Text: The Evolution of Economic Thought, 7th ed., by Brue and
Grant.
Prerequisites: Economics 311 and 313, or the equivalent.
GTF/Office/Hours: Alex Twist: [email protected], PLC 507, T/Th: 10:00-11:00.
Tests: There will be two midterms and a final. The midterms will be given
on Tuesday, October 21st and Tuesday, November 18th. The final
will be given on Tuesday, December 9th from 8:00 a.m. – 10:00 a.m.
Homework: Problem sets will be assigned periodically. These are
graded, and exam questions will be based, in part, upon the problem sets.
Grading: Each midterm is worth 25%, the homework counts as 15%, and the
final is worth 35%. Grades will be assigned according to your relative
standing in the class.
Tentative Course Outline:
Introduction
Ch. 1
The Mercantilist School
Ch. 2
The Physiocratic School
Ch. 3
The Classical School ‑ Forerunners
Ch. 4
The Classical School ‑ Adam Smith
Ch. 5
The Classical School ‑ Thomas Malthus
Ch. 6
The Classical School ‑ David Ricardo
Ch. 7
The Classical School ‑ Bentham, Say, Senior, and Mill
Toward the end of World War II, he became an adviser to Assistant Treasury
Secretary Harry Dexter White, who led U.S. efforts to shape the world's economy
after the war. Mikesell was present at the Bretton Woods conference, where White
and the British economist John Maynard Keynes negotiated the design of the World
Bank, the IMF and the General Agreement on Tariffs and Trade. The institutions
funded the European recovery and laid the foundation for the postwar economic
expansion.
Mikesell provided data for White to use against Keynes' attempts to preserve
British interests. ... [Update: NY Timesstory]
Among all countries involved in the Bretton Woods negotiations the
last surviving economist is, as far as I'm aware, Dr. Jacques J. Polak
who was a member of the Netherlands delegation. He is 92, lives in
Washington, D.C., and maintains an office at the IMF where he continues
to write.
One of Ray's many books, Foreign Adventures of an Economist written in 2000,
gives details of his experiences in all sorts of negotiations and advisory
capacities. One part of the book details his experiences at Bretton Woods and
it's a history worth preserving. Ray's main lasting contribution at the
conference was to determine the IMF and World Bank formula used to set quotas:
This exercise required many calculations with a 1940s-style calculator, using
a number of variables and weights for each country. If I had had access to a
modern computer, I could probably have come up with a better formula. ... My
formula was ... used as a basis for determining the IMF and World Bank quotas at
Bretton Woods for most member countries represented at the conference.
Thereafter, it was used in a somewhat revised form for new members joining the
Fund. In fact, the formula is still used, but with special adjustments for
individual countries. I take no pride in having authored the formula and
sometimes apologize for it as my claim to infamy! It has continued to be used in
large part because the Fund wanted to apply the same conditions in determining
quotas for new members as were applied to the original members.
The book has a lot of interesting detail and insider information on the
negotiations, and I've included the pdf's for the chapters on Bretton-Woods
below for anyone who is interested. Here's one small section:
A Note on Personalities
John Maynard Keynes
As a young academic who had studied and taught both The Treatise on Money
and The General Theory I was awed by Keynes and grateful that I could sit
in meetings with him. Although he fought hard for positions he regarded as
important for Britain's welfare, his economic arguments were academic and
dispassionate. Keynes could accept philosophically the economic advantages of
multilateral trade while continuing to defend a discriminatory sterling area in
terms of Britain's national interest.
There was a sharp contrast between the literary quality of Keynes's ICU
proposal and the legalistic formulation of the July 1943 version of the White
plan. Keynes displayed arrogance in the elegant language of an educated British
lord. He disliked the style and format of the Fund's Articles of Agreement. He
said they were written in Cherokee, and he blamed the language on the Treasury
Department's lawyers. Keynes frequently complained that Americans were too
dependent on attorneys, and once suggested that "when the Mayflower sailed from
Plymouth, it must have been entirely filled with lawyers."
Keynes was capable of displaying temper and once threw one of
White's drafts to the floor, but he usually expressed his anger through
sarcasm. He always had an air of dignity and did not join the revelry
at the Bretton Woods nightclub. I never saw him in sport clothes.
Nevertheless, he was approachable. Junior members, such as myself, were
able to talk privately with him, and I always found him willing to
answer my questions. If we took too much time, however, Lady Keynes
would tiptoe over to protect him from becoming too tired. Those of us
who were privileged to shake his limp hand on the train from Savannah
to Washington following a light heart attack were left with the memory
of saying farewell to a truly noble man.
Harry White
Personalities played an important role in the Bretton Woods debates and in
the final outcome. I saw White in numerous meetings and on dozens of other
occasions when we talked alone in his Treasury Department office. His Monetary
Research staff was largely composed of former academicians, and many of us
returned to universities after the war. The staff was intensely loyal to White,
and he respected us as scholars and strongly supported us even when he thought
we had made mistakes. I do not recall White's embarrassing any staff member by
dressing him down, but he showed another side when he was involved in
negotiations outside the Treasury Department. He was often brusque, even crude,
in his meetings with Keynes and the British delegation.
When annoyed, he sometimes cynically addressed Keynes as "Your Royal
Highness" or "Your Lordship." Lord Robbins, who participated in many of the
pre-Bretton Woods meetings but was not close to White, described White well in
his book Autobiography of an Economist:
It is true that White was not a very beautiful character. He was brash,
truculent, and, I suspect, somewhat unscrupulous where his own interests were
concerned. In his younger days he had been the victim of academic unemployment,
possibly due to the discreditable anti-Semitism which at that time tended to
affect the policies of the great university with which he had been associated;
and I am fairly clear that he was determined that henceforth Harry White should
not be worsted in the struggle for survival-- or eminence. But that he was in
any way associated with the groups in the United States who actively wished harm
or wished to exploit our [Britain's] position of weakness will not stand up to
examination for a moment. (Robbins, 1971).
White often expressed to his staff his hostility toward the State Department,
with which he frequently struggled for power within the U.S. government. Like
Morgenthau, he wanted the Treasury Department to be the center of postwar
economic policy and planning. This helps to explain the comprehensive nature of
the original White plan. International financial institutions were not a high
priority in the State Department; without White's zeal, there probably would not
have been a Fund or a Bank. The Bretton Woods institutions might not have come
into being if they had not been well advanced before the end of the war, since
by then there was a plethora of immediate economic problems that these
institutions were not equipped to handle.
White sought to conduct his own foreign policy independently of the State
Department. He dealt directly with foreign officials in Washington, and members
of the Monetary Research staff in American embassies in Allied countries,
including myself, secretly reported directly to White without going through
their embassies. White sometimes used the press to promote his policies that
were in opposition to those of the State Department. On one occasion, while I
was alone with him in his office, he dictated over the phone a long, top-secret
State Department statement to a reporter. I do not know the reasons for White's
antipathy toward the State Department, but it was not directed at individuals
since he had close relations with some of them. I believe it was a reaction to
the State Department's traditional insistence that it have commanding
responsibility over foreign policy.
White believed that the U.S. government should have sought closer cooperation
with the Russians. Through certain members of his staff, he provided information
to and discussed policy with Soviet embassy officials. These relations were
later discovered by the FBI and led to White's dismissal from the government,
but they were not known to most of us in Monetary Research.
Many people have asked me if White was a Communist. I am convinced that he
was not. White believed in free markets and capitalism and devoted his energies
to planning for a postwar world with free and nondiscriminatory trade and
payments. He was, however, quite willing to deal with Communist officials to
achieve his objectives. The Soviet Union shared his political objectives
regarding postwar Germany, and he believed that Soviet officials would support
the Fund and the Bank proposals. He did not share the pervasive fear that the
Communist ideology would spread to the rest of the world, or that the Soviet
Union might dominate the world by military conquest. He believed that a
Communist state could operate under a system of nondiscriminatory trade
rules, abiding by the trade and exchange obligations of his plan.
White's associates who were later accused of being spies for the Soviet Union
-- Sol Adler, Frank Coe, and Harold Glasser -- never indicated to me that they
were not completely loyal to the United States or that they did not believe in a
democratic capitalist society. I knew them so well personally that it is
difficult for me to believe they could have concealed communist ideology from
me. Although they may have had some association with the American Communist
movement in their youth, as did many of my college acquaintances in the 1930s, I
believe that the accusations directed against them arose from White's propensity
to carry on direct relations with the Soviet government outside regular
diplomatic channels. If these same activities had been carried on with the
British or Canadians, they would have been acceptable. White and his closest
associates simply ran their own foreign ministry.
A few weeks before White's death, he and I were speakers at a conference of
the American Academy of Political and Social Science in Philadelphia. After the
evening meeting on April 19, 1947, I spent a couple of hours with him in the
lobby of the Benjamin Franklin Hotel. He was in a reflective mood, and we
reminisced about the events leading to the creation of the Bretton Woods
institutions. White had already been compelled to give up his position as the
U.S. executive director of the Fund. He had been working as a consultant to the
Chilean government and had recently returned from Santiago. He was scheduled to
testify before the House Committee on Un-American Activities, but he spoke very
confidently of being able to disprove the charges against him and appeared to
look forward to the opportunity. White was charged with providing confidential
information to the Soviet Union, but I have never believed he gave any
information that was harmful to U.S. national interests. White did speak of his
heart condition and, when we parted, he apologized for taking the elevator
rather than walking the two flights to where both of our rooms were located.
Some say he committed suicide to avoid testifying before the House committee. I
do not believe it.
