Money and Markets: Essays in Honor of Leland B. Yeager

12 Roger Kopplscholarly profile. I hope this festschrift results in greater attention to Yeager’s workin monetary history.I said that Yeager is widely recognized as a monetary theorist of the highestorder. Steven Horwitz (Chapter 12) is probably right, however, to describe Yeageras possibly “the most underappreciated monetary theorist of the twentieth century.”I think Landreth and Colander have identified one reason for this neglect. Yeagerwas a pluralist and not a committed formalist at a time of formalist hegemony.Yeager relied on sound microeconomic reasoning and an encyclopedic knowledgeof institutions, economic history, and the history of economic thought. Any careeristworth his salt would have relied almost exclusively on fashionable mathematicaltechnique. In Yeager’s hands, monetary disequilibrium theory was historicallygrounded in both senses, that of economic history and that of the history ofeconomic thought.In his contribution to this volume, Michael Montgomery (Chapter 9) also givesus an historical perspective on monetary disequilibrium theory. Like Yeager (1996),Montgomery traces the theory back to David Hume (1752). Montgomery givespride of place to John Stuart Mill, whose “insights” from the Unsettled Questions essay(1844) “represent the start of monetary disequilbrium theory as that theory is conceivedof today.” Montgomery takes aim at facile interpretations of the classicals assimpletons who believed that prices and wages adjust too rapidly for unemploymentto develop in the wake of any shock. Montgomery says, “it is quite possible toargue plausibly that none of these three propositions – Say’s Law, price/wage flexibility,the neutrality of money – accurately characterize Classical macroeconomicthought, at least not in the simplistic forms in which modern parlance assertsthem.” In exploring the origins on monetary disequilibrium theory, Montgomerycomes across an interesting puzzle in the history of economic thought. Why didMill permit only a weakened form of the theory into his Principles of 1848?In his contribution to this volume, Jürgen Backhaus (Chapter 8) raises anotherinteresting question in the history of economic thought. Could Yeager’s favoriteeconomist, Walter Eucken, have been influenced by Friedrich Nietzsche? Thequestion may surprise some readers. Eucken was a free-market liberal and anarchitect of German “Ordo-Liberalismus.” Nietzsche’s philosophy is oftenassociated with illiberal views. On the other hand, Nietzsche has been given manyconflicting interpretations and, as Backhaus shows, the liberal interpretation is atleast a legitimate candidate. And there is an interesting and important point incommon between them. Eucken, like Nietzsche, suffered a crisis “because he couldnot reconcile scripture and evidence.” They “nevertheless came to rather similarconclusions.” The heart of Nietzsche’s liberalism, if Backhaus is right, may be hiscelebration of the “sovereign individual” as “the ripest fruit” on the “tree” ofEuropean culture.The strength in Backhaus’s interpretation of Nietzsche is its basis in economics.How many scholars have examined Nietzsche’s writings from this particularvantage point? The two central points are Nietzsche’s identification of man as the“animal which is able to make promises” while having also the capacity of “forgetfulness.”Backhaus says, “Although Nietzsche does not fully work out the basic institutions of