tailieunhanh - History of Economic Analysis part 72

History of Economic Analysis part 72. At the time of his death in 1950, Joseph Schumpeter-one of the major figures in economics during the first half of the 20th century-was working on his monumental History of Economic Analysis. A complete history of humankind's theoretical efforts to understand economic phenomena from ancient Greece to the present, this book is an important contribution to the history of ideas as well as to economics. | History of economic analysis 672 Let us then look at the positions of Ricardo and . First recall that mere recognition of the relevance to value of the supply or quantity of gold does not imply acceptance of what we have called the strict quantity theorem Part II ch. 6 sec. 4 . That is to say the mere statement that the purchasing power of a monetary unit depends upon supply and demand does not identify any particular theory of money. The first of the troubles with which the reader has to cope in this matter is that Ricardo and James Mill and a long list of later writers on money including Pigou and Cannan did not realize this but in striking analogy with their procedure in the case of the wage fund tried to deduce the quantity theorem from the law of supply and demand. As a result in every individual instance one has to ask himself whether they meant something that does follow from the law of supply and demand for example that ceteris paribus an increase in the quantity of money will tend to decrease the purchasing power of the unit or whether they meant more for example that ceteris paribus strictissime an increase in the quantity of money will decrease the purchasing power of the unit proportionately. The second of the troubles with which the reader has to cope arises from the fact that the term quantity theory covers several meanings so that if he finds that two writers disagree on whether or not the quantity theory should be attributed to a given author he must keep in mind the possibility that the two writers simply mean different things by that term. For our present purpose we shall define it to mean first that the quantity of money is an independent variable in particular that it varies independently of prices and of physical volume of transactions 11 second that velocity of circulation is an institutional datum that varies slowly or not at all but in any case is independent of prices and volume of transactions 12 third that transactions or let us .