As I wrote in my post on Milton Friedman’s “Money Mischief” yesterday I have asked a number of “monetary thinkers” to make a list of around five (or so) books on monetary matters they would recommend for students of economics. I had initially just thought I would make a list of books based on the survey, but it turns out that there is a lot more material than I really had thought about. So I will instead do a number of posts on the book recommendations.
When I started to study economics in the early 1990s at the University of Copenhagen I already had a keen interest in monetarist thinking as I read Milton Friedman’s Free to Choose when I was 16 years or so. Some of my fellow students probably would have said that I had a obsessive interest in money supply numbers (I still have…)
Other than studying money supply numbers I early on found the library at the economics department at the University of Copenhagen. I read everything I could find by and about Milton Friedman and then went on to read other monetarists – such as Karl Brunner and Allan Meltzer. It was also at that time I first read articles by Scott Sumner and Bob Hetzel.
Another book I found at the library was David Laidler’s “Monetarist Perspectives”. I think what made the biggest impression initially by reading Monetarist Perspectives was actually that David termed Robert Lucas’ New Classical business cycle theory a Neo-Austrian business cycle theory (Lucas had used a similar term himself). That was one of the inspirations when I later in my Master thesis tried to formalize mathematically by “merging” rational expectations and Austrians Business Cycle theory (I am not sure I was successful…)
It was not everything in Monetarist Perspectives, which impressed me. In fact I was somewhat upset by David’s discussion of “The Case for Gradualism” (Chapther 5). I wanted shock therapy to end inflation. I reread the Chapter last year I must say I had a very hard time seeing what my problem had been back in the early 1990s.
The reason why reread Monetarist Perspectives is that I was able to get my own copy last year. I got a used copy. In fact my copy used to belong to University of California but was withdrawn from the library there and now it is on my table while I am writing this.
Monetarist Perspectives is not the only book written by David Laidler I own. And it is not even my favourite Laidler book – that is instead “The Golden Age of the Quantity Theory”.
David Laidler is hence one of the biggest experts on monetary thinking in the world and it was therefore natural that I asked David for his contribution to my book survey.
And I am very happy that David kindly has provided me with five books that he would recommend to students of monetary thinking.
This is David’s list:
W. S. Jevons. Money and the Mechanism of Exchange (1875)
D. H. Robertson, Money (3rd ed, 1928) (the best edition according to David)
Axel Leijonhufvud, Information and Coordination (1981)
John Hicks, A Market Theory of Money (1989)
Milton Friedman, Money Mischief (1992)
This is what David has to say about the books on his list:
The common theme here is that the monetary economy performs the allocative and distributive functions usually attributed to the “market” by general equilibrium theory, that it is capable of performing these well, that success in this regard should nevertheless not be taken for granted, and that the way in which issues related to these matters appear evolves over time as monetary institutions evolve in the face of challenges presented by their own successes and failures.
When I went through David’s list and his arguments for choosing these books I actually came to think of another book and that is Robert Clower’s “Money and Markets”.
The reason I mention Clower is that I think he has been a particular inspiration for particularly Canadian monetarists like Nick Rowe who was very much brought up in a Laidlerian tradition of monetarism. Nick and David are of course both British-Canadian.
As always David Laidler is a great inspiration and I hope this post and particularly David’s list will inspire my readers to explore some of these great books (including those written by David!)
And finally as Kurt Schuler notes many of the books on money published prior to 1922 are now available for free online. Particularly the Ludwig von Mises Institute has done a great job in making classics available online – including the first book on David’s list Jevon’s “Money and the Mechanism of Exchange “.
Cheers David and start reading all of you!
The Market Monetarist 
George Selgin
/ July 2, 2013Lars, Jevons’ Money and the Mechanism of Exchange is also available, with many other monetary classics (including Lombard Street, The Rationale of Central Banking, and my own Theory of Free Banking) in a variety of formats at Liberty Fund’s “Online Library of Liberty.”
Lars Christensen
/ July 2, 2013George, you are right, but for once I tried to say something nice about LvMI – I often forget to do that. By the way my readers should look forward to my post on your book recommendations. It will be out in the next couple of days.
Edwin
/ July 6, 2013Have you ever heard of Monetary Theory by Alan A. Rabin? It sounds very market monetarist friendly.
“This is a valuable and scholarly contribution to modern monetary theory. It keeps alive the ideas of monetary disequilibrium proposed by such writers as Clower, Leijonhufvud, Yeager and Laidler. While so much of monetary theory has focused on aggregate issues of how national income and the rate of inflation are determined, making use of large scale general equilibrium models, this work aims at the more fundamental question of how monetary factors facilitate the realization of gains from trade at the micro level, how they affect adjustment processes that work in individual markets, and how the interaction between these individual adjustment processes determines the performance of the overall economic system. The book is definitely worth the attention of any serious student of money. Peter Howitt, Brown University, US Alan Rabin argues that new Keynesian and new classical macroeconomics, which have dominated the literature and textbooks, have crowded the monetary-disequilibrium hypothesis, or orthodox monetarism, off the intellectual stage. Trying to remedy this imbalance, the author concentrates on what he judges to be the essentials of monetary theory. Emphasizing money s fundamental role in lubricating exchanges and promoting economic coordination, Alan Rabin argues that when the lubricant goes awry, so do the processes being lubricated. Monetary disequilibrium can have repercussions that last months and even years. The book presents the author s interpretation of Yeager s enormous contributions to monetary theory, especially his development of monetary-disequilibrium theory, while also building on the contributions of Patinkin, Clower, Leijonhufvud, Barro and Grossman, and Laidler. A unique hybrid of treatise and graduate text, Monetary Theory fills a tremendous void in the current literature and will be of interest to scholars and students of monetary theory and economic thought.”
http://books.google.com/books?id=d7DsAA0DpvEC&printsec=frontcover#v=onepage&q&f=false
Lars Christensen
/ July 6, 2013Edwin,
Yes, I have read Rabin’s book. It is correct that is covers topics that are very Market Monetarist in nature. However, it is notable that it is said in the introduction that the book was co-authored by Leland Yeager, but that Yeager withdrew his name. It doesn’t say why and I don’t know why.
Furthermore, if I where to have the same kind of insight I would rather read the source itself.
Read these four books and it covers it all (in that order)
Leland Yeager: “The Fluttering Veil”
Clark Warburton “Depression, Inflation and Monetary Policy”
Robert Clower “Money and Markets”
Steve Horwitz “Microfoundations and Macroeconomics: An Austrian Perspective”
Steve’s book is the closest to a textbook on Monetary Disequilibrium theory you get.