Two minds that never met: Frank H. knight on john M. keynes once again — A documentary note

Abstract

This note presents new archival evidence about Frank H. Knight’s views on John M. Keynes. The relevant material is composed of a series of lecture notes taken by Perham C. Nahl in Frank H. Knight’s course on Business Cycles at the University of California at Berkeley in the fall of 1936. It emerges from the notes that the methodological gap between Keynes and Knight was irreducible, which explains the harsh tone of Knight’s published review of The General Theory. Connected to this is Knight’s strenuous defense of the ‘postulates of classical political economy’ as criticized by Keynes in chapter 2 of his book, an argument that was better expounded in the classroom than in the review. However, besides strong criticisms, a few constructive remarks can also be found in the notes. In criticizing Keynes, Knight proposed an interesting analysis of the business cycle that he did not develop in the published review of The General Theory, and there is even some evidence that Knight was attracted to Keynes’s discussion of ‘liquidity preference.’.