On Keynes and Monetarism

It is an honor to be invited to speak at a conference honoring Keynes. His work has probably stimulated more pages of analysis, discussion and controversy than the work of any other economist.* Many of the controversies proved sterile, but others have had lasting effects and some continue to shape economics. The particular controversy about which I have been asked to speak - the monetarist controversy - remains one of the more productive controversies. The controversy stimulated developments in micro and macro economics, in econometrics, in the theory of expectations and the relation of expectations to econometrics and to micro and macro economics. At times, some disputants ignore these gains and appear to see only retrogression where there is progress. Kaldor (1982) is one example, but an example familiar to this audience. Other economists, who undertake to read the literature - though highly critical of recent developments and distressed by their policy implications - recognize that the monetarist controversy has caused them to rethink and change their views - Modigliani (1977) - and, more importantly, has caused lasting changes in economic theory - Tobin (1981, pp. 41-2). I take as given and obvious that both monetarism and our understanding of Keynes1 theory continue to change, the former because it is part of economic science, the latter to considerable degree as a result of the excellent volumes containing Keynes' papers and letters produced for the Royal Economic Society