Allyn Abbott Young Ramesh Chandra Great Thinkers in Economics
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GREAT THINKERS IN ECONOMICS SERIES EDITOR: A. P. THIRLWALL Allyn Abbott Young Ramesh Chandra Great Thinkers in Economics Series Editor A. P. Thirlwall School of Economics University of Kent Canterbury, UK The famous historian, E.H. Carr once said that in order to understand history it is necessary to understand the historian writing it. The same could be said of economics. Famous economists often remark that spe- cific episodes in their lives, or particular events that took place in their formative years attracted them to economics. Great Thinkers in Economics is designed to illuminate the economics of some of the great historical and contemporary economists by exploring the interaction between their lives and work, and the events surrounding them. More information about this series at http://www.palgrave.com/gp/series/15026 Ramesh Chandra Allyn Abbott Young Ramesh Chandra Glasgow, UK ISSN 2662-6276 ISSN 2662-6284 (electronic) Great Thinkers in Economics ISBN 978-3-030-31980-9 ISBN 978-3-030-31981-6 (eBook) https://doi.org/10.1007/978-3-030-31981-6 © The Editor(s) (if applicable) and The Author(s) 2020 This work is subject to copyright. All rights are solely and exclusively licensed by the Publisher, whether the whole or part of the material is concerned, specifically the rights of translation, reprinting, reuse of illustrations, recitation, broadcasting, reproduction on microfilms or in any other physical way, and trans- mission or information storage and retrieval, electronic adaptation, computer software, or by similar or dissimilar methodology now known or hereafter developed. The use of general descriptive names, registered names, trademarks, service marks, etc. in this publication does not imply, even in the absence of a specific statement, that such names are exempt from the relevant protective laws and regulations and therefore free for general use. The publisher, the authors and the editors are safe to assume that the advice and information in this book are believed to be true and accurate at the date of publication. Neither the publisher nor the authors or the editors give a warranty, expressed or implied, with respect to the material contained herein or for any errors or omissions that may have been made. The publisher remains neutral with regard to jurisdictional claims in published maps and institutional affiliations. Cover illustration: © History collection 2016 / Alamy Stock Photo This Palgrave Macmillan imprint is published by the registered company Springer Nature Switzerland AG. The registered company address is: Gewerbestrasse 11, 6330 Cham, Switzerland Also in the Great Thinkers in Economics Series Forthcoming: Alan Kirman Vilfredo Pareto Harald Hagemann John Hicks Esteban Perez Roy Harrod Robert Dimand Tjalling Koopmans Available: James Forder Milton Friedman Robert Dimand Irving Fisher David Reisman Thomas Robert Malthus Peter Boettke F.A. Hayek David Reisman James Edward Meade David Cowan v vi Also in the Great Thinkers in Economics Series Frank H. Knight Nahid Aslanbeigui and Guy Oakes Arthur Cecil Pigou David Reisman James Buchanan Robert Scott Kenneth Boulding Robert Dimand James Tobin Peter E. Earl and Bruce Littleboy G.L.S. Shackle Barbara Ingham and Paul Mosley Sir Arthur Lewis John E. King David Ricardo Esben Sloth Anderson Joseph A. Schumpeter James Ronald Stanfield and Jacqueline Bloom Stanfield John Kenneth Galbraith Gavin Kennedy Adam Smith Julio Lopez and Michaël Assous Michal Kalecki G.C. Harcourt and Prue Kerr Joan Robinson Alessandro Roncaglia Piero Sraffa Paul Davidson John Maynard Keynes John E. King Nicholas Kaldor Gordon Fletcher Dennis Robertson Michael Szenberg and Lall Ramrattan Franco Modigliani Also in the Great Thinkers in Economics Series vii William J. Barber Gunnar Myrdal Peter D. Groenewegen Alfred Marshall Preface Charles Blitch who authored Allyn Young’s biography wrote to me in 2005 before his death urging me to write an intellectual biography of Young. He said that his own work was more in the nature of a factual biography and less about his thought. It is true that Young’s thought, apart from his growth theory, is not widely known even within academic circles. This book is intended to fill this important gap in the literature. The idea is to present his thought in a systematic way so that it can be understood by as wide an audience as possible. Allyn Young stated that there was much confusion surrounding the notion of increasing returns. There was no problem where there had been more loose thinking than in increasing returns. His 1928 paper on increasing returns was an attempt to dispel this loose thinking on the subject and is widely quoted in the literature on growth theory. What are not well known are his other ideas. This book is written in a simple and straightforward manner so as to bring out his entire thought, including his growth theory, clearly in the form of thematic chapters. This book is largely about Young’s economics—his contribution to monetary eco- nomics, value theory, distribution theory, business cycles, growth theory, applied economics, index numbers and imperfect competition. An attempt has also been made to present Young’s opinion of some of his contemporaries and earlier economists. ix x Preface Allyn Young was a great and profound thinker. He was an inspiring teacher and mentor to famous students such as Frank Knight, Edward Chamberlin and Lauchlin Currie. He had studied the whole literature of economics. He had a wide range and depth of knowledge. He com- mented on well-known economists—past as well as those of his own gen- eration. He was neither a revolutionary nor a reactionary, but had an evolutionary perspective of society. He thought of an economic system as an organon, anxious to study the economic phenomenon in its togetherness. He believed neither in complete laissez-faire nor in undue interventions. He had an optimistic vision about capitalism and its future. Capitalism will not fail because of its contradictions (as in Karl Marx) nor because of its success (as in Joseph Schumpeter), but would be reformed by the endogenous forces of the system. He had great faith in institutions, which acting in the public interest would save capitalism from its excesses. His ideas need to be clearly and systematically stated along with their deeper implications. This book is an attempt in that direction and is primarily aimed at students and teachers of the history of economic thought. But others interested in the subject such as social scientists (including econo- mists), politicians, journalists, administrators, professionals, businessmen or thinking persons in general can also draw benefit. Some amount of repetition in the book is inevitable because of the interconnectedness and overlapping nature of the various themes. This book is dedicated to Charles P. Blitch who urged me to undertake this task. I have never met Professor Blitch personally, and at the time when he wrote to me I was hard pressed for time. But now with much more time at my disposal, this task has been easier to undertake. This book is also dedicated to Roger J. Sandilands, my Ph.D. supervisor and later my colleague at Strathclyde University, as it is he who introduced me to Allyn Young. He has also been my co-author who has collaborated with me on a number of journal papers on Young. Besides, he read through all earlier draft chapters of the book. I am deeply indebted to Anthony P. Thirlwall, the great thinker series editor, for painstakingly going through the entire manuscript and offer- ing constructive criticisms and comments. My special thanks also to Rachel Sangster, Laura Pacey and others at Palgrave Macmillan for their help in shaping this volume in various ways. Preface xi Finally, a word of thanks to my family who were patient with me while I worked on this project. Glasgow, UK Ramesh Chandra September 2019 Contents 1 Introduction 1 2 Intellectual Influences on Allyn Young 33 3 Nature, Scope and Method of Economics 69 4 Allyn Young’s Contribution to Growth Theory 95 5 Allyn Young’s Contribution to Economic Theory 127 6 Allyn Young on Applied Economics 175 7 Allyn Young on Money, Banking and Business Cycles 207 8 Allyn Young’s Role as an Author, Teacher and Mentor 235 9 Young’s Estimate of His Contemporaries and Earlier Economists 261 xiii xiv Contents 10 Concluding Remarks 303 Author Index 327 Subject Index 335 1 Introduction This book attempts to present Allyn Young’s thought in the form of the- matic chapters. Since many of his ideas, apart from increasing returns, are not well known, it is hoped that these thematic chapters will lead to a better appreciation of his thought. In this introductory chapter, we shall briefly first make some preliminary remarks about Young and his thought, and then his life and times, his personality, and the scheme of the book. Allyn Young: Preliminary Remarks The 1990s have seen a revival of interest in Young with the publication of his first authoritative biography by Charles Blitch (1995). His work, which was largely scattered in obscure journals, newspapers and encyclo- paedias, was collected, and a bibliography consisting of about 100 entries was compiled by Perry Mehrling and Roger Sandilands (1999). His mon- etary thought was pieced together by David Laidler (1993, 1998) and Mehrling (1996, 1997). Some of Young’s earlier papers were collected by himself in a volume Economic Problems: New and Old (Young 1927). It had been thought that Young published very little, but with the © The Author(s) 2020 1 R. Chandra, Allyn Abbott Young, Great Thinkers in Economics, https://doi.org/10.1007/978-3-030-31981-6_1 2 R. Chandra compilation of a bibliography of a hundred items, it became obvious that his work was quite substantial.