Thomas Mayer on Monetarism

Abstract

Professor Mayer on Monetarism

This paper is basıcally a set of commentaries and notes on Professor Mayer’s*, and cannot claim significant independent content of its own. The digest which follows is accordingly diffuse and disorganized. Section 1, 2, and 8 are of introductory and summary character. They argue that Mayer’s essay is well worth the effort required for its preparation, but that it is inevitably subjective and cannot preclude similar exercises by other scholars seeking to define monetarism. Section 3 suggests that the antithesis of “monetarism” should perhaps be “fiscalism” rather than “Keynesianism”, and (in Note 4) compares positive and normative forms of fiscalism. It also suggests that there may be a continuum between extreme fiscalist and extreme monetarist views, rather than the bunching at the two extremes which Mayer’s paper seems to imply. Section 4 develops a distinction between the stability and the volatiliy of economic functions, which the writer would like to see reflected in much macroeconomic writing, including Mayer’s. Section 5 approves, on essentially Schumpeterian grounds, Mayer’s inclusion among the differentia specifica of monetarism of several subordinate propositions which do not follow rigorously from his major postulates and which are not universally accepted by monetarists. Section 6 goes on to add (at least for the U. S.) another subordinate proposition to Mayer’s group, namely, that the monetary authority has the power and responsibility for monetary regulation. Section 7 takes several minor exceptions to specific points in Mayer’s analysis, including (1) treatment of Pigou and Keynes effects, (2) compromises between a Friedman-type monetary rule and complete discretion, and (3) the role of Phillips curves.