An economics, investment, trading and policy blog with a focus on Modern Monetary Theory (MMT). We seek the truth, avoid the mainstream and are virulently anti-neoliberalism.
Short and important historically in relation to MMT. Keynes endorsed Chartalism (state theory of money) and the credit theory of money very early in his career.
When Mises’s German-language book first appeared in 1912, Keynes reviewed it in the prestigious Economic Journal, dismissing it as being unoriginal. Seems pretty damning, until we learn that Keynes himself, in his 1930 book Treatise on Money, confessed that “in German, I can only clearly understand what I already know – so that new ideas are apt to be veiled from me by the difficulties of the language.”
Keynes’s influential dismissal of Mises’s work was based not on anything as lofty as informed disagreement; it was based instead on incomprehension.
The comment above by Bob Roddis is typical of libertarians: selective and unfair to Keynes.
While there is the charge of unoriginality, here is in fact what Keynes really said about the Mises’s Theorie des Geldes und der Umlaufsmittel (Theory of Money and Credit). It is in fact reasonably positive:
"DR. VON MISES' treatise is the work of an acute and cultivated mind. But it is critical rather than constructive, dialectical and not original. The author avoids all the usual pitfalls, but he avoids them by pointing them out and turning back rather than by surmounting them. Dr. Mises strikes an outside reader as being the very highly educated pupil of a school, once of great eminence, but now losing its vitality. There is no 'lift' in his book; but, on the other hand, an easy or tired acquiescence in the veils which obscure the light rather than a rending away of them. One closes the book, therefore, with a feeling of disappointment that an author so intelligent, so candid, and so widely read should, after all, help one so little to a clear and constructive understanding of the fundamentals of his subject. When this much has been said, the book is not to be denied considerable merits. Its lucid common sense has the quality, to be found so much more often in Austrian than in German authors, of the best French writing. The field covered is wide. .... there is a great deal on every one of these topics very well worth reading. Perhaps the third book is, on the whole, the best. The treatment throughout is primarily theoretical, and quite without striving after actualite. The book is 'enlightened' in the highest degree possible."
Keynes, J. M. 1914. “Theorie des Geldes und der Umlaufsmittel. by Ludwig von Mises; Geld und Kapital. by Friedrich Bendixen” (review), Economic Journal 24.95 (Sep.): p. 417.
As to Keynes not being able to understand it, that is palpable nonsense. Here is Keynes' actual comments on the content:
"The first book deals with the meaning, place, and function of money; the second witlh the value of money, the problem of measuring it, and the social consequences of variations in it; and the third with the relation of bank-money, of notes, and of discount policy to the theory of money. With the exception of the section on the value of money, where Dr. von Mises is too easily satisfied with mere criticism of imperfect theories, there is a great deal on every one of these topics very well worth reading. Perhaps the third book is, on the whole, the best." p. 417.
Not only did Keynes not "dismiss" the work or its content, but clearly showed signs of understanding it perfectly well, even appreciating and agreeing with some chapters.
A. But it is critical rather than constructive, dialectical and not original.
B. “in German, I can only clearly understand what I already know – so that new ideas are apt to be veiled from me by the difficulties of the language.”
TRANSLATION: Why, such a marvelous book. Oh, but it’s not original. But I couldn’t understand new ideas in German anyway because I don’t understand the language. So, how would I know? Thus, I think I’ll be a chartalist even though Mises has blown that idea out of the water in a language I don’t understand.
"But I couldn’t understand new ideas in German anyway because I don’t understand the language"
That charge is nonsense:
"Yet what Keynes already knew in German was not insignificant: Keynes had two German governesses in the 1890s, who, according to Skidelsky (1983: 55), gave him a “good grounding in German,” even if he admitted later that his knowledge was hardly fluent. I suspect there is some degree of self-deprecation in [Keynes's] remark ..., a quite British trait.
Keynes clearly had enough German to read (or at least plan to read) an astonishing 3,000-4,000 pages of the German literature for his work on probability theory (Moggridge 1992: 172; Skidelsky 1983: 178). Around 1907, Keynes had his father send him books in German relevant to probability, and he himself said in a candid private letter to his father that his reading speed for English, French and German bore a ratio of 1:2:3" (letter of Keynes to John Neville Keynes, 22 March 1907; cited in Moggridge 1992: 172; Skidelsky 1983: 178).
When Mises’s German-language book first appeared in 1912, Keynes reviewed it in the prestigious Economic Journal, dismissing it as being unoriginal. Seems pretty damning, until we learn that Keynes himself, in his 1930 book Treatise on Money, confessed that “in German, I can only clearly understand what I already know – so that new ideas are apt to be veiled from me by the difficulties of the language.”
ReplyDeleteKeynes’s influential dismissal of Mises’s work was based not on anything as lofty as informed disagreement; it was based instead on incomprehension.
http://cafehayek.com/2009/11/keynes-on-mises-and-on-himself.html
The comment above by Bob Roddis is typical of libertarians: selective and unfair to Keynes.
ReplyDeleteWhile there is the charge of unoriginality, here is in fact what Keynes really said about the Mises’s Theorie des Geldes und der Umlaufsmittel (Theory of Money and Credit). It is in fact reasonably positive:
"DR. VON MISES' treatise is the work of an acute and cultivated mind. But it is critical rather than constructive, dialectical and not original. The author avoids all the usual pitfalls, but he avoids them by pointing them out and turning back rather than by surmounting them. Dr. Mises strikes an outside reader as being the very highly educated pupil of a school, once of great eminence, but now losing its vitality. There is no 'lift' in his book; but, on the other hand, an easy or tired acquiescence in the veils which obscure the light rather than a rending away of them. One closes the book, therefore, with a feeling of disappointment that an author so intelligent, so candid, and so widely read should, after all, help one so little to a clear and constructive understanding of the fundamentals of his subject. When this much has been said, the book is not to be denied considerable merits. Its lucid common sense has the quality, to be found so much more often in Austrian than in German authors, of the best French writing. The field covered is wide. .... there is a great deal on every one of these topics very well worth reading. Perhaps the third book is, on the whole, the best. The treatment throughout is primarily theoretical, and quite without striving after actualite. The book is 'enlightened' in the highest degree possible."
Keynes, J. M. 1914. “Theorie des Geldes und der Umlaufsmittel. by Ludwig von Mises; Geld und Kapital. by Friedrich Bendixen” (review), Economic Journal 24.95 (Sep.): p. 417.
As to Keynes not being able to understand it, that is palpable nonsense. Here is Keynes' actual comments on the content:
"The first book deals with the meaning, place, and function of money; the second witlh the value of money, the problem of measuring it, and the social consequences of variations in it; and the third with the relation of bank-money, of notes, and of discount policy to the theory of money. With the exception of the section on the value of money, where Dr. von Mises is too easily satisfied with mere criticism of imperfect theories, there is a great deal on every one of these topics very well worth reading. Perhaps the third book is, on the whole, the best." p. 417.
Not only did Keynes not "dismiss" the work or its content, but clearly showed signs of understanding it perfectly well, even appreciating and agreeing with some chapters.
A. But it is critical rather than constructive, dialectical and not original.
ReplyDeleteB. “in German, I can only clearly understand what I already know – so that new ideas are apt to be veiled from me by the difficulties of the language.”
TRANSLATION: Why, such a marvelous book. Oh, but it’s not original. But I couldn’t understand new ideas in German anyway because I don’t understand the language. So, how would I know? Thus, I think I’ll be a chartalist even though Mises has blown that idea out of the water in a language I don’t understand.
"But I couldn’t understand new ideas in German anyway because I don’t understand the language"
ReplyDeleteThat charge is nonsense:
"Yet what Keynes already knew in German was not insignificant: Keynes had two German governesses in the 1890s, who, according to Skidelsky (1983: 55), gave him a “good grounding in German,” even if he admitted later that his knowledge was hardly fluent. I suspect there is some degree of self-deprecation in [Keynes's] remark ..., a quite British trait.
Keynes clearly had enough German to read (or at least plan to read) an astonishing 3,000-4,000 pages of the German literature for his work on probability theory (Moggridge 1992: 172; Skidelsky 1983: 178). Around 1907, Keynes had his father send him books in German relevant to probability, and he himself said in a candid private letter to his father that his reading speed for English, French and German bore a ratio of 1:2:3" (letter of Keynes to John Neville Keynes, 22 March 1907; cited in Moggridge 1992: 172; Skidelsky 1983: 178).
http://socialdemocracy21stcentury.blogspot.com.au/2012/03/keynes-on-misess-theory-of-money-and.html