On the Many and Great Contradictions Present in Hicks’s June, 1936 Economic Journal Review of the General Theory When Compared to His April, 1937 Econometrica Article: Hicks Did Not Correctly Cite the 1936 Champernowne and Reddaway Reviews of the General Theory or the General Theory
35 Pages Posted: 23 May 2018
Date Written: May 10, 2018
There is no mention in Hicks’s June, 1936 review of Keynes’s General Theory for the Economic Journal, which was then by far the highest ranked economics journal in the world, of any kind of an IS-LM model in the General Theory at all. In fact, there is no mention of any kind of model at all. Hicks’s major point in his June, 1936 review for the Economic Journal was to emphasize the great importance of Keynes’s analysis of expectations and anticipations of the future vis-à-vis his contemporaries and past economist’s writings. Hicks mistakenly claimed that Keynes’s Liquidity Preference theory of the rate of interest was a purely monetary one, where the demand and supply of money alone determined the rate of interest.
Less than 10 months later, Hicks introduced major changes in his evaluation of the General Theory. Hicks’s entire 1937, Econometrica paper now puts great emphasis on Keynes’s IS-LP(LM) model. In direct contradiction to the 1936, Economic Journal review paper, Hicks removes expectations from his “suggested interpretation” of Keynes’s IS-LP(LM) model in his 1937 paper.
Hicks’s 1937 Econometrica article is, in fact, directly based on the two June, 1936 review articles of the General Theory made by Champernowne and Reddaway, respectively, that appeared in the Review of Economic Studies and the Economic Record. Hicks did not cite or mention either paper in his 1937 Econometrica paper. It is obvious that Hicks read both papers and got his ideas from them on Keynes’s IS-LP(LM) model. Hicks removed his emphasis on Keynes’s analysis of expectations, the focus of his 1936 review of the General Theory, from his 1937 paper because of the heavy emphasis given to them by Champernowne and, to a lesser extent, Reddaway.
Hick’s so called LL diagrams, presented on pages 153 and 154 of his 1937 article, are based directly from Keynes’s mathematical description and listing of specific historical empirical results supporting his description that was provided by Keynes on page 207 of the General Theory.
The only evidence preventing one from concluding that Hicks was negligent in his scholarly duties regarding Keynes’s, Champernowne’s, and Reddaway’s work, is Hicks’s concluding statement that his “skeleton” model might only be a minor improvement on Keynes’s “skeleton” model in the General Theory.
Hicks’s 1937 Econometrica article is completely different in content and focus from his June,1936 Economic Journal article on the GT. In the interregnum of time that elapsed between the writing of the two articles, Hicks read both Champernowne’s and Reddaway’s. He then chose to not cite them in his 1937 article. This is very poor scholarship, to say the least.
Hicks failed to properly cite the General Theory. The crucial pages of the GT that Hicks needed to cite were pages 115, 179-182, 199-209, and 298-306. His footnote nine citation on page 158 of his article is completely irrelevant to the issue of the creation of a IS-LP(LM) model a la Keynes or a IS-LL model a la Hicks.
Hicks’s footnote 5 citation to “Keynes, General Theory, pp. 201-202.” on page 154 can only mislead a reader of the GT from the far more important pages 207-209 as far as the slopes and ranges of the Keynesian LP function (Hicks’s LL function).
Finally, the catastrophic decision made by Hicks to remove expectations from his version of Keynes’s model in Econometrica in 1937 represents a complete repudiation of Hick’s 1936 EJ paper in June that proclaimed that “From the standpoint of pure theory, the use of the method of expectations is perhaps the most revolutionary thing about this book; but Mr. Keynes has other innovations to make, innovations directed towards making the method of anticipations more usable.”
Note that Hicks never explained his decision even in his reassessment of IS-LM made in a 1981 issue of the JPKE.
Keywords: IS-LM, IS-LP(LM), Reddaway, Hicks, Champernowne, Keynes, Chapter 21, Chapter 15, Keynes’s Views of Math
JEL Classification: B10, B12, B14, B16, B20, B22
Suggested Citation: Suggested Citation