I want to respond to Bert's question about David and Goliath, and in the 
process segue back into the "pre-1936 thread" since to answer to Bert 
requires going back to one of the central issues there.

I would say, Bert, that the proclivity of economists to tell a "David 
and Goliath" story is a variant of the well-known proclivity of 
economists to set up straw men when they introduce a new theory. This 
listserv has had at least one discussion thread in the recent past about 
the use of "straw men"  by famous economists, a trait that was certainly 
present in Smith's _Wealth of Nations_ and never seems to have 
disappeared. I do not know other disciplines well enough to know how 
wide spread this is, but economists seem very prone to exaggerating 
other people's arguments to make it easier for them to demonstrate the 
necessity/ power of/originality of their own work. Two years ago, HOPE 
published a whole set of short papers about how economists have misused 
their own discipline's history to make their arguments. (I have a paper 
in that set on one of the misuses of Keynes's work.)

Bert eventually asks, "My question is: But is the Story basically right? 
Is the history of economic ideas of the 20th century, in a very broad brush, free market to 1936, a meteoric rise of Keynesianism, and then a pendulum 
swing back?  The date of the swing back is harder to pin down. It was more 
gradual than Keynes' landslide win."

I will not talk here about the demise of Keynesianism after (roughly) 
1970, only about the history before 1936.

The story before 1936 is mixed, but as I argued in an earlier post, in 
America there was not a single dominant orthodoxy in 1935 in favor of 
laissez-faire. American economics had been virtually solely 
laissez-faire before (roughly) 1885, but after that became much more 
diverse and plural. There were many economists by 1935 who were not 
laissez-faire and they held their views for many different reasons. One 
type of objection to laissez-faire was Instituionalism, for instance.  
But there were many, many other ways to believe that the market didn't 
always automatically lead to optimal outcomes. Roy Weintraub mentioned 
J. Ronnie Davis's _The New Economics and the Old Economists_ (1971) 
which documents the many economists who advocated macroeconomic policies 
to fight the Great Depression before 1936. (I am afraid Hugh Rockoff's 
assertion last week that there was little or no "macroeconomic" dissent 
from laissez-faire before 1936 is simply not correct ,as Davis's book 
makes abundantly clear. While there were certainly economists before 
1936 who opposed "macroeconomic" policies to stimulate the economy, it 
is a myth that there was an "old time religion" before 1936 that Keynes 
somehow exploded with the _General Theory_.)

And as Roger Backhouse's post to this listserv earlier today suggests, 
there is an excellent source in Peter Hall's (edited) collection of 
essays, _The Political Power of Economic Ideas: Keynesianism Across 
Nations_ to help in understanding what happened in the early decades of 
the 20th century as demand management  became widely used around the 
world. Hall's book has case studies from Sweden, Germany, Italy, France, 
Japan, the U.S. and the U.K. detailing how demand management came to be 
used in each country. In many of them, demand management's use pre-dates 
1936. Even when it doesn't pre-date 1936, it wasn't always Keynes's 
influence that caused demand management to be used. What Hall discovered 
is that Keynes was not the reason for the rise of demand management in 
most any country. Canada may be an exception, and whether the U.K. came 
to use demand management as a result of Keynes's writings has been the 
cause of some great debate among economic historians. Thus, the fact is 
that Keynes's _General Theory_  played the role that Roy Weintraub 
described in an earlier post: it became an ex post theoretical framework 
for a revolution in policy that had already happened for other reasons. 
(I am not making any statements here about the theoretical revolution 
after 1936. About this, see Laidler, 1999.) I have glossed Hall's 
argument and the differences between what Keynes said and what the 
Keynesians said in an essay, "Keynes and Keynesiansim" in the new 
_Cambridge Companion to Keynes_ (2006).

So, Bert, the answer to the small corner of your query that I can 
comment upon is that the world of economics was not "dominated" by 
laissez-faire before 1936. Nor was the world of economic policy making 
"dominated" by laissez-faire before 1936, even if there were arguments 
made then against using fiscal or monetary policy to combat the Great 
Depression. Keynes, of course, faced a brilliant and rigid exposition of 
laissez-faire in the British Treasury (the famous Treasury View). But 
the U.K. Treasury was not the whole world, then or now. And we can say 
with absolute certainty that the historical record does not bear out the 
argument that Keynes's book is the reason that demand management came to 
be used in the 20th century as a policy tool to manage the economy. Thus 
in response to your two questions, "Is the history of economic ideas of 
the 20th century, in a very broad brush, free market to 1936"? followed 
by, "a meteoric rise of Keynesianism"?, the answers are "No" and "Not if 
you mean by Keynesianism that demand management was used to try to 
stabilize the economy." There are two Goliaths there, both invented by 
people who needed them so they could play David.

Bradley W. Bateman