Selected Essays of Axel Leijonhufvud
Economists of the Twentieth Century series
Chapter 5: Hicks on time and money
Modern macroeconomic theory has been shaped to an extraordinary degree by Keynes and by Hicks. My assignment was to discuss them both, but I have found it too large for a paper. I will conﬁne my discussion of Hicks’s role to two related themes: time and money. Even within these boundaries, the following attempt at an interpretation cannot be deﬁnitive.1 Among the several reasons for this, one is germane: I know that I shall learn more from Sir John Hicks in the future. But I cannot know exactly what I shall learn next time I sit down to read or reread him. Hence today’s assessment cannot be my ‘optimal’ or ﬁnal one. Rather than commit myself fully, I should retain a measure of ‘ﬂexibility’.2 In certain types of situations, it is rational to commit oneself fully or contingently. In others, where the future contingencies cannot be enumerated or their nature anticipated, one should retain ﬂexibility. One difference between neoclassical and Keynesian theory is that the former tends to exclude, whereas the latter must include, situations of the second sort.3 The younger Hicks is remembered for his contributions to neoclassical economics; over the years the elder Hicks has become more insistently Keynesian in this particular sense. TIME AND EQUILIBRIUM ‘Every economist is familiar with the accomplishments of Hicks the Younger, whether he has read him or not. That brilliant young man was supremely successful – by reformulating utility theory, by simplifying monetary theory, by interpreting Keynes and the Classics, and...
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