As readers of this list may know, I once wrote an intellectual biography of Alvin Hansen, as the middle third of my first book, The Money Interest and the Public Interest (1998).  I do not have a copy in front of me at the moment, but I recall treating carefully the separate questions of Hansen and Keynes, and Hansen and the Keynesians.  I'm not sure anyone noticed those passages, though, so let me sketch what I remember.

Hansen himself was definitely an American institutionalist, and as such he saw Keynes as a latecomer to ideas that he himself encountered earlier coming from the Continental business cycle literature.  To a large extent, what Hansen taught as Keynes was really Hansen himself, an American institutionalist interpretation.  Samuelson's story about a Damascus-like transformation on the road to Harvard is a nice story, and useful for recruitment, but not very good history.  

As for the Keynesians, Hansen never himself thought in IS-LM terms, but he did not discourage his students who went in that direction, unlike other institutionalists (as for example Moulton at Brookings who told people that Samuelson's 1948 textbook was "dogmatic").  A bit of engineering, Hansen thought, was called for in order actually to implement some of his ideas.  In this regard it was Hicks who showed the way, not Keynes.  Hansen's optimism about the inherent dynamism of the US economy was a commonly held view among the institutionalists, and had nothing at all to do with faith in equilibrium and market clearing.  Hansen would have had no patience with the Walrasianism that became orthodoxy, in both Keynesian and monetarist circles.

On the issue of monetary policy, I am surprised by what Ric says he found in the letters.  I remember Hansen always liking the metaphor of a fat man trying to lose weight by tightening his belt.   He can kill himself if he pulls tight enough, but it doesn't do much for the underlying problem.  

Perry Mehrling 

From: "Ric Holt" <[log in to unmask]>
To: "SHOE" <[log in to unmask]>
Sent: Wednesday, August 27, 2014 11:19:26 AM
Subject: Re: [SHOE] Galbraith's writing voice

 Working with the Galbraith's letters I have come to appreciate the insightfulness of Alvin Hansen. Also my impression is that his ideas evolved over time, which is part of what made him a great economist -- his willingness to change his ideas and experiment with different models and policies to see where they would lead us. In a letter to Seymour Harris' widow, Galbraith mentioned the three economists he believed did the most to bring  Keynes to America (Currie would be part of that group also but in a more limited way for Galbraith). Here he is referring to Harris and then mentions Hansen and Samuelson. 


“His [Harris] primary accomplishment was in bringing the ideas of John Maynard Keynes to the United States. With Alvin Hansen and Paul Samuelson, he was one of the three people who principally translated the Keynesian ideas into American terms, made them commonplace with American economists, their students and the larger public” (Letter from JKG to Dorothy Harris, December 16, 1974).


Paul Samuelson and Jim Tobin were students of Hansen. The question I'm asking myself is what level of influence did Hansen have on what has become known as the MIT method that has dominated how economics is done in America. And it seems Hansen is coming back again with this MIT crowd with his pioneer work on stagnation. One of the big debates Hansen had with Galbraith was over this method, though they never put it in those terms. Hansen believed that through the IS-LM model (which he helped create) you could deal with inflation and support employment with changes in the money supply i.e. interest rates, etc. Galbraith was very much against this (and the letters will show a long correspondence about this with Tobin) where he insisted that  the institutional approach of price controls were better to deal inflation than monetary policies through the IS-LM model. Galbraith was very hawkish on inflation, but no monetarist or followed the MIT method, but instead an institutionalist.  Finally about Harris, who Galbraith had a lot of respect for, in the same letter to his widow Galbraith wrote:

 

“Except for a tragic accident of history Seymour Harris would have ended his career a member of the Board of Governors of the Federal Reserve System. It would have been fitting; one of Seymour’s first major works was a two-volume history of the System and its policies. In the late summer of 1963 there were two vacancies to be filled. One was to go to a comparative conservative. Those who were present remember President Kennedy’s delight in announcing that the other vacancy was to go to Seymour Harris. It was thought politic to make the conservative appointment first. President Kennedy was killed in Dallas before he could make the second appointment” (Letter from JKG to Dorothy Harris, December 16, 1974). 


Ric



On Wed, Aug 27, 2014 at 2:20 AM, Roger Sandilands <[log in to unmask]> wrote:
This reminds me that Galbraith's close friend Lauchlin Currie told me that Harvard only appointed Alvin Hansen to the Littauer chair in 1937 because of his apparently very orthodox credentials. They were discombobulated when from his secure position he then revealed his heretical tendencies (teaming up with Currie to make a joint presentation before the TNEC to explain the fiscal causes of the 1937 recession).



Roger Sandilands



________________________________
From: Societies for the History of Economics [[log in to unmask]] on behalf of Ric Holt [[log in to unmask]]
Sent: Tuesday, August 26, 2014 5:36 PM
To: [log in to unmask]
Subject: [SHOE] Galbraith's writing voice

In January 1955 Galbraith gave testimony before the Joint Committee on the Economic Report for 1955, titled "Fiscal Policy and the Economic Prospect." The 1950s was a grand decade for Galbraith where he turned from just publishing one co-authored book up to the age of 41 to publishing a plethora of them. It was also the decade where he truly found his "writing voice." Below is a short piece from his testimony that shows that voice we all know. It's amazing what tenure will do.  He finally was awarded tenure in November, 1949 at Harvard after a difficult struggle for the second time -- and his cheerful but sardonic voice never stopped after that for another fifty years. Luck us.
Ric Holt

"Let me turn now to two or three specific questions on which the Committee has asked for suggestions. (I pass over some of these because I am not sufficiently informed. Thus I have never been sure that I fully understand the doctrine of percentage depletion, although what I have heard of it sounds very nice. It would seem to me important that it be promptly applied to professors. There is no group where depletion of what is called intellectual capital proceeds so immutably and leaves a more hideous void. Surely we should be permitted to deduct from our taxes each April an allowance for this annual deterioration. I am told that Powers models have an analogous case.)"