Clark Warburton: A much overlooked monetarist pioneer

When I started this blog it was my plan to write a lot about Clark Warburton. I must admit I have failed to do this, but I still hope to be able to give Clark Warburton the attention he deserves.

Nearly no economists know of Clark Warburton and everybody knows about Milton Friedman. However, the fact is that a lot of what Milton Friedman said about monetary policy had been said by Clark Warburton 10-20 years earlier. Unfortunately nobody wanted to listen to Warburton.

In the introduction to Milton Friedman’s and Anna Schwartz’s “Monetary History” they wrote:

“We owe especially heavy debt to Clark Warburton. His detailed and valuable comments on several drafts have importantly affected the final version. In addition, time and again, as we came to some conclusion that seemed to us novel and original, we found he had been there before.”

Said in another way – Warburton might has well have written “Monetary History” – and to some extent he did.

In the articles “The Volume of Money and The Price Level Between the World Wars” (1944) and “Monetary Theory, Full Production and the Great Depression” (1945) Warburton basically presented the monetarist explanation of the Great Depression – almost 20 years before Friedman and Schwartz (1963).

Scott Sumner has recently tried to argue why the fiscal multiplier is zero if the central bank is targeting any nominal target. For those interested in this discussion should read Warburton’s 1945 article on “The Monetary Theory of Deficit Spending”. Read it and you should pretty fast become convinced that Scott is right – of course Warburton knew that in 1945. My own view that there is no such thing as fiscal policy (and everything is monetary policy) is also clearly inspired by Warburton.

Warburton’s main contribution to American monetary history and theory are collected in the book “Depression, Inflation and Monetary Policy” (including the above mentioned articles). Anyone who wants to understand monetary theory should read this book. The book, along with Leland Yeagers “The Fluttering Veil” are the two most important books in relation to the understanding of the monetarist branch, we could call disequilibrium monetarism (DM). DM is in many ways between the Austrian school and more traditional monetarists like Milton Friedman, Karl Brunner and Allan Meltzer. DM has undoubtedly had a major influence on Free Banking theorist such as George Selgin, but also on modern Austrian economists like Steven Horwitz. As such DM pioneers like Leland Yeager and Clark Warburton are also important from Market Monetarist perspective.

I hope to write more on Warburton in the future. He work surely deserves a lot more attention.

For a good introduction to Warburton’s work see Michael Bordo’s and Anna Schwartz’s article “Clark Warburton: Pioneer Monetarist”

Leave a comment


  1. Benjamin Cole

     /  February 19, 2012

    Terrific blog–and I never heard of Warburton, but glad to have my ignorance somewhat corrected.

    Yes–there is no such thing as fiscal policy.

    It is lonely being a Market Monetarist—liberals want deficit spending, and GOP’ers want tight money (in the USA).

    Like Japan, we may get both deficits and tight money. And like Japan, property markets, real wages and equities will all retreat for decades at a stretch.

  2. Thanks Benjamin…

    Too Milton Friedman is not around anymore – by the way he called himself a “liberal”. I never understood how it happened what is what we in Europe call Social Democrats became “liberals” in the US. Odd…

    Anyway, you should get that Warburton book. It is excellent…

  3. I became aware of Clark Warburton through Leland Yeager (specifically, his book The Fluttering Veil). I agree with the conviction that one would do well to read Warburton’s work. It’s also noteworthy that Warburton was not shy to give credit where credit is due. One of my favorite articles of his is his 1981 HoPE article “Monetary disequilibrium theory in the first half of the twentieth century.”

  4. Jon, I certainly agree that that is an excellent article – and the connection to Yeager is very clear.

    As I noted above Warburton and Yeager is somewhere between the Austrians and traditional monetarists like Friedman/Brunner/Meltzer. A position that makes perfectly good sense to me.

  5. Rob

     /  February 21, 2012

    Nice article. It makes me want to go and read Warburton first-hand.

    In following the various links on you site I ended up at:

    I think this is one of the clearest articles on what differentiates Market Monetarism from other schools. I hope you plan to do more articles like this one on the theory that underlies the program.

  6. Thanks Rob…

    You just gave me an idea for two new blog post, which I hope to write in the coming days.

    1) The utter irrelevance on interest rates in the monetary transmission mechanism
    2) Exchange rates and monetary policy – it’s not about competitiveness

    And I surely hope you will have a look at Warburton.

    Once again thanks for the positive feedback.

  1. Exchange rates and monetary policy – it’s not about competitiveness: Some Argentine lessons « The Market Monetarist

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