Re: Keynes & Inflation (was Re: Query on teminology)

[Edwin Dickens <edickens@xxxxxxxx>]

Yoshie,

Many thanks for the quotes.  But I'm having a hard time interpreting them.
Do you see then as a break with Keynes' position in the G.T., particularly
concerning monetary policy?  These quotes strike me as consistent with his
concept of "pure inflation" in the G.T..  Do you disagree?  Also, my
computer can't find the link you provide.  Could you check it?  Thanks
again.

Edwin (Tom) Dickens


Yoshie Furuhashi wrote:
>
> >I just did a quick scan of my files.  I cannot find it.  I don't think that it
> >was a major point for him, but it was of some concern.  But then I would not
> >trust my memory 100%.
> >
> >Edwin Dickens wrote:
> > > Could you be more specific about what you mean by Keynes' later concern
> > > with inflation?  In particular, do you think Keynes abandoned his view of
> > > monetary policy in the G.T. in order to assign it a role in fighting
> > > inflation?
> > >
> > > Edwin (Tom) Dickens
> > >
> > > michael@xxxxxxxxxxxxxxxxx wrote:
> > > >
> > > > This vision of the synthesis that you attribute to Samuelson is
> >very clear
> > > > in Keynes' General Theory, except of the concern about
> >inflation, which is
> > > > not in the General Theory, but does come later in Keynes.
> >
> >--
> >Michael Perelman
>
> *****   ...After the General Theory
>
> Near the end of his life, Keynes (CW [1944], 26:16) informed the
> House of Lords that his "main task" of the previous twenty years had
> been to establish three principles: "We are determined that, in
> future, the external value of sterling shall conform to its internal
> value, as set by our own domestic policies and not the other way
> round. Secondly, we intend to keep control of our domestic rate of
> interest. Thirdly, while we intend to prevent inflation at home, we
> will not accept deflation at the dictate of influences from outside."
> It was "certainly not the policy of the Treasury to allow prices to
> break loose after the war"; despite the fact that "the political
> argument in favour of inflation is almost overwhelming. No one has to
> take the responsibility for inflation, not even the Chancellor of the
> Exchequer" (CW [1939], 22:76-77). If, after the war, "we need more
> saving to provide more investment, we have to reduce the rate of
> interest up to the point of full employment. Thereafter the old rules
> apply we have to raise the rate of interest to prevent inflation" (CW
> [1945], 27:390). The "real risk of the future, about which it is
> difficult to predict for certain, is whether we may not be in for a
> further rise of prices due either to internal reasons (i.e.,
> increases of wages) or external reasons." The general election result
> would intensify the cheap money policy and increase the chances of
> inflation (CW [1945], 12:85, 87-88). The objective of the Bank for
> Reconstruction and Development was "to promote a policy of expansion
> of the world's economy in the sense in which this term is the exact
> opposite of inflation" (CW [1944], 26:73). This opposition to the
> "vicious spiral" of rising prices and wages was a persistent theme of
> Keynes's writings (CW [1939], 22:44)....
>
> (Robert Leeson, "Keynes and the 'Keynesian' Phillips Curve," _History
> of Political Economy_ 31.3 (1999) 493-509, at
> <http://www.press.jhu.edu/journals/history_of_political_economy/v031/3
> 1.3leeson.html>   *****
>
> Leeson says that Keynes, unlike pseudo-Keynesians, was a
> _re_flationist, never an _in_flationist.
>
> Yoshie