Abstract
Hansen saw the world from an inherently dynamic viewpoint. What propelled a dynamic economy was investment. The business cycle was ultimately an investment cycle, and what drove that dynamism was his triumvirate of technological progress, territorial and natural resource expansion, and population growth. If one took savings as given, then the issues resolved to a failure to find or fill the profitable outlets for the nation’s savings. Whilst monetary and institutional factors could complicate that process they were not fundamental. Hansen’s savings and investment analysis grew out of his understanding of a continental influenced theory of crisis, through the works of Spiethoff, Tugan-Baranowsky, Wicksell, Schumpeter and Robertson. Reflecting his interest in dynamics he found period analysis far more conducive than Keynes’s statical approach. A key concern was the financial plumbing that made this happen. That raised questions of changes in hoarding as well as the role of institutional savings, financial markets, and corporate saving (retained profits and depreciation allowances) in relation to external finance. This weakened the relationship between the rate of interest, savings and investment. In turn this added to the realisation that whilst monetary policy had a role to play it could not be the prime mover. Fiscal policy could not only fill that role but also achieve far more in terms of redistribution and the provision of public services than the market could do on its own.
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Notes
- 1.
ibid: 155.
- 2.
See also Backhouse (2017).
- 3.
See also Hansen (1933b) on Hayek’s Prices and Production, 1933d, and 1938a Ch.III.
- 4.
- 5.
Keynes (1936: 78).
- 6.
see also (1945c: 225n35).
- 7.
ibid: 29.
- 8.
For example Ohlin, Lindahl and Myrdal
- 9.
1953a: 58–64.
- 10.
Robertson Papers C18/115a8–10.
- 11.
Robertson Papers, C18/115a11.
- 12.
ibid: 157.
- 13.
The multiplier being the reciprocal of the marginal propensity to save
- 14.
As highlighted by Perez Caldentey (2019: 352–3n3).
- 15.
1974: 232–3.
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Bigg, R.J. (2023). Savings and Investment Analysis. In: Alvin Hansen. Great Thinkers in Economics. Palgrave Macmillan, Cham. https://doi.org/10.1007/978-3-031-42216-4_10
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