A recent post on the history of economic thought has generated a lot of comments, so I feel that our readership won't begrudge my excited sharing of a new book acquisition along the same lines, a brief plug for the store, and a few more links.
Yesterday I picked up a first edition of A.C. Pigou's "Industrial Fluctuations" (1926) - his massive tome on the business cycle. It sells on Amazon for $180, I got it in very good shape for $40. Not too shabby! Pigou was a contemporary of Keynes at Cambridge, and unfortunately was treated very ignobly by Keynes in the General Theory, although they were close personal friends. Pigou is sort of a New Keynesian in a lot of ways - his views on recessions are hardly "Classical" or non-chalant, but he places a great deal more emphasis on frictions and cyclical factors. I think this is perfectly consistent with the Keynesian system, and the appropriate emphasis really depends on the economic environment. Keynes presented a new way at looking at savings and investment decisions that introduced the possibility of a stable state of underemployment. The Keynesian system didn't have to tend towards underemployment, but it certainly could. As far as an over-arching framework goes, the Keynesian system was and is far superior to an assumption that markets always and everywhere clear. However - markets still have tendancies to clear, even in a Keynesian system - and there's no reason why frictions and cyclical factors can't contribute to downturns in such an environment. I'm with Keynes on the prospect of underemployment, but still think Pigou (and others - his modern incarnation, Greg Mankiw, for example) have a lot of important things to say about what produces any given recession.
I also purchased a second edition of Sir John Hicks's "Value and Capital" (1939) for only $9. Hicks is famous for providing a formal model for the Keynesian system. Others have modified and adjusted it over the years, but he set the ball rolling. Hicks also worked a lot with the idea of a liquidity trap - something that Keynes briefly alluded to in the General Theory, but never spent that much time on. I don't expect to read Pigou's book all the way through any time soon - but I think I might try and read "Value and Capital" in the very near future.
I got both of these books at Second Story Books in Dupont Circle in Washington, D.C.. It's a really great used bookstore, and I recommend that anyone in the area drop by. Usually I just go there for history books - they have a great European and American history section. Good history of science, and a good military section. Their section on economics is very sparse, and they do the Barnes and Noble thing, where personal finance and business books get mixed in with economics books. Recently, however, that section has doubled in size and I found these two great books. I don't know if they just acquired someone's collection or if they're responding to a strong demand for economics books - but the economics section might be getting more respectable. Anyway - make sure you drop by.
Finally, I don't know why he's had this recent interest, but Brad DeLong has been churning out posts on the history of economic thought recently. Here are some recent ones:
- J.S. Mill on inflation targeting, anticipating Michael Mussa's position.
- J.S. Mill on why bad ideas won't die (take, for example, a recent commenter's embrace of Jean-Baptiste Say). This is a great line from Mill: "a perpetual principle of resucitation in slain absurdity".
- Hayek anticipating Eugene Fama (featuring an appearance by Kahn and Robinson)
- Tracing Fama back through Hazlitt, Friedman, Say, Bastiat, and Hawtrey