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Robert Clower: Portrait of an Affectionate Curmudgeon

An appreciation of the work of the American monetary macroeconomist Robert Clower who died in May 2011.


functions. The famous Clowerian dual

Robert Clower: Portrait decision hypothesis, hatched in Monrovia,

the capital of Liberia, and produced at the

of an Affectionate Curmudgeon

Abbey in Royaumont, France at the International Economic Association conference of 1962,3 was devised with the express in-K Vela Velupillai tention of “getting income into demand

An appreciation of the work of the American monetary macroeconomist Robert Clower who died in May 2011.

K Vela Velupillai ( is at the Department of Economics, University of Trento, Italy.

The upshot of all this is that everything being done these days by the general equilibrium idiots with “money” is just silly. Until they give up the idea of general equilibrium à la Walras and deal with a conception of an economy that actually has a money commodity explicitly built into it, they will continue to talk nothing but nonsense.

– Letter from Clower to the author, 27 November 2006

1 A Brief Preamble on Thirteen Clowerian Codes1

My ‘doubts about orthodoxy’…occurred long before I knew any economics. What others may see as an intellectual development, I knew to be a personality trait.

– Clower 1984, p 259.

ith the death of Robert Clower, on 2 May 2011, the group of outstanding monetary macroeconomists who moulded the subject in terms fashioned by Knut Wicksell, Irving Fisher, Maynard Keynes and Dennis Robertson, has lost its last, enduring, exponent.2 This set of giants, whether we agreed with their notions and ideologies, their theories or their methods (or lack of method), comprised – apart from Robert Clower – Paul Samuelson, Milton Friedman, Don Patinkin and James Tobin – an all-American group. This was in contrast to the presecond world war pioneers of monetary macroeconomics, all of whom, with the exception of Irving Fisher, were Europeans: Wicksell, Cassel, Keynes, Robertson, Lindahl, Myrdal, Ohlin and Hayek. John Hicks straddled both eras.

The only explicit statement the great logician Kurt Gödel is ever known to have made about economics was characteristically prescient. Anticipating, by many months, the publication of Keynes’ General Theory, Gödel, in commenting on a celebrated paper by Abraham Wald which, itself, was the fountainhead of modern mathematical general equilibrium economics, pointed out a central tenet of Keynesian macroeconomics: The need to include income as an argument in individual demand

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functions” and, thus, reorient the research agenda of macroeconomic theory away from the fallacies and ad hockeries of the “neoclassical synthesis” towards a framework where money, dynamics and disequilibria played essential roles with solid microeconomic foundations. It was the beginning of a lifelong search for consistency between macro and micro economic theories which, Clower thought, could be found only if the economic theorist succeeded in constructing successful “thought experiments” (Gedankenexperiment) to tame disequilibrium economic processes in monetary economies. This search for consistency was, surely, the only bond that linked the unlikely personalities of Gödel and Clower.

Bob Clower, almost single-handedly, initiated simultaneous moves away from the complacency and the twin orthodoxies of the neoclassical synthesis that had come to dominate macroeconomic thinking on the one hand and, on the other, a general equilibrium theory that had come to be viewed as providing a rigorous foundation for microeconomic theory. Clower’s celebrated two thought experiments – the dual decision hypothesis and the dichotomised budget constraint – were constructed, respectively, to expose the lack of any Keynesian content in the neoclassical synthesis and to highlight the role of money in exchange processes and, hence, the vacuity of a general equilibrium theory that claimed to model exchange economies faithfully.

These two almost synchronised moves

– away from the orthodoxies of monetary macroeconomics and mathematical microeconomics – were codified in terms of what I have come to encapsulate as the “13 Clowerian Codes”: Stock-Flow Monetary Dynamics, The Patinkin Controversy, Hahn’s Problem,4 Say’s Law, Walras’ Law, The Keynesian Perplex, The Dual-Decision Hypothesis, The Keynesian Cross, The Neowalrasian Code, Thought Experiments, Induction, Axiomatics, General Process Analysis.

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I have listed them in the approximate sequential order in which they were codified by Clower, in his fascinating, constructively critical, intellectual journey towards a disequilibrium dynamic monetary macroecono mics, underpinned by a rigorous, yet empirically disciplined microeconomics. However, a discerning reader would, in any case, be able to detect a pattern in the sequence, mildly transcending the “timeline”.

For example, the penultimate threethought experiments (Clower 1984: 82), induction (Clower 1994) and axiomatics (Clower 1995) form a methodological triptych. However, the fruitful use of thought experiments, in theorising counterfactually, permeate Clower’s contributions almost without exception.

The first and the last form a unified couple, providing mathematical economic foundations for a general process analysis, where disequilibrium economic dynamics is encapsulated in an intrinsic stock-flow dynamics. They emerged, almost fully formed for use for the rest of his intellectual life, in that annus mirabilis for Clower,5 1954 in Bushaw-Clower (1954), Clower (1954a) and Clower (1954b).

The formalism of a general stock-flow dynamics was achieved by Bushaw and Clower in terms of Integro-Differential equations; however, for purely economic reasons, it may have been far more intuitively useful to have formalised stock-flow dynamics in terms of differential-difference equations. Had they done the latter, their classic may have fared better as an intermediate precursor of the “time-to-buildtradition in business cycle theory” (cf Dharmaraj and Velupillai 2011, for a fairly comprehensive survey of this tradition).

It may be apposite to mention that the Bushaw-Clower classic was the first article in economics to mention clearly, and utilise imaginatively, Lyapunov’s stability criteria, at least in the English language economic literature.6 Moreover, so far as I am aware, this was the very first paper in economics, in any language, to have referred to the important Russian contributions to an analysis of the problems posed by linear isations of non-linear differential equations and the difficulties of inferring, from the stability of the linearised system, anything about the dynamics of the more general non-linear system from which it was derived. Bushaw and Clower refer, explicitly, to the relevant sections in Russian classic by Nemytski and Stepanov (cf Clower and Bushaw, footnote 8, p 337). Obviously, they were familiar with this literature in view of the important role played by Bushaw in the editing of the translation of the first edition of the Nemytski-Stepanov classic.7

In monetary macroeconomics Clower’s lifelong preoccupations were centred on untangling the confusions wrought by the neoclassical synthesis as a repository of Keynesian macroeconomics, first by Hicks and his unfortunate IS-LM mythologies8 and, later by Lange9 (1942) and Patinkin10 (1956, 1965), with their neo-Walrasian phantoms, through which prisms the classical dichotomy, Say’s Law and Walras’ Law came to dominate monetary discussions. To these was added the so-called Hahn Problem of the difficulties in proving the existence of an equilibrium in a monetary economy. The core monetary macroeconomic contribution by Clower are encapsulated, thus, in the codes I have called the Patinkin Controversy, the Hahn Problem, Say’s Law, Walras’ Law, the Keynesian Perplex and the Dual-Decision Hypothesis.

I believe – at least if I am to go by what I learned from personal conversations with Clower – he came round to the view that the Hahn Problem was a classic red herring in the following sense. An essential monetary economy is a disequlibrium dynamic process. Therefore, any attempt to show the difficulties of proving the existence of equilibrium in a static “monetary” economy, using classic non-constructive methods was a pointless, non-empirically underpinned, exercise. I wholeheartedly agree. Mercifully, the Hahn Problem has been forgotten in the monetary macroeconomics literature at the frontiers – but, unfortunately for all the reasons that Clower abhorred.

Then, there is the fudge – both analytical and pedagogical – that is the Keynesian Cross has been dissected with merciless clarity and precision by Clower (1996), who then goes on to derive and place, with impeccable faithfulness to Keynes (1936, chapter 3), “Keynes on the Cross”!

Finally, the Neo-walrasian Code has been the bête noire of Clower’s focused intellectual assault on orthodoxy’s complacency in the face of empirical anomalies, historical


irrelevancies, institutional vacuities and behavioural absurdities of orthodox mathematical economics.

2 Outlining an Affectionate Curmudgeon’s Life

I may be a bit of a curmudgeon, but I believe 95 percent of all economists are incompetent, and the rest are anxious to get into public policy.

– Robert W Clower

In one of those compelling coincidences of life and its mysteries, Robert Wayne Clower was born in Pullman, in the state of Washington, on 13 Februay 1926, even as the death was being announced of another great economic theorist, Francis Ysidiro Edgeworth, on that very day. Wicksell, too, died that same year, a few months later.

His father, Fay Walter, was from Morrisonville in Illinois and was a professor of economics at Washington State University, in Pullman. His mother, Mary Valentine, from Chanute, Kansas, was “wise and lovable” whose advice, “not to go looking for arguments”, the son ignored for most of his life. Bob Clower once told me that one of his distant cousins had traced the Clower’s back to about 1,745 in Scotland. The first Clowers in the “New World” were found in Charleston, South Carolina around 1750.

Clower graduated from Pullman High School in 1943 after a short stint as a radio repairman in Seattle. He claimed to have won no prizes of distinction at school except to have narrowly avoided occupying last place in the academic honours list at school, 52nd out of 54! After army service for 31 months, from 1943 to 1946, in Wiesbaden, Germany – during which he also managed to get married to a Scottish lady from Aberdeen – Clower returned to enter Washington State University as a freshman

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in the summer session of 1946. Although Clower started his undergraduate studies with the intention of pursuing a career in law, he ended up by graduating, in 1948, with the highest honours and obtaining a BA in economics and, in the following year, also an MA in economics.

Part of these alleyways into economics was inspired by a perceptive father – “who had met Maynard Keynes at a University of Chicago seminar in 1931 and thought him ‘fascinating’” – who gave the undisciplined son a copy of The Economic Consequences of the Peace soon after the return from Wiesbaden and just before entering university, in early 1946, on the eve of Keynes’ untimely death in April of that year. The result was a lifelong passion and interest in Keynes in every sense imaginable and, more importantly, a reading of the General Theory even before starting formal University education in economics.

A Rhodes scholarship took him to Oxford to do a PhD in economics under John Hicks. Clower initially proposed a thesis on “Theories of Capital Accumulation” but changed it to add the phrase “With special reference to Their Ability to Explain the Experience of the United States and Great Britain Since 1869”, on the advice of Hicks who informed him that to obtain an Oxford doctorate in economics one would have to “exhibit skill at handling facts along with theory”. The completed thesis, on submission in May 1952, was judged – in Clower’s own brutally honest opinion, “rightly” – to be “not in a form fit for publication” and was failed. He was offered the consolation prize of a B.Litt and a quarter century later, in 1978, Oxford bestowed on him a D. Litt and his Oxford odyssey was crowned, in December of the same year, when he was elected to an honorary fellowship at his alma mater, of sorts, Brasenose College.

For a decade and a half he shepherded, as managing editor, two of the most influential journals in the world of academic economics. From 1973 to 1980 he edited the Western Economic Journal, which subsequently became Economic Inquiry; and the American Economic Review, the premier journal of the profession, from 1981 to 1985. When I asked him, not long after he resigned from the latter, prestigious position, why he did not continue in the post, at least so that he could guide the direction of research, even in some small way, in wise and interesting directions, his answer was pungent and direct: “the submissions were pure paper, nothing but paper and dull, dull, dull”! I could not argue, and did not do so.

Critique of Neoclassical Synthesis

Robert Clower unleashed a ferocious and sustained criticism of what he felt was the mechanical framework and duplicity of the neoclassical synthesis and its emasculated portrait of Keynesian economics as a special case of the classical system. In his unfortunately unpublished Perugia Lectures of the early 1970s he described a conversation with Paul Samuelson in the late 1960s. In that conversation Samuelson “confesses” that the phrase “neoclassical synthesis”, first used in the third edition of his famous textbook, was coined simply to placate the “McCarthyites” who were “on his back” for being a Keynesian. Clower’s incredulity, described vividly in those fine “Perugia Lectures”, that a whole generation of macroeconomic education had been based on an empty shell, and his anger at the callousness of the “eastern establishment”, was evident in the written description of that episode.

Clower travelled widely – early in his career to Lahore as a visiting professor at the University of the Punjab in 1954-56; to direct the economic survey of Liberia in 1961-62; as a visiting professor at Makerere College in Uganda, in the summer of 1965. These visits to south Asia and west and east Africa, he once said, gave him “a feel for theoretical treatment of fact and factual scrutiny of theory”.

Prestigious Appointments

Then there were invitations and visits to all the usual prestigious places in the western academic world as a visiting professor: Cambridge, Oxford, Stockholm, Vienna, Siena, Trento, Western Ontario, etc. He even almost decided to move to the UK on a permanent basis in the late 1960s when, between his main permanent, longterm, sojourns at Northwestern University (1958-64, chairman for the whole period) and UCLA (1971-86), he spent a couple of years as the dean of the School of Social

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Studies and professor of economics at the University of Essex.

Many and varied academic honours came his way. He was elected a Fellow of the Econometric Society in 1978 and was the recipient of Fullbright, Guggenheim and Erskine fellowships. He co-authored four textbooks, edited a much cited and useful Penguin collection on Monetary Theory, produced two jointly written monographs on Liberia and Puerto Rico and published two volumes of collected essays.

In 1996, a handsome conference to celebrate his 70th birthday was organised at the University of Trento and this resulted in a fine Festschrift with contributions from many of his close academic friends and admirers. I took the opportunity to give him, as his 70th birthday present, just before I gave my own talk at that memorable conference, what I thought was the perfect gift to a man who could not suffer fools, pretensions or pomposity: an original edition of Carlo Cipolla’s pungent booklet, The Four Basic Laws of Human Stupidity (which was a personal gift from the author to me when Cipolla and I had been colleagues in Florence, more than two decades ago).

Bob Clower was an exceptionally generous man, particularly to junior colleagues and graduate students. I am a living example of this generosity, as his Falstaffian

– “brevity is the soul of wit” contribution to my Festschrift (2010) would testify. I take this opportunity to mention this contribution only because I believe this was his last, written, professional paper.

Contrariwise, he could seem to be arrogant towards senior colleagues and anyone who exhibited the slightest trace of pretence or humbug. I have seen him “carve eminent economists as dishes fit for the gods”, at exclusive and specialised conferences, where sloppy analysis and incorrect historical knowledge were exposed with razor-sharp wit. His battles with Patinkin at such events were legendary and even entertaining to the cognoscenti.

The final academic move was to the University of South Carolina as the first Hugh C Lane Professor of Economic Theory, in 1986. The move was motivated more by personal, family, considerations than anything else. By then the two daughters from his second marriage to Georgene were on the verge of becoming teenagers and Los Angeles, seething in all sorts of ways, did not seem to be an attractive place for family life. So this combative, extroverted, peripatetic academic chose the peace and tranquillity of Columbia, South Carolina, and literally at the supreme height of his academic career, withdrew to a “quiet life”.

A debilitating stroke of a little over a decade ago seriously hampered Bob Clower physically, although it did not diminish in any way his mental alertness and agility till almost the very end. In his last years he was nursed with loving care by his wife, Georgene, with immaculate attention, at their beautiful Columbia home. It was only in the last few months that they moved to a small apartment, in the same attractive neighbourhood.

Clower had five children – four daughters and one son – from his first marriage to Frances Hepburn which was dissolved in 1975, and two daughters, Anastasia, born in 1978, and Kathryn, born in 1980, from his second marriage to Georgene Thousendfriend. He was always very proud, also, of his five grandchildren. All of them survive him.

3 The Art of Monetary Macroeconomics – after Keynes

I have always thought that the essential art of economics, as of any other science (or of literary fiction, for that matter) is to tell a good story in a persuasive way.

– Clower 1984, p 264

Clower’s contribution to economic theory and methodology span vast, deep, wonderful and colourful canvasses. Monetary macroeconomics was his forte. But this was underpinned by a conviction, buttressed by solid theoretical work, and a recognition based on acute observation of real world phenomena, that economies where money matters are those in which exchange and production processes can only be observed in disequilibrium states. Hence, he felt, it was imperative that an honest macroeconomic theorist should develop theories and construct thought experiments to elucidate such disequilibrium dynamics. With these convictions and understanding to guide him, he constructed those famous thought experiments of the dual decision hypothesis and the dichotomised budget constraint to suggest the kind of theories, models and concepts that were imperative for an understanding of monetary economies in situ. The concepts he introduced have become a part of the folklore of macroeconomics and the novice in his graduate studies meets them as “Clower Constraints” or “Finance Constraints”, although it is only the form, not the economic content, that bears any relation to the creator’s concepts, as he has, himself, tirelessly repeated.

There was a particular novelty in the way he derived what came to be called the “Clower constraint” which, in simplistic terms one can describe by saying that one cannot spend without having some money to do the spending with. The novelty was his explicitly stated awareness that going, by aggregating, from individuals to the macroeconomy, the only constraining microeconomic structural properties are Walras’ Law and continuity of the demand functions. These structural constraints, and their role in linking the individual and the collective, came to be formalised by the mathematical economists only some years later and now, generally, referred to as the “Sonnenschein-Debreu-Mantel theorem on excess demand functions”. One could, with perfect justice, add Clower’s name to the above trio, for no other economist has used it in the imaginative way he did, to draw out its deep implications in one particular and important domain.

The acuteness and sensitivity with which he has been an observer of the economic scene, and his scholarship of the classics of theory, convinced him, also, of the ubiquity of scale effects in economic processes. There are too many nonconvexi ties in production processes and too many indivisibilities in exchange processes, he claimed, over and over again. Monetary units, for example, do not come in infinitely divisible form. They come in units of whole dollars, euros or whatever and, even in England, in decimal subunits of the primary denomination.

He did not, like the uncritical curmudgeons of the profession, leave it at that; he went on, in several path-breaking papers, to try to construct with novel mathematical tools, rigorous models in which these non-convexities and indivisibilities could be explored theoretically. In one of these,

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jointly written with his younger collaborator and sometime colleague, Peter Howitt, both novel and difficult aspects of number theory and dynamical system theory were invoked, with the laconic caveat that “the proofs [of propositions about the transactions demand for money] necessarily involve the use of number theory – a branch of mathematics unfamiliar to most economists.” This exercise was to illustrate another of his firmly held beliefs: that even simple issues in economics, in this case the familiar and almost banal case of the transactions demand for money balances, require careful analytical considerations and sophisticated mathematical tools to be faithful to real phenomena.

His co-author for the early book on an Introduction to Mathematical Economics, Bushaw – a noted expert on dynamical systems theory – was also his trusted lieutenant in his explorations into the difficult field of disequilibrium economic dynamics. It is, therefore, not surprising that his penetrating criticism of standard economic dynamics of varieties of Walrasian tâtonnement were technically well informed. This writer has benefited in numerous ways from Clower’s vast knowledge and almost perfect recall of mathematical classics. When I was working on the literature on topological fix point theorems and their applications in dynamical systems theory, it was to Clower I first turned for some guidance and he, unerringly, told me to begin with the papers by the elder Birkhoff on Poincaré’s “last conjecture”.

These considerations of “lumpiness”, he felt, rendered the welfare propositions of economic theory, particularly the two socalled “fundamental theorems of welfare economics”, which underpin many of the efficiency claims of theoretically derived policy proposals, inapplicable and even dangerous, if taught and retained in textbooks. He devoted the opportunities for reflection granted by presidential addresses to the Western and Southern Economic Associations and to the History of Economics Society to propagate these themes in wise and measured ways. In these superbly crafted lectures he also called for a return to the “inductive traditions” of Adam Smith, William Whewell and, of course, Maynard Keynes.

4 Monetary Macroeconomics beyond the Neowalrasian Code

Hence, the present perplex in economic theory; for if neo-Walrasian theory is bankrupt – as, for practical purposes, it most surely is – then where do we go from here?

– Clower, 1984, p 198; italics added.

Clower, in his presidential address to the Southern Economic Society (Clower 1994: 805-06) noted with characteristically acerbic wit:

Before I proceed, let me emphasise that by “pure theory” I do not mean what most working economists ... mean when they use the word ‘theory’ without further qualification. Generally speaking, we mean by ‘theory’ the fact-oriented creative mixture of intuition, casual empirical knowledge, and seat-of-thepants logic that is found in virtually all ‘applied economic analysis’ and, indeed, in virtually everything called “economics” before 1950. ... By pure theory I mean the axiomatically-based neowalrasian analysis of Arrow-Debreu ... and closely related offshoots that serve as a standard of ‘economic correctness’ in all modern teaching not only in microeconomics but in macro economics, money and banking, finance, and econometrics.

By “economic correctness” Clower means

what Howitt referred to as “the neowalra

sian code”:

[A]dherence to an increasingly complex code of formal ideas has become the overriding criterion of success, rather than the fruitful modelling of observed phenomena. The code of modern economics has become for the most part that of neowalrasian analysis, with its rules for modelling all behaviour as the outcome of rational choice. ... But accounting for some phenomenon in a discipline dominated by an elaborate code consists not of telling stories designed to convince others that this is why the phenomenon exists, or why it appears the way it does, but of telling stories, no matter how ad hoc, that incorporate some aspect of the phenomenon, no matter how trivial, without violating the code. ... In many ways, modern economic theory has ....become a purely logical discipline in which the objective is to follow a set of a priori rules with no connection to the external world. ... Economists building ‘rational models’ to account for things not found in conventional theory think of themselves as seeking explanation in the usual sense, whereas in fact they are just addressing purely semantic questions that do not even arise once one ventures out of the neowalrasian cloister. Only by the rarest fluke could someone working under such delusions come up with a convincing scientific explanation of anything.

– Howitt 1996: 75-6; italics added.

I have come to believe that the Clower’s vision for an analytical basis for monetary macroeconomics was a formal framework which could encapsulate “Diophantine Dynamics”. This is an inference based on trying to extract a common theme from the 13 Clowerian Codes, outlined above, in Section 1. The integral valued constraints with which Clower developed his outstanding and innovative model of the transaction demand for money (jointly with Howitt, in Clower-Howitt, 1978), the importance he came to attribute to non-convexities via “lumpiness” in production processes, the irrelevance of the

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two fundamental theorems of welfare scholarship in the underpinning of monetary goods and goods buy money; but goods do not macroeconomics after Keynes. The dynamic, dis-buy goods.”

economics under such conditions and, a

equilibrium basis of the monetary macroeconomics 11 Note: not inequalities. fortiori, in disequilibrium dynamic mone-Clower sought to develop, as a General Process Analysis (Clower 1984, Part IV) has nothing what

tary economies, are all important elements soever to do with what Leijonhufvud has tried to References popularise as Adaptive Economic Dynamics, and,

that led me to suggest that the notion of Bushaw, W Donald and Clower, W Robert (1954):

in any case, the latter is not envisaged in terms of

“Price Determination in a Stock-Flow Economy”,

Diophantine Equations,11 within the frame-monetary disequilibrium dynamics, especially in Econometrica, Vol 22, No 3, July, pp 328-43. a macroeconomic mode.

work of Decision Problems (in the strict Clower, W Robert (1954a): “An Investigation into the

3 Ironically, it was first published in German, in

Dynamics of Investment”, American Economic

sense in which this is interpreted in meta- 1963, in the Swiss Journal, Schweizerische

Review, Vol 44, No 1, March, pp 64-81. Zeitschrift für Volkswirtschaft und Statistic (see

mathematics, for which see Velupillai 2011) – (1954b): “Productivity, Thrift and the Rate of

Clower 1984, footnote on p 34)!

Interest”, Economic Journal, Vol 64, No 253,

is the best way for a path “beyond neo-4 Hahn’s Problem must be distinguished from Hahn’s March, pp 107-15. Paradox of Indeterminacy in multisectoral growth

Walrasian economics”. Diophantine Equa- – (1963): “Permanent Income and Transitory Bal

theory (Wan 1971, chapter 4), both of which are red

ances: Hahn’s Paradox”, Oxford Economic Papers,

tions, formalising economic relations – herrings in analytical economics, as far as this writer Vol 15 (NS), No 2, July, pp 177-90.

is concerned. This harsh evaluation by me is for

between more-or-less rational agents, in – (1975): Reflections on the Keynesian Perplex, Zetis

both mathematical and economic reasons; as for

chrift für Nationalökonomie, Band 35, Heft 1-2,

empirically meaningful institutions – under the former, it is due to the triviality of the mathepp 1-24.

matics. As for the economics, space constraints pre

integral valued constraints for values and – (1984): Money and Markets: Essays by Robert W

clude any serious exposition!

Clower, edited by Donald A Walker (Cambridge, quantities are typically only satisfiable, in 5 All of the papers that came to be published in 1954 UK: Cambridge University Press).

had been conceived and written in 1952/3, i e, when

the classic Herbert Simon sense, within – (1994): “Economics as an Inductive Science”,

he was not quite 27 years old. This fact puts in per-

Southern Economic Journal, Vol 60, No 4, April,

the framework of Decision Problems. spective Clower’s mature reflection (Clower 1984, pp 805-14.

pp 263/4): “Economics is less obviously a young

In his concluding “Reflections on the – (1995): “Axiomatics in Economics”, Southern Eco

man’s game than mathematics, but I doubt that

nomic Journal, Vol 62, No 2, October, pp 307-19.

Keynesian Perplex” (Clower 1975: 18): many economists have had a really new idea after – (1996): “On Truth in Teaching Macroeconomics”

the age of thirty-five. I must confess that, one way

in Daniel Vaz and Kumaraswamy Velupillai (ed.),

[I]t is fallacious to argue that standard theo-or another, everything I have done in the second

Inflation, Institutions and Information, chapter 5,

ries of individual or market behaviour can half of my life reminds me (at least retrospectively) pp 35-61 (Houndmills, Basingstoke, Hampshire:

of something I did or thought about earlier. This is

serve directly as a conceptual basis for models Macmillan Press, Ltd).

especially true of my papers on money, which are

– (2004): “Trashing J B Say: The Story of a Mare’s that describe the dynamics of disequilibrium full of rearranged ideas, some drawn from earlier Nest” in K Vela Velupillai (ed.), Macroeconomic motion; in particular, it would be wrong to published work on unrelated subjects, others from

Theory and Economic Policy, chapter 5, pp 88-97

ruminations that earlier came to nothing.”

regard established microtheory as a suitable

(London: Routledge).

6 Weintraub (1991) has explored and reported the

foundation for macrotheory, for the central Clower, W Robert and Peter Howitt (1978): “The

Japanese contributions by Yasui and Morishima,

Transactions Theory of the Demand for Money: A if not the sole object of macrotheory is to who both seem to have used Lyapunov’s methods

Reconsideration”, Journal of Political Economy,

enhance our understanding of short-run dis-in the late 1940s. I am not entirely sure their mem-Vol 86, ## 3, June, pp 449-66.

ories, faithfully reported by Weintraub, are a relia

equilibrium adjustment processes.

Dharmaraj, N and K Vela Velupillai (2011): The Time

ble guide to the exact or accurate sources on which

to-Build Tradition in Business Cycle Modelling,

they relied for the Lyapunov theory. This is be

Clower’s lifelong contributions, from ASSRU DP 11-09, March, Department of Econom

cause, as a result of Perron’s work on generalising

ics, University of Trento.

the classics of the annus mirabilis, to his some of the Lyapunov results, there were fundamental and very early contributions by eminent

Fukuhara, Masuo and Mitsuo Nagumo (1930): “On a final reflections, were an attempt to con-Condition of Stability for a Differential Equation”,

Japanese mathematicians to the stability theorytribute to the vision suggested in these ob-of differential equations which easily shows full

Proceedings of the Imperial Academy, Tokyo, Vol 6, familiarity with the “western” literature (cf, for ex-

No 4, pp 131-2. viously Keynesian reflections – which also ample Fukuhara and Nagumo 1930). Hicks, John R (1937): “Mr Keynes and the ‘Classics’: A Suggested Interpretation”, Econometrica, Vol 5,

happen to place him squarely in that kind 7 Solomon Lefshetz, who was instrumental in ar-No 2, April, 147-59.

ranging for this translation, acknowledged in the

of behavioural economics fostered by

Preface to the English Language Edition of Nemytskii Howitt, Peter (1996): Cash in Advance, Microfounda-Herbert Simon (Clower 1963: 190). That Stepanov (1964), as follows (p v): “This transla

tions in Retreat in Daniel Vaz and Kumaraswamy tion [of the English language edition of the Ne-

Velupillai (ed.), Inflation, Institutions and Inforwhich was missing in the latter’s pioneer-mickii-Stepanov treatise] was edited by Donald mation, chapter 6, pp 62-88 (Houndmills, Basinging contributions was money and mone-Bushaw and John McCarthy, at the time graduate

stoke, Hampshire: Macmillan Press). students at Princeton University.” That very little of Keynes, John Maynard (1936): The General Theory

tary institutions; the former, although im- of Employment, Interest and Money (London:

this has received adequate recognition in the ecoplicitly about behavioural foundations for nomics literature – instead attributing various pri-Macmillan and Co). orities to Arrow, Block and Hurwicz, Allais, etc, Lange, Oscar (1942): “Say’s Law: A Restatement and monetary economics, did not develop a may well be due to the unfortunate fact that the Criticism” in Oscar Lange, Francis McIntyre and Bushaw-Clower classic appeared in the same issue Theodore O Yntema (ed.), Studies in Mathemati

formal framework for it. Clower’s work

of the Econometrica as the one in which the (infa-cal Economics and Econometrics – In Memory of bridged the gap – with a little help from mous!) Arrow-Debreu classic appeared! Henry Schultz, pp 49-68 (Chicago: The University of Chicago Press).

8 It may be useful to point out that the Hicks classic (Hicks 1937) labelled the two intersecting lines in Nemytskii, V V and V V Stepanov (1964): Qualitative the r-Y space as SI LL. Any moderate cynic, Theory of Differential Equations (Princeton, New reading from left to right, could not but have

Marshall and Norwood Russell Hanson.

Jersey: Princeton University Press).


wondered why the whole thing was SI-LL Y! Patinkin, Don (1956): Money, Interest and Prices: An 1 I first used the concept of “codes”, derived from 9 Clower considered the pernicious influence of Investigation of Monetary and Value Theory “codifying” to encapsulate and summarise Theo-Lange’s chapter in the Schulz Festschrift almost

(Evanston, Illinois: Row, Peterson and Company).ries of the Business Cycle: From Frisch to Lucas in unforgivably irreparable, although he made – (1965): Money, Interest and Prices: An Investigation my UCLA Lectures of 1987. Clower’s use of the valiant attempts to set right the logic, the analysis of Monetary and Value Theory (second edition)

phrase Neowalrasian Code (see Section 4) derives and the doctrine historical background to both (New York: Harper Row Publishers). from Howitt (1996). Say’s Law and Walras’ Law – even till the very end Velupillai, K Vela (2011): “Towards an Algorithmic 2 I must, at the outset, confess that I have never of his life (cf, Clower 2004). Revolution in Economic Theory”, Journal of Ecosubscribed to the bracketing together of Leijon-10 There is no better indictment of Patinkin by Clower

nomic Surveys, Vol 25, N 1, March. hufvud’s name with Clower in an understanding than in his disdainful dismissal of the former’s Wan, Y Henry Jr (1971): Economic Growth (New York: of the latter’s vastly more profound, analytically (in)famous opening line in Patinkin (1965, pp xxi-Harcourt, Brace Jovanovich, Inc). deeper and doctrine historically wider – encom-ii), as “nonsense”: “Money buys goods and goods Weintraub, E Roy (1991): Stabilising Dynamics: Con

passing not just the history of economic thought do not buy money”. Instead, Clower suggested structing Economic Knowledge (Cambridge, UK: but also mathematics and philosophy of science – the “aphorism” (Clower 1984: 86): “Money buys Cambridge University Press).

Economic Political Weekly

June 11, 2011 vol xlvi no 24 27

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