389. Harrod to R. F. Kahn , 29 October 1934 [a]
[Replies to 387 , answered by 391 1 ]
Christ Church, Oxford #
29 October 1934
My dear Kahn
I agree that the responsiveness of money wages is a fundamental element in the problem.
I think that my letter to the Economist  was of doubtful value. It implies a special definition of savings,  which may, after all, not be a very good one. JMK in his day gave a (different) special definition of savings,  which, I gather from your letter, is now thrown overboard. Why, then, shouldnt I, too have a bit of fun? I dont think there is any "fallacy in my argument." This somewhat perverse definition is implicit in it: that being granted, it is all right. But I quite agree that my letter was of doubtful expediency.
You say that there is no sense in which I > S.  But of course it is in JMK's sense. Whatever are the faults in his equation, that main proposition is sound on his definition.
Is all the old terminology now to be scrapped? This makes a severe demand on the general public. If the Treatise is to be put in cold storage for a year, what are we to teach? We have not only to consider the truth, but education which is done through standard terms and concepts. If the language is perpetually to be altered, progress is hardly possible. Language is one thing and truth another. If the old truth is untrue it must be cast out. But if the old language is inconvenient, it must not necessarily be changed. For the inconvenience of change may be greater than the superior convenience of the new terminology.
I disliked the Treatise on terminological grounds very strongly, but adopted the terminology, because I had to tell people to read it in order to discover the truth. There has been a certain amount of acclimatization by this time, but now everything is to be altered again. If the alteration is towards old fashioned terminology, I am all for it. But when you say that "there is no such thing as a boom"  my heart sinks.
When you say that Investment is always equal to saving and that is the whole of the matter, I think it may be the whole of the matter so far as the Hayekian arguments are concerned; but this tautology does not contain the secret of the trade cycle! 
It is very sad that nothing is to come out for a year.  Cant some preliminary article be written?
The wider circles--well, I dont know, but I meet odd people now and again, e.g. some of the younger members of the Economist staff-- do you know Jay?  --who have no connexion with the L.S.E.
I am not sure that our Meade isnt partly infected--I must have it out with him some day. I should say that the H[ayekian] point of view has somehow filtered through to the general public (not specialist intelligentsia) almost as much as the Treatise doctrines had 2 years ago.
2. See also letters 383 , [jump to page] and 388 , [jump to page] .
3. Keynes, Treatise on Money (1930), in Collected Writings, vol. V, pp. 111-14.
4. Letter 383 , footnote [iii] to [jump to page] , and letter 387 , [jump to page] .
5. See letter 387 , [jump to page] .
6. See, for a similar argument, letter 388 , [jump to page] .
7. Refers to Keynes's General Theory (1936): see note 2 to letter 387 .
8. Douglas Jay was also a member--with Durbin, of the London School of Economics, and Gaitskell--of the New Fabian Research Bureau (see E. F. Durbin's New Jerusalems, 1985, pp. 112-13).
- a. ALS, three pages on two leaves, in RFK 13/57/77-79.
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