criticisms of British economics. Matthews is less surprised: "In his early Cambridge years, Johnson was an ardent Keynesian, a disciple of Kahn and an acid-tongued critic of the still-living Robertson. As was said of an earlier Oxbridge polemicist [Mark Pattison], 'we cannot give up early beliefs . . . without some shock to the character. It made him hate what he had left. . . with the bitterness of one who had been imposed upon' (quoted in Sparrow, page 58)" (2000:F189).