Transformational Growth and Full Employment
Edited by Edward J. Nell and Mathew Forstater
Chapter 4: Neisser’s Unorthodox Quantity Theory of Money
4. NeisserÕs unorthodox quantity theory of money Hans-Michael Trautwein 1. INTRODUCTION When Hans Neisser came to America in 1933 to become a professor of monetary theory at the Wharton School in Philadelphia, his works in that field had already earned him an international reputation of high stature.1 His treatise on the value of money (Der Tauschwert des Geldes, 1928) was approvingly cited by Keynes, Hayek and other writers in those peak years of monetary theory. This is remarkable for several reasons. It was not only because they were written in German that NeisserÕs works were not an easy read.2 They also contained painstaking dissections of the effects of capital accumulation and technical progress on the circuit flow of money; and they were based on Irving FisherÕs formulations of the quantity theory of money. At first glance we might take these to be very orthodox approaches, and Neisser, in fact, never made any great claims to originality. Yet his methods and results were unorthodox, both for his time and from the vantage point of ours. The first unorthodox feature of NeisserÕs approach lies in the fact that he took recourse to the quantity theory. The hyperinflation in 1923 may have made many Germans believe that changes in price level were directly and equiproportionally caused by changes in the volume of money. Among monetary theorists in the German language area, however, the quantity theory was quite unpopular. Under the influences of KnappÕs chartalism, other types of nominalism...
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