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The Keynesian Revolution: a Research School Analysis

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The Keynesian Revolution: a Research School Analysis Cambridge University The Keynesian Revolution: A Research School Analysis This dissertation is submitted for the degree of Doctor of Philosophy. Name: Robert A. Cord College: St Edmund’s Department: History and Philosophy of Science Supervisor: Dr G.C. Harcourt Word count: 77,223 Date: 17th July 2009 Preface My special thanks go to Dr Geoff Harcourt, my supervisor at Cambridge, who, as always, provided extensive advice and guidance during the writing of this thesis. Thanks also go to Dr Jon Agar and Professor John Forrester for their many useful suggestions. Responsibility for any errors is mine and mine alone. I dedicate this thesis to my wife, Doris, for her love and support throughout. I would also like to thank my mother and my friends for their encouragement. This dissertation is the result of my own work and includes nothing which is the outcome of work done in collaboration except where specifically indicated in the text. 2 Contents Summary ........................................................................................................................ 1 Section 1. Introduction ................................................................................................... 2 Section 2. Review of the Literature ............................................................................... 5 Section 3A. Some Common Ground between Economics and Science ...................... 12 Section 3B. Research School Analysis ........................................................................ 14 i. Research School Analysis: Morrell and Geison ................................................... 14 ii. Research School Analysis since Morrell and Geison .......................................... 15 Section 4. Research School Analysis: Keynes, Marshall, Hayek and Kalecki ............ 18 i. „Charismatic‟ leader(s).......................................................................................... 19 ii. Leader with research reputation ........................................................................... 35 iii. „Informal‟ setting and leadership style ............................................................... 48 iv. Leader with institutional power .......................................................................... 57 v. Social cohesion, loyalty, esprit de corps, „discipleship‟ ...................................... 71 vi. Focused research program .................................................................................. 95 vii. Simple and rapidly exploitable experimental techniques ................................ 105 viii. Invasion of new field of research.................................................................... 117 ix. Pool of potential recruits (graduate students) ................................................... 130 x. Access to or control of publication outlets ........................................................ 143 xi. Students publish early under own names .......................................................... 161 xii. Produced and „placed‟ significant number of students .................................... 174 xiii. Institutionalization in university setting ......................................................... 180 xiv. Adequate financial support ............................................................................. 187 Section 5. Summary and Conclusion ......................................................................... 194 Bibliography .............................................................................................................. 200 1 Summary Various explanations have been put forward as to why the „Keynesian‟ Revolution occurred. Some of these point to the temporal relevance of the General Theory while others highlight the importance of more anecdotal evidence, such as Keynes‟s relations with the Cambridge „Circus‟. However, no systematic effort has been made to bring together these and other factors under one recognised framework of analysis. This thesis attempts to fill this gap by making use of a well-established tradition of work within the history of science literature devoted to identifying the factors which help to explain why certain research schools are successful and why others fail. This body of work is based primarily on the ideas of Jack Morrell and Gerald Geison. More specifically, Morrell and Geison make use of a combination of 14 intellectual, technical, institutional, psychological and financial factors which, they argue, help determine the relative performance of research schools. We apply the research school approach to the development very specifically of macroeconomics in the 1930s and 1940s. Our findings suggest that it does indeed provide a reasonably coherent explanation as to why the revolution in macroeconomics witnessed during this period was specifically labelled „Keynesian‟, this despite the fact that Keynes was far from being the only economist attempting to gain dominance for his ideas. Thus, as well as Keynes, we apply the same research school analysis to the cases of Hayek and Kalecki and use it to explain why they were overshadowed by Keynes. On a final note, although it is clear that Keynes independently possessed a number of the attributes necessary to establish a successful and sustainable research school, the thesis also identifies the theories and activities of Marshall as providing an important foundation from which Keynes was able to mount his own revolution. 1 The Keynesian Revolution: A Research School Analysis Section 1. Introduction „The Keynesian Revolution is one of the most remarkable episodes in the entire history of economic thought: certainly never before and perhaps never since has the economics profession been won over so rapidly and so massively to a new economic theory‟ (Blaug 1991: 171). „[N]o sign in the pre-1936 literature warned how quickly and completely Keynesian economics would come to dominate the discipline‟ (Laidler 1991: 295). Historians of economic theory have posited a variety of explanations in their attempt to account for the success of John Maynard Keynes‟s (1883-1946) The General Theory of Employment, Interest and Money (1936). These range from its supposedly revolutionary nature to the idea that the timing of the General Theory‟s appearance was fortunate as it took place when the world was struggling with the „most severe and widely diffused…contraction of modern times‟ (Friedman and Schwartz 1963a: 299). Other accounts rely on more anecdotal evidence. For example, stress is often placed on the relationship between Keynes and the „Circus‟, a group of able, young Cambridge economists who dissected Keynes‟s ongoing work over a number of months from November 1930 to the spring of 1931 and whom, some argue – although it has been a matter of some controversy – played a key role in helping Keynes to develop crucial ideas in the years leading up to 1936. This emphasis on anecdote has been influenced by the „oral tradition‟ at Cambridge, „a style which relies heavily on allusion to and caricaturization of the work of a few eminent contemporaries and predecessors rather than on meticulous documentation of sources‟ (Johnson and Johnson 1974: 261). 2 Taken together, these explanations should, one might hope, provide a reasonably coherent account of why, in the 1930s and 1940s, the emerging Keynesian School – centred on Cambridge, England, but with prominent outposts, notably in the United States – was successful and thus why the revolution in macroeconomics which took place during this period was specifically labelled „Keynesian‟. However, little attempt has been made to bring these explanations under one analytical framework. The main aim of this thesis is to provide such a framework. To do this, it is necessary to adopt a more innovative approach than those typically employed by historians of economic theory. More specifically, we will use the body of work pioneered by Jack Morrell (1972) and formalised by Gerald Geison (1981) within the history of science literature which examines why „research schools‟ succeed or fail. Morrell-Geison (as it shall be referred to) draws together a range of intellectual, technical, institutional, psychological and financial factors that help determine the relative performance of a school. Despite its heuristic appeal, the application of Morrell-Geison as a means of better understanding the „rapid and massive‟ success of Keynes‟s masterpiece has received almost no attention from those interested in the history of economic theory.1 We will proceed as follows. Section 2 reviews the existing literature which has attempted to explain why Keynesian economics emerged when it did and why it rose to prominence in such a relatively short period of time. Even though there are overlaps between the evidence presented in Section 2 and in the main section, it is clear that there is no pre-existing systematic and convincing account of why Keynes was successful. Section 3A very briefly identifies links between economics and „science‟, while Section 3B details the research school approach before discussing the development of the relevant literature since Morrell-Geison. Section 4 is the main focus of the thesis. It explains each of the criteria postulated by Morrell-Geison and shows how, when considered as a whole, they provide a coherent explanation of why the Keynesian School was victorious in the 1930s and 1940s. (The thesis does not attempt to apply the Morrell-Geison criteria outside of the period in 1 Coats (1993: 55) suggests the possible
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