W. H. Hutt on Say’s Law and the Keynesian Multiplier

In a post a few months ago, I referred to W. H. Hutt as an “unjustly underrated” and “all but forgotten economist” and “as an admirable human being,” who wrote an important book in 1939, The Theory of Idle Resources, seeking to counter Keynes’s theory of involuntary unemployment. In responding to a comment on a more recent post, I pointed out that Armen Alchian relied on one of Hutt’s explanations for unemployment to provide a microeconomic basis for Keynes’s rather convoluted definition of involuntary unemployment, so that Hutt unintentionally provided support for the very Keynesian theory that he was tried to disprove. In this post, I want to explore Hutt’s very important and valuable book ARehabilitation of Say’s Law, even though, following Alchian, I would interpret what Hutt wrote in a way that is at least potentially supportive of Keynes, while also showing that Hutt’s understanding of Say’s Law allows us to view Says Law and the Keynesian multiplier as two (almost?) identical ways of describing the same phenomenon.

But before I discuss Hutt’s understanding of Say’s Law, a few words about why I think Hutt was an admirable human being are in order. Born in 1899 into a working class English family (his father was a printer), Hutt attended the London School of Economics in the early 1920s, coming under the influence of Edwin Cannan, whose writings Hutt often referred to. After gaining his bachelor’s degree, Hutt, though working full-time, continued taking courses at LSE, even publishing several articles before taking a position at the University of Capetown in 1930, despite having no advanced degree in economics. Hutt remained in South Africa until the late 1960s or early 1970s, becoming an outspoken critic of legal discrimination against non-whites and later of the apartheid regime instituted in 1948. In his book, The Economics of the Colour Bar, Hutt traced the racial policies of the South African regime not just to white racism, but to the interest of white labor unions in excluding competition by non-whites. Hutt’s hostility to labor unions for their exclusionary and protectionist policies was evident in much of his work, beginning at least with his Theory of Collective Bargaining, his Strike-Threat System, and his many critiques of Keynesian economics. However, he was opposed not to labor unions as such, just to the legal recognition of the right of some workers to coerce others into a collusive agreement to withhold their services unless their joint demand for a stipulated money wage was acceded to by employers, a right that in most other contexts would be both legally and morally unacceptable. Whether or not Hutt took his moral opposition to collective bargaining to extremes, he certainly was not motivated by any venal motives. Certainly his public opposition to apartheid, inviting retribution by the South African regime, was totally disinterested, and his opposition to collective bargaining was no less sincere, even If less widely admired, than his opposition to apartheid, and no more motivated by any expectation of personal gain.

In the General Theory, launching an attack on what he carelessly called “classical economics,” Keynes devoted special attention to the doctrine he described as Say’s Law, a doctrine that had been extensively and inconclusively debated in the nineteenth century after Say formulated what he had called the Law of the Markets in his Treatise on Political Economy in 1803. The exact meaning of the Law of the Markets was never entirely clear, so that, in arguing about Say’s Law, one can never be quite sure that one knows what one is talking about. At any rate, Keynes paraphrased Say’s Law in the following way: supply creates its own demand. In other words, “if you make it, they will buy it, or at least buy something else, because the capacity to demand is derived from the capacity to supply.”

Here is Keynes at p. 18 of the General Theory:

From the time of Say and Ricardo the classical economists have taught that supply creates its own demand; — meaning by this in some significant, but not clearly defined, sense that the whole of the costs of production must necessarily be spent in the aggregate, directly or indirectly, on purchasing the product.

In J. S. Mill’s Principles of Political Economy the doctrine is expressly set forth:

What constitutes the means of payment for commodities. Each person’s means of paying for the productions of other people consist of those which he himself possesses. All sellers are inevitably, and by the meaning of the word, buyers. Could we suddenly double the productive powers of the country, we should double the supply of commodities in every market; but we should, by the same stroke, double the purchasing power. Everybody would bring a double demand as well as supply; everybody would be able to buy twice as much, because every one would have twice as much to offer in exchange.

Then, again at p. 26, Keynes restates Say’s Law in his own terminology:

In the previous chapter we have given a definition of full employment in terms of the behavior of labour. An alternative, though equivalent, criterion is that at which we have now arrived, namely, a situation in which aggregate employment is inelastic in response to an increase in effective demand for its output. Thus Say’s Law, that the aggregate demand price of output as a whole is equal ot its aggregate supply price for all volumes of output ["could we suddenly double the productive powers of the country . . . we should . . . double the purchasing power"], is equivalent the proposition that there is no obstacle to full employment. If, however, this is not the true law relating the aggregate demand and supply functions, there is a vitally important chapter of economic theory which remains to be written and without which all discussions concerning the volume of aggregate employment are futile.

Keynes restated the same point in terms of his doctrine that macroeconomic equilibrium, the condition for which being that savings equal investment, could occur at a level of output and income corresponding to less than full employment. How could this happen? Keynes believed that if the amount that households desired to save at the full employment level of income were greater than the amount that businesses would invest at that income level, expenditure and income would decline until desired (and actual) savings equaled investment. If Say’s Law held, then whatever households chose not to spend would get transformed into investment by business, but Keynes denied that there was any mechanism by which this transformation would occur. Keynes proposed his theory of liquidity preference to explain why savings by households would not necessarily find their way into increased investment by businesses, liquidity preference preventing the rate of interest from adjusting to induce as much investment as required to generate the full-employment level of output and income.

Now the challenge for Keynes was to explain why, if there is less than full employment, wages would not fall to induce businesses to hire the unemployed workers. From Keynes’s point of view it wasn’t enough to assert that wages are sticky, because a classical believer in Say’s Law could have given that answer just as well.  If you prevent prices from adjusting, the result will be a disequilibrium.  From Keynes’s standpoint, positing price or wage inflexibility was not an acceptable explanation for unemployment.  So Keynes had to argue that, even if wages were perfectly flexible, falling wages would not induce an increase in employment. That was the point of Keynes’s definition of involuntary unemployment as a situation in which an increased price level, but not a fall in money wages, would increase employment. It was in chapter 19 of the General Theory that Keynes provided his explanation for why falling money wages would not induce an increase in output and employment.

Hutt’s insight was to interpret Say’s Law differently from the way in which most previous writers, including Keynes, had interpreted it, by focusing on “supply failures” rather than “demand failures” as the cause of total output and income falling short of the full-employment level. Every failure of supply, in other words every failure to achieve market equilibrium, means that the total effective supply in that market is less than it would have been had the market cleared. So a failure of supply (a failure to reach the maximum output of a particular product or service, given the outputs of all other products and services) implies a restriction of demand, because all the factors engaged in producing the product whose effective supply is less than its market-clearing level are generating less demand for other products than if they were producing the market-clearing level of output for that product. Similarly, if workers don’t accept employment at market-clearing wages, their failure to supply involves a failure to demand other products. Thus, failures to supply can be cumulative, because any failure of supply induces corresponding failures of demand, which, unless there are further pricing adjustments to clear other affected markets, trigger further failures of demand. And clearly the price adjustments required to clear any given market will be greater when other markets are not clearing than when those other markets are clearing.

So, with this interpretation, Hutt was able to deploy Say’s Law in a way that sheds important light on the cumulative processes of contraction and expansion characterizing business-cycle downturns and recoveries. In his modesty, Hutt disclaimed originality in using Say’s Law as a key to understanding those cumulative processes, citing various isolated statements by older economists (in particular a remark of the Cambridge economist Frederick Lavington in his 1921 book The Trade Cycle: “The inactivity of all is the cause of the inactivity of each”) that vaguely suggest, but don’t spell out, the process that Hutt describes in meticulous detail. If Hutt’s analysis was anticipated in any important way, it was by Clower and Leijonhufvud in their paper “Say’s Principle, What it Means and Doesn’t Mean,” (reprinted here and here), which introduced a somewhat artificial distinction between Say’s Law, as Keynes conceived of it, and Say’s Principle, which is closer to how Hutt thought about it.  But to Clower and Leijonhufvud, Say’s Principle was an essential part of the explanation of the Keynesian multiplier.  The connection between them is simple, effective supply is identical to effective demand because every purchase is also a sale.  A cumulative process can be viewed as either a supply-side process (Say’s Law) or a demand-side process (the Keynesian multiplier), but they are really just two sides of the same coin.

So if you have followed me this far, you may be asking yourself, did Hutt really rehabilitate Say’s Law, as he claimed to have done? And if so, did he refute Keynes, as he also claimed to have done? My answer to the first question is a qualified yes. And my answer to the second question is a qualified no. I will not try to justify my qualification to my answer to the first question, except to note that the qualification depends on the assumptions made about how money is supplied in the relevant model of the economy. In a model in which money is endogenously supplied by private banks, Say’s Law holds; in a model in which the supply of money is fixed exogenously, Say’s Law does not hold. For more on this, see my paper, “A Reinterpretation of Classical Monetary Theory,” or my book Free Banking and Monetary Reform (pp. 62-66).

But if Hutt was right about Say’s Law, how can Keynes be right that cutting money wages is not a good way (but in Hutt’s view the best way) to cure a depression that is itself caused by the mispricing of assets and factors of production? The answer is that, for all the care Hutt exercised in working out his analysis, he was careless in making explicit his assumptions about the expectations of workers about future wages (i.e., the wages at which they would be able to gain employment). The key point is that if workers expect to be able to find employment at higher wages than they will in fact be offered, the aggregate supply curve of labor will intersect the aggregate demand curve for labor at a wage rate that is higher, and a quantity that is lower, than would be the case in an equilibrium in which workers’ expectations about future wages were correct. From the point of view of Hutt, there is a supply failure because the aggregate supply of labor is less than the hypothetical equilibrium supply under correct wage expectations. But there is no restriction on market pricing, just incorrect expectations of future wages. Expectations need not be rigid, but in a cumulative process, wage expectations may not adjust as fast as wages are falling. Though Keynes, himself, did not discuss the possibility explicitly, it is also possible that there could be multiple equilibria corresponding to different sets of expectations (e.g., optimistic or pessimistic). If the economy settles into a pessimistic equilibrium, unemployment could stabilize at levels that are permanently higher than those that would have prevailed under an optimistic set of expectations. Perhaps we are now stuck in (or approaching) such a pessimistic equilibrium.

Be that as it may, Hutt simply assumes that allowing all prices to be determined freely in unfettered markets must result in the quick restoration of a full-employment equilibrium. This is a reasonable position to take, but there is no way of proving it logically. Proofs that free-market adjustment leads to an equilibrium are based on some sort of tatonnement or recontracting process in which trading does not occur at disequilibrium prices. In the real world, there is no restriction on trading at disequilibrium process, so there is no logical argument that shows that the Say’s Law dynamic described by Hutt cannot go on indefinitely without reaching equilibrium. F. A. Hayek, himself, explained this point in his classic 1937 paper “Economics and Knowledge.”

In the light of our analysis of the meaning of a state of equilibrium it should be easy to say what is the real content of the assertion that a tendency toward equilibrium exists. It can hardly mean anything but that, under certain conditions, the knowledge and intentions of the different members of society are supposed to come more and more into agreement or, to put the same thing in less general and less exact but more concrete terms, that the expectations of the people and particularly of the entrepreneurs will become more and more correct. In this form the assertion of the existence of a tendency toward equilibrium is clearly an empirical proposition, that is, an assertion about what happens in the real world which ought, at least in principle, to be capable of verification. And it gives our somewhat abstract statement a rather plausible common-sense meaning. The only trouble is that we are still pretty much in the dark about (a) the conditionsunder which this tendency is supposed to exist and (b) the nature of the process by which individual knowledge is changed.

In the usual presentations of equilibrium analysis it is generally made to appear as if these questions of how the equilibrium comes about were solved. But, if we look closer, it soon becomes evident that these apparent demonstrations amount to no more than the apparent proof of what is already assumed[11] . The device generally adopted for this purpose is the assumption of a perfect market where every event becomes known instantaneously to every member. It is necessary to remember here that the perfect market which is required to satisfy the assumptions of equilibrium analysis must not be confined to the particular markets of all the individual commodities; the whole economic system must be assumed to be one perfect market in which everybody knows everything. The assumption of a perfect market, then, means nothing less than that all the members of the community even if they are not supposed to be strictly omniscient, are at least supposed to know automatically all that is relevant for their decisions. It seems that that skeleton in our cupboard, the “economic man,” whom we have exorcised with prayer and fasting, has returned through the back door in the form of a quasi-omniscient individual.

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25 Responses to “W. H. Hutt on Say’s Law and the Keynesian Multiplier”


  1. 1 Lorenzo from Oz July 5, 2012 at 12:37 am

    Steve Horwitz is also impressed by Hutt’s treatment of Say’s Law

    http://myslu.stlawu.edu/~shorwitz/Papers/Say's%20Law-Elgar.pdf

  2. 2 Olivier Braun July 5, 2012 at 12:38 am

    Dr. Gasner,

    Thank you for that great post.

    Toward the end, you fault Hutt for not taking into account of the expectations of the workers about the wages at witch they could find employment. I didn’t re-read Hutt before writing this, but I recalled he was aware of the fact that the wages are subject to “unstable rigidities”, that preclude instantaneous adjustment. Those unstable rigidities could be caused in part by the erroneous expectations, and in part by the new (in the 1920′s) policies of unemployment insurance.

    In a paper (on the variations of unemployment in England, published in 1925) that sparked controversies in the UK Parliament at the time (he held a official position in the French Embassy) Rueff wrote, but I think Hutt would agree :

    “La discipline des trade-unions en premier lieu est, en Angleterre, exceptionnellement puissante et le régime du contrat de travail collectif plus généralise que partout ailleurs. La tradition, toutefois, eût été insuffisante à maintenir la résistance des ouvriers sans travail aux inévitables mouvements de salaires si une politique de subsides aux chômeurs, aussi généreuse que coûteuse pour le pays, n’avait permis à ceux-ci de rester indéfiniment inoccupés plutôt que de transgresser les instructions syndicales.
    On est ainsi conduit à cette conclusion, qu’à partir du moment où les prix ont été stabilisés en Angleterre, c’est d’une part la puissance traditionnelle des syndicats anglais, obstacle à l’adaptation des salaires aux conditions nouvelles nés de l’appréciation monétaire, d’autre part la politique de secours aux chômeurs, condition nécessaire du maintien de la discipline syndicale, qui ont été la cause profonde de la subsistance en Angleterre d’une crise qui ne paraît pas en voie d’atténuation.”

    The paper is available here (in french) : http://www.catallaxia.org/wiki/Jacques_Rueff:Les_variations_du_ch%C3%B4mage_en_Angleterre

    See the graph here : http://www.catallaxia.org/wiki/Fichier:Rueff_2.png

  3. 3 stickman July 5, 2012 at 1:25 am

    An aside, but since you discuss some South African history and the role of special interest groups during the Apartheid regime…

    I am reminded of a story told by a friend of mine, who farms near the old diamond town of Kimberley in SA’s Northern Cape (where Cecil John Rhodes made much of his fortune). His family have been farming pecan nuts with much success for several decades. However, their crop choice remains something of a curiosity in an area which is still dominated by sheep farming.

    The move to pecans was predicated by a Wool Board meeting his father attended back in the 70s, when all farming activity was controlled by the board old boys and government-connected “Broederbond” (The Brotherhood) types. During the meeting, he launched a forceful attack on the autocratic policies of the Wool Board, asking why he should be made to price his wool at levels that made little economic sense to him as an individual farmer. (In case it isn’t clear, the Board dictated from up high what price you should be charging for your produce.) If his wool was of better quality than his neighbours, then surely he should be able to go to the market and find a willing buyer who would pay more for it?

    Their response to this market logic? They accused him of being a communist.

    With no Pecan Board in existence, the decision to change was effectively made for him…

  4. 4 rob July 5, 2012 at 9:15 am

    I really enjoyed reading this article. However I think I may have misunderstood something so I have a question:

    You say”

    “If the economy reaches a pessimistic equilibrium, unemployment could stabilize at levels that are permanently higher than those that would prevail under an optimistic set of expectations.”

    However my understanding of your description of Hutt’s views suggests that it is overly optimistic expectation on future wages that reduces current employment. If workers expect wages to fall in the future they will be more likely to take lower wages now than if they expect them to increase.

    Did I misunderstand this point? .

  5. 5 JP Koning July 5, 2012 at 3:52 pm

    Very interesting.

    In your post you mentioned both Leijonhufvud and Clower and pointed out the symmetry between their demand side and Hutt’s supply side theories of market failure.

    I know that Hutt wrote his book on Say’s Law in part as a reaction to Leijonhufvud, Clower, Yeager, and others. Here is Hutt:

    “Of more recent years Harry G. Johnson, R. W. Clower, Axel Leijonhufvud and Leland Yeager have continued the process of challenging the very foundations of the Keynesian system, in the process indirectly, if unintendedly, re-asserting Say’s law. Yet paradoxically these eminent theorists, and other economists of repute who accept their criticisms of, or changing attitudes towards, the Keynesian system, still seem to leave the impression that, after all, Say’s law does not work—at least not in the manner in which the old general equilibrium analysis suggested it did…. Their objections to the notion that supplies constitute the source of demands are always traceable, directly or indirectly (as I suggested before) to the surviving notion that the use of money somehow frustrates the operation of the market-clearing process. Under theoretical barter, the implication (or explicit assertion) is, Say’s law would apply. In a money economy it does not.”

    Hutt pointed out that these thinkers believed that

    “…where there is indirect exchange and the use of money, “effective demand” may be insufficient for reasons other than pricing. Only under hypothetical barter, they may protest, can Say’s law hold. I have written this essay to refute such a view.”

    So while Clower/Leijonhufvud and Hutt may be two sides of the same coin, they also (at least according to Hutt) had irreconcilable differences: Hutt believed that recessions could occur in a barter economy or a monetary economy, the others thought it was only in a money-using economy that recessions could occur.

  6. 6 Becky Hargrove July 5, 2012 at 4:47 pm

    I’ve got a long way to go before understanding the arguments around Say’s Law but will keep trying. For me it matters in that the work so many people actually want, exists not so much as burden or necessity, but as a form of consumer good: Talk about entertwined supply and demand!

  7. 7 Benjamin Cole July 6, 2012 at 3:44 am

    Well, Dr Glasner is certainly erudite.

  8. 8 Lorenzo from Oz July 6, 2012 at 4:10 am

    Becky: I would recommend Steve Horwitz’s article,it is an enlightening discussion of Say’s Law (I don’t agree with his wanderings into Austrian business cycle, but that does not detract from the piece’s virtues).

    Dr Glasner, your article on classical monetary theory I also found very enlightening, thank you.

  9. 9 Becky Hargrove July 6, 2012 at 5:27 am

    Lorenzo, thanks for the link, I started taking notes on Steve’s article yesterday and plan to continue. While I am limited with JSTOR (Nick Rowe had his problems with it yesterday) there is a lot Dr Glasner linked to in this post which is easy to access.

  10. 10 David Glasner July 6, 2012 at 3:01 pm

    Lorenzo, I recall vaguely that that is the case. Horwitz is a pretty sensible guy. Thanks for the link.

    Olivier, Before writing the post, I did reread Hutt’s book again for the first time in a long time, so I recall the passage about unstable rigidities. He did understand that there was a problem of inconsistent expectations; that is not my criticism. My criticism is the uncritical assumption that allowing the free market to operate will result in an alignment of expectations that restores full employment. That is simply an assertion. There is no way of proving that that is the case, as Hayek recognized in the two paragraphs that I quoted at the end of my post. I am aware of Rueff’s argument, which was also made by Edwin Cannan, and provided the basis for an important article in JPE in the late 1970s about interwar unemployment in Great Britain by Dan Benjamin and Levis Kochin. I am not competent to evaluate the magnitude of the effect described by Rueff and supported by Benjamin and Kochin, they think that it accounts for a substantial portion of high British unemployment in the 1920s and 1930s, but that unemployment persisted even in periods of historically rapid growth in Britain from 1925 to 1929 and from 1932 to 1938. It has nothing (or at least not much) to do with the cyclical unemployment of 1929 to 1932.

    Stickman, Interesting story. Thanks for sharing.

    rob, You are a thoughtful reader. Overoptimistic wage expectations lead to inefficient unemployment. The problem is how to explain a situation in which unemployment is no longer rising and possibly even falling but in which there is very little expansion of real output. In other words a “recovery” such as the one we see now in the US. Wages have stabilized so it’s hard to argue that wage expectations are overly optimistic, so I conjecture that we are in a kind of “stable” low-level pessimistic “equilibrium.”

    JP, I actually agree with Hutt that the issue is not monetary exchange versus barter exchange, as Clower and Leijonhufvud argued. The problem is inconsistent expectations. Hutt’s error was an unwarranted assumption that free market price adjustments would automatically bring expectations into correspondence.

    Becky, You are a dedicated student, so it will eventually fall into place for you.

    Benjamin, Thanks for the compliment. My erudition, such as it is, was luckily inspired by the fact that I knew personally so many of the characters that I write about: Alchian, Leijonhufvud, Clower, and of course Earl Thompson were among my teachers at UCLA. F. A. Hayek visited UCLA in the 1968-69 academic year and I remained in contact with him for the next 20 years. I even met W. H. Hutt once around 1969 or 1970, and I have a vague memory of urging him to read Leijonhufvud’s book on Keynes which had just come out.

    Lorenzo, My paper on classical monetary theory is one of the best things I ever wrote. I am glad that people still find it worth reading.

    Becky, Good luck in your reading.

  11. 11 Greg Hill July 6, 2012 at 5:46 pm

    “In a model in which money is endogenously supplied by private banks, Say’s Law holds; in a model in which the supply of money is fixed exogenously, Say’s Law does not hold.”

    Don’t we now live in an economy in which “money is endogenously supplied by private banks”? Perhaps this is a semantic issue, but it seems that credit cards, overdraft facilities, and home equity lines of credit are examples of private banks supplying money (or credit) endogenously. And, on the other hand, the Fed can’t really fix the supply of money exogenously unless it can effectively control the type of credit instruments noted above.

  12. 12 JP Koning July 8, 2012 at 12:24 pm

    “JP, I actually agree with Hutt that the issue is not monetary exchange versus barter exchange, as Clower and Leijonhufvud argued. The problem is inconsistent expectations. Hutt’s error was an unwarranted assumption that free market price adjustments would automatically bring expectations into correspondence.”

    This differentiates you quite a bit from those like Nick Rowe and Lars Christensen who both believe that recessions are always (“and everywhere”) monetary phenomena.

    See for instance:

    http://marketmonetarist.com/2011/10/16/recessions-are-always-and-everywhere-a-monetary-phenomenon/

    and

    http://worthwhile.typepad.com/worthwhile_canadian_initi/2011/08/recessions-are-always-and-everywhere-a-monetary-phenomena.html

  13. 13 David Glasner July 8, 2012 at 3:16 pm

    Greg, I agree that the quantity of bank money is endogenously supplied. However, only the Fed can produce base money (currency and bank reserves). Since there is a demand for currency and reserves that is not interchangeable with the demand for bank money, there are circumstances in which Say’s Law does not hold. The demand for base money would have to be eliminated entirely for that to occur. I think I discuss that in my book, but perhaps not fully satisfactorily. I haven’t really thought seriously about that issue for a long time.

    JP, Yes, I think that on the purely theoretical question I would disagree with them. In practice, there may not be that big of a difference between us, because significant business-cycle downturns tend to be associated with monetary disturbances.

  14. 14 Olivier Braun July 9, 2012 at 6:08 am

    Just a correction for the record. When I mentionned Rueff’s 1925 paper and the controversies in uk, I erred : he was not yet in the french embassy in UK. That, and the controversies in the House of Commons happened in the 1930′s, and after a publication by Rueff of the same nature (social insurrance as a cause of unemplyment, 1931, signed XXX). Sorry.

  15. 15 JP Koning July 10, 2012 at 7:36 am

    David, belated congratulations on your blog’s one year anniversary.

    On the subject of Hutt in general, I very much liked how he explicitly defined every one of the terms he would use in “A Rehabilitation” in the first chapter. As a result, it’s very difficult to misunderstand Hutt. More writers should try this technique of predefining all terms.

    His essay “The Yield from Money Held” has also become a bit of a cult classic (at least among Austrians and monetary disequilibrium types) and justly so. A nice exercise in basic monetary theory as well as the history of thought.

  16. 16 David Glasner July 11, 2012 at 10:21 am

    Olivier, Thanks for the correction

    JP, Thanks. I remember reading Hutt’s essay “The Yield from Money Held” when I was just starting to get interested in economics as an undergrad, and being very impressed by him. I haven’t looked at it since. I should go back and read it again, and see what I think now.

  17. 17 Tas von Gleichen July 22, 2012 at 12:01 pm

    Well I like to think that free markets give us the kind of accurate pricing that we like to see. If not the black market will always do that for us, but at much higher prices.


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About Me

David Glasner
Washington, DC

I am an economist at the Federal Trade Commission. Nothing that you read on this blog necessarily reflects the views of the FTC or the individual commissioners. Although I work at the FTC as an antitrust economist, most of my research and writing has been on monetary economics and policy and the history of monetary theory. In my book Free Banking and Monetary Reform, I argued for a non-Monetarist non-Keynesian approach to monetary policy, based on a theory of a competitive supply of money. Over the years, I have become increasingly impressed by the similarities between my approach and that of R. G. Hawtrey and hope to bring Hawtrey's unduly neglected contributions to the attention of a wider audience.

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