RICHARD T ELY LECTURE The Keynesian Revolution and the Monetarist Counter-Revolution By HARRY G. JoHNSON The London school of Economics and Political Science and The University of Chicago When James Tobin and I agreed on the difficult to transfer from its origins in poli subject of this lecture last spring, it ap tics to other fields of social science. Its es peared to be a highly topical subject that sence is unexpected speed of change, and would command widespread interest this requires a judgment of speed in the among the membership of this Associa- context of a longer perspective of histori tion. Unfortunately, as so often happens cal change, the choice of which is likely to with forward planning for academic pur- be debatable in the extreme. leaving the poses, others have also been alert to tor judgmental issue aside for the moment cality, and have undermined our forward one could characterize the history of our lanning by getting in earlier with their subject in terms of version of the theme. Thus Milton Fried- tions very broadly u: began with what man himself gave a widely publicized lec- Economics as we know it began with what ture on"The Counter-Revolution in Mon- might be called the "Smithian Revo- etary Theory"last September in London, lution"against the established body of which lecture has recently been published doctrines generically described as"mer by the institute of Economic Affairs, [4]: cantilism, "a revolution which changed Karl Brunner has recently circulated a ideas on the nature and sources of the typically scholarly paper on"The'Mone- wealth of nations and the policies required tarist Revolution In Monetary Theory' to promote the growth of what we now [1]; and undoubtedly many others have call"affluence. "The Ricardian revolution been writing and publishing on the same turned the attention of economists from subject. My treatment of this beginning. concern with national wealth and it to-be-well-worn theme today will, I hope, growth to the distribution of income still retain some novelty, inasmuch as i among social classes and the interactions shall be primarily concerned, not with the of growth and income distribution. The scientific issues in dispute in the monetar- marginalist revolution of the 1870's essen- ist counter-revolution against the Keyne- tially introduced a new and superior ana- ian revolution, but with the social and in- lytical technology for dealing with ricar tellectual conditions that make a revolu- do's distribution problem, in the process tion or counter-revolution possible in our gradually depriving Ricardian economic profession. This lecture is therefore an ex- of its social content; hence, the results of cursion--amateurish. i must confess-- that revolution have been described as into the economics and sociology of intel- neo-Ricardian or more commonly neo- lectual change classical economics As is well known from the field of eco- Contemporary economics is based on nomic history, the concept of revolution is this development and on at least four dis-