Keynes, Schumpeter, Mercantilism and Liquidity Preference: Some Reflections on How We Do History of Economic Thought

What readers ‘made of’ a text is an object of historical study that is distinct from the ‘original purposes’ that its author may have had. Later commentators will typically bring to bear concerns and perspectives of their own time when interpreting earlier economic writings. Simply condemning such interpretations for being ‘retrospective’ is often too simple. This chapter develops this point by examining Joseph Schumpeter’s willingness to read Keynesian precedents into ‘mercantilist’ monetary writings. It focuses on a single instance in which Schumpeter argued that a passage, which he attributed to the eighteenth-century author Malachy Postlethwayt, ‘reads like’ Keynes’s theory that money interest depends on liquidity preference. It illustrates the historicity of historiography, or how the emergence of new economic theories, like Keynes’s theory of interest as a monetary phenomenon, motivates new readings of old texts.