RICHARD T ELY LECTURE in the 1930s. It has had the same two that orthodox theory cannot solve-is to vulnerable characteristics: inability to concentrate on the issue of infation, the prescribe for what has come to be consid- issue that Keynesian theory was least well ocial problem--inflation, in designed to deal with. The trouble with contrast to the unemployment of Keynes's that answer has been that, under the time-and a dependence on the authority fluence of both experienced infation and and prestige of senior scholars which is Keynesian theory, the public has for the oppressive to the young. Also, ironically most part not been much concerned about enough in view of Keynes's own long con- the economic evils of inflation, and so has cern with the influence of money on the not regarded infation as an important economy, it has suffered from the same test of the intellectual strength of Key- major defect as the orthodoxy Keynes at- nesian orthodoxy. The history of the tacked-the attempt to explain essentially monetarist counter- revolution has, in fact, monetary phenomena in terms of a mix- been characterized by a series of mostly ture of real theory and ad-hoc-ery, and vain efforts to convince the profession and specifically to explain inflation in terms of the public(a) that inflation is an im real effective demand and the Phillips portant question and (b)that monetarism curve. The fact that Keynesian economics can provide an explanation and a policy has stumbled into the same pitfall as the whereas Keynesianism cannot. Proposi- "classical"orthodoxy it succeeded is, per- tion(b)is eminently plausible; but it can haps, an indication of the difficulty of only get a hearing if proposition(a) is monetary theory as contrasted with value accepted first; and, aside from a brief in- theory as well as of the perils of abandon- terlude in the late 1950,s, the public has ing monetary theory in favor of what ap become convinced of proposition(a)only pears seductively to be more reasonable very recently. It is no accident that the common sense. appearance of monetarism as a strong in- If, in accordance with the"as if"meth- tellectual movement has had to wait until odology of positive economics that i the aftermath of the escalation of the war dopted earlier in this lecture, one posed in Viet Nam in 1965. It is even less of an the question of how to mount a counter- accident that its current success has de revolution against Keynesian orthodoxy, pended on a prior Keynesian claim to and considered the question in the light of and acceptance of, responsibility for ef the factors that contributed to the success forts to stop inflation by Keynesian fiscal of the Keynesian revolution, one would, means, under the auspices of the "New I think, be driven inescapably to two sets Economics. "Monetarism has until the past few years been in the position of in- The first would be the need to find an vesting a great deal of intellectual ability nportant social problem that the estab- in analyzing problems and producing solu lished orthodoxy is incapable of dealing tions that no one else has considered with, even though it tries its best and worth the effort involved. It has eventu claims to be successful. The second would ally become a public force less by its own be the need to develop a counter-revolu- efforts than as a consequence of the "New tionary theory that had the requisite char- Economics"overreaching itself when it acteristics to be academically and profes- was riding high in the formation of na- sionally successful in replacing the pre- tional economic policy. The"New Eco- vious revolutionary theory. nomics"was favored by the opportunity The obvious answer to the first problem to sell Keynesian policies to meet a Key -finding an important social problem nesian problem; it encountered disaster