Why Was Henry Simons So Interventionist

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Why Was Henry Simons Interventionist: The Curious Legacy of a Chicago Economist1 Sherry Davis Kasper

Maryville College 502 E. Lamar Alexander Parkway

Maryville, Tennessee 37804 (865) 981-8231

E-mail: [email protected]

1 Kindly do not quote without permission of the author.

mailto:[email protected]

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In 1934 Chicago economist Henry Calvert Simons presented his Positive

Program for Laissez Faire, a group of proposals designed to reconstruct the devastated

American economy in a fashion that would save its organizing principle of classical

liberalism. At the time, the Positive Program became a rallying point for fellow classical

liberals. As his student Don Patinkin described, it united “the same qualities that made

Marxism so appealing to many other people at the time: simplicity with apparent logical

completeness: idealism combined with radicalism” (1981, 4). And at first glance, the

specific proposals appear congruent with the classical liberal philosophy commonly

associated with the Chicago School of economics. For example, Simons recommended

that the state eliminate private monopoly to restore a competitive industry structure.

Further, the state should institute a legislated rule for monetary policy to ameliorate

business cycles. Additionally, the state should eliminate tariffs to promote free

international trade.

But a closer inspection reveals policies that seem at odds with the free-market

liberalism commonly associated with Chicago economics. For example, Simons

recommended that the state should eliminate private monopoly by making the Federal

Trade Commission (FTC) the most important agency of the state via aggressive

enforcement of anti-trust policy that capped market share at five percent. The state

should also replace regulation of natural monopolies with public ownership and

operation. Further, the state should radically reform the banking system by implementing

a 100% reserve policy. Additionally, the state should adopt a monetary rule that

stabilized the price level rather than the quantity of money, a policy that required much

more discretion on the part of the monetary authority. Moreover, the state should change

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the tax structure to use graduated income and inheritance taxes to create more equal

incomes. Finally, the state should use taxation to restrict advertising and merchandising

and devote the funds collected to social welfare initiatives.

Over the next decades, those influenced by Simons and others explained these

differences with subsequent Chicago policy recommendations in a variety of ways. Early

on Milton Friedman asserted that Simons’s recommendation to use the more

discretionary rule of stabilizing the price level rather than the quantity of money rested on

a lack of knowledge of contemporary empirical facts about monetary data (1967, 12-3).

Unfortunately such ignorance does not square with the fact that in 1935 Simons reviewed

Lauchlin Currie’s The Supply and Control of Money in the United States, a book that

included detailed data about monetary aggregates and policy during the early years of the

Great Depression .2 In the 1962 Capitalism and Freedom, Friedman altered the

explanation to context: he stated that Simons wrote when the federal government was

smaller and was “willing to have the government activities that today’s liberals would not

accept now that government has become so overgrown” (Friedman 1962 [2002], p. 32).

By 1983, at a law and economics symposium, Ronald Coase inquiringly observed that the

Positive Program was “highly interventionist” (In Kitch 1983, 178). Friedman agreed

but then argued that scholars should assess it within the historical context of its

development: “By comparison with almost everyone else he was very free market

oriented” (In Kitch 1983, 178). In 1990 Bradford DeLong attempted to resurrect

Simons’s classical liberal credentials by pointing out his ignorance of subsequent

theoretical developments in industrial organization and public choice. DeLong reasoned

2 David Laidler independently pointed out the lack of validity of Friedman’s claim of Simons’s ignorance about empirical data related to money (1993).

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that Simons made his peculiar proposals to strengthen the FTC and to assume public

ownership of natural monopolies, because he did not know the economic theory that

Harold Demsetz, Stigler and Coase drew on to move away from such interventionist

modes of creating a competitive industrial sector (1990, 617). In 2009, Robert Van Horn

and Philip Mirowski refocused the discussion, describing how members of the post-1946

Chicago School converted the classical liberalism of Simons to a neo-liberalism “which

had some prospect of challenging the socialist doctrines which were in ascendancy in the

immediate postwar period” (2009).

This paper provides a new interpretation of why Henry Simons displayed an

interventionist bent in his policy proposals. Its essential argument is that Simons worked

as an economist from an earlier era, individuals who judged monopoly power dissimilarly

and who operated with a different set of best practices.3 As a result, his policy

recommendations were not interventionist due to ignorance of current facts or subsequent

theoretical developments. Rather they were interventionist, because they originated in

Simons’s conceptions of the task of the economist, organic thinking, and monopoly

power, lingering ideas from the progressive social science that endured due to the

pluralism which characterized the interwar period in American economics.4 To develop

the argument, the paper will proceed in four stages: a description of the early years of

Simons’s career leading up to the creation of the Positive Program, a description of the

elements crucial to his interventionism, an interpretation of the reasons for this

interventionism and, finally, concluding remarks.

3 The interpretation of the two Chicago schools follows a tradition in the literature on its development. See, for example, Bronfenbenner (1962), Miller (1962), Samuels (1976), Reder (1982 and 1987), Emmett (1998), Kasper (2002), Van Horn and Mirowski (2009) and Van Horn (2009). 4 This characterization of the development of American economics follows the interpretation of interwar pluralism described by Mary S. Morgan and Malcolm Rutherford (1998).

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A necessary first step consists of a description of the environment that nurtured

Simons’s intellectual development. Like many prominent interwar economists, he was a

student of the first generation of progressive social scientists. As a result, it is not hard to

trace some of the qualities of interwar pluralism back to ideas and professional values of

that cohort of economists. In her history of American social science, Dorothy Ross

offered the following characterization of this group that she dates from 1896 to 1914.

They maintained their concern for the primary problem addressed by economists of the

Gilded Age, that of the concentration of economic wealth and power and the

accompanying inequality it engendered. But they recognized that they needed to address

this problem in a new political context, one in which previous reform had broken down

old political institutions and increased the importance of public opinion in policy debates.

With respect to professional qualities, progressive social scientists aimed to serve as

experts who engaged in discourse primarily in specialized journals and with

policymakers. At the same time, they continued to address respectable members of the

upper class, because the moral and political implications of their analysis were important

to them. As a result, this direct advocacy to the public often left them vulnerable to

attacks on their objectivity. They also continued to conceive of society as organic, one

composed of individuals that co-operated to form a social organ that gradually changed

over time. (See Ross 1991, 158-190).

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The Early Years5

Henry Simons was born on October 9, 1899 in small, midwestern town, Virden,

Illinois. He grew up comfortably as the member of the middle class, the son of a

moderately successful lawyer and an extremely ambitious homemaker. He graduated

second in his high school class by the age of 16, but due to a decline in the family’s

financial situation, he could not follow his older sister to an eastern college (Ella Simons

Siple had graduated from Wellesley College). Instead in 1916 he enrolled at the

University of Michigan with the aim of becoming a lawyer. By his junior year, the study

of economic theory captured his interest. Joseph Dorfman has drawn attention to the

pluralism present at Michigan during the time Simons studied there:

The capacity of the American university to encourage and foster diverse views

has seldom been more clearly demonstrated than at the University of Michigan.

Their two first-rate social scientists were influential teachers, Fred M. Taylor and

Charles Horton Cooley. . . . during their long years of service, [they] developed

along almost diametrically opposed lines. Taylor became an expert analyst and

‘purifier’ of orthodox economic thought; Cooley emerged as the innovator,

particularly in his beliefs that valuation is a social process” (1949:3, 390).

Simons claimed later in his life that Taylor was the key influence in his early education at

Michigan: “Taylor gave me an ideal introduction to economics – what a tough old drill

sergeant gives to neophytes in the army – but little more” (1942, 1).

5 The biographical detail in this section is drawn from information in a biographical sketch completed by George Stigler (1974), Claire Bowler, the editor of the Henry Simons Papers (Bowler 1973), and an anonymous interview with an individual who maintained a friendship with Simons from 1911 to 1940 (Anonymous 1972). A more detailed version is presented in Kasper (2010).

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During the time Simons studied with him, Taylor had gained professional acclaim

for his neoclassical principles text, one most certainly used by Simons sometime during

his academic career at Michigan. The 1918 edition of the text reveals that Taylor’s

neoclasscism was of a different character than modern forms. In agreement, he favored

Marshallian partial-equilibrium analysis and reasoned from a series of formal principles

that ultimately demonstrated the superiority of the existing economic order as a means

social control. In contrast, he agreed with the approach of progressive social scientists to

conceptualize the existing economic order in evolutionary terms – as an evolving social

organism. Like many progressive social scientists, this view led him to feel it was his

responsibility to subject the existing order to an ethical critique because “the most strictly

scientific study . . . cannot properly omit a consideration of the fitness of several organs

to perform well their respective functions” (Taylor 1918, 483). His critique identified

some failings in the price principle of regulating distribution, production and

consumption, but ultimately he was convinced of the superiority of the existing economic

order. Taylor’s “ideal introduction to economics” provided Simons with an early model

for justifying the superiority of an economy organized with the principle of classical

liberalism, with the proviso that the economy and the policies necessary to control it were

subject to change.

Simons graduated as an economics major in 1920 and then began graduate

studies, initially taking courses at Michigan. In 1921, upon receiving an offer of a part-

time teaching position, he moved to the University of Iowa where he studied with and

became a follower of Frank Knight. He continued his graduate studies, first at Columbia

University in 1922 with Herbert Davenport and subsequently at the University of

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Chicago (in the summers of 1923 and 1924 and the 1925-26 academic year). In 1927, he

followed Frank Knight to the University of Chicago, where he taught in the department

of economics. He later stated: “Knight was nearly perfect as an influence at the next

stage” (Simons 1942, 1).

Knight had completed his Ph.D. in 1916 at Cornell University, worked at the

University of Chicago for a few years, and then moved to Iowa in 1921. As Ross

Emmett has described, during the 1920s Knight was intimately involved in the pluralistic

discourse of the interwar period, some of it with the students of the 1896-1914 cohort of

progressive social scientists (1999, x-xv). Knight had just published his revised

dissertation Risk, Uncertainty and Profit (1921), which used a method similar to Taylor,

reasoning from formal principles to identify the source of profit. Right after he met

Simons, he published two influential articles “Ethics and the Economic Interpretation”

(1922) and “The Ethics of Competition” (1923). Both represented further examples of

using logical analysis to identify the formal principles necessary to insure the optimal

efficiency results of perfect competition. In the second article, Knight subjected

competition to an ethical critique and used the image of competition as a game as the

basis for finding it deficient because it did not provide all individuals with an equal

opportunity to compete. One product of the progressive conception of the organic society

was the intense consciousness during 1920s of change, an awareness manifest in the

discussion between Knight and institutionalists about the possibilities for social control of

an evolving economy using the scientific method (See Ross 1991, Chapter 10). His

influential article “The Limitations of the Scientific Method” appeared in Rexford

Tugwell’s edited volume The Trend of Economics describing the “new” economics;

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Knight’s was the one voice that argued the institutionalists’s program for social control

was not possible (Knight 1924). Finally, near the end of his years at Iowa and into the

early 1930s, Knight began to study the work of Max Weber and other historical

economists of Germany. His reading changed the focus of his research to “constructing a

pluralistic approach to economics which combined an appreciation for traditional

economic theory with an investigation of history and the role of social institutions”

(Emmett 1999, xiii). Thus, at “the next stage” of his professional career, Knight provided

Simons with a more multifaceted picture of the debate about social control and one that

subjected orthodox economic theory to comparison with other ways of thinking about

social control of the economic order, including ethical analysis, the “new” economics of

American institutionalists and German historicism.6

During the late 1920s, Simons also came under the influence of Frank A. Fetter,

first as a teacher of a six-week course at the University of Chicago and later as a fellow

visitor at the University of Berlin. Simons appreciated Fetter for giving him an “example

of (to my mind) what a political economist should be. . . . The identification, of course,

has far more to do with broad economic (political) philosophy and professional ethics

than with technical economic theory” (1942, 1). After a career in business, Fetter went to

Germany and earned a graduate degree at Halle. Near the turn of the century, he wrote

an influential orthodox textbook that incorporated an ethical critique of capitalism. In it,

he argued that a capitalist market contributed to the general social welfare by virtue of

matching individual gains to their merits. Since the system changed in response to

6 No consensus exists on the presence of institutionalism in Knight’s economics. For example, Hodgson (2001 and 2004) presents Knight as an institutionalist, while Emmett (2006) and Rutherford (2010) support this interpretation of Knight as the questioning skeptic who aimed to keep his fellow social scientists aware of and accountable for the limitations and possibilities of their methods of analysis.

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modifications in the law, collective action and social institutions, Fetter believed that

gradual alterations in the system were appropriate as dictated by variations in public

opinion. In his case, Fetter worked to influence public opinion in the area of immigration

restriction (See Ross 1991, 183-4 and 189-190.) Important for Simons’s story is Fetter’s

work to influence policy toward monopoly power. He served as the chair of the 1932

Economists” Roundtable on Anti-Trust Law Policy, a group which drafted a petition to

the platform committees of the Republican and Democratic conventions calling for a

“more vigorous enforcement of the existing anti-trust laws” (Barber 1985, pp. 165-6). In

addition, in 1931 he published The Masquerade of Monopoly in which he detailed

numerous case studies in which he described the rise of monopolies in the US economy.

In essence, Fetter provided Simons with another theoretical justification for the classical

liberal state and an example of a progressive economist who combined theoretical

analysis with advocacy.

During the early years of his career, Simons did not make observable progress in

gaining the credentials generally deemed necessary for success as a professional

economist. While at Iowa, he published only one article on taxes (1923). He published

two rather dull book reviews in 1926 and 1929 about the economics of taxation. In his

papers, there is also a copy of a 1925 speech about taxation that he delivered to the

Weatherly Gang in Iowa City, perhaps one of those respectable upper-class groups that

progressive economists sometimes addressed. Thus, no published record exists of his

active participation in the professional discourse, either in specialized journals or at

meetings. In 1928, he made a trip to Germany intended to help him make progress on his

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dissertation on income taxation and learn German. Though he later published his

dissertation as Personal Income Taxation (1938), he never finished his Ph.D.7

Elements of Simons’s Interventionism

In the early 1930s, Simons began a period of intense activity. He published his

“Syllabus Materials for Economics 201” (1933a). He wrote two book reviews, one on

T.E. Gregory’s The Gold Standard and Its Future (1933b) and another on America Faces

the Future edited by Charles A. Beard (1933d). Both displayed the urgency about current

economic events that went on to permeate the Positive Program. Similar to Fetter’s

leadership in antitust policy, he also wrote three memoranda about banking and monetary

policy signed by a group of Chicago economists and sent to academic economists and

key policymakers in Washington D.C. The first responded to the March 1933 banking

crisis and called for radical reconstruction of the banking industry using 100% reserves

(Simons 1933c). Simons then wrote two memoranda in November 1933, which called

for greater centralization of monetary policy using the Federal Reserve (1933f). In

March 1934, Simons also went to Washington D.C. to help Senator Bronson Cutting

outline a bill that would bring the money supply and availability of credit under stronger

federal control (Phillips 1995, 81-93). This frenzy of activity culminated in the

publication of the Positive Program in 1934, which included the monetary proposals of

the Chicago memoranda, but added the more wide-ranging calls for social control

described earlier.

7 A long-time friend believed that Simons never earned his degree, because he “did not want to be examined by inferior minds” in oral examinations (Anonymous 1972, 9).

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The impetus to this activity was stimulated by his view of the proper task of the

professional economist. Its output was influenced by a particular set of ideas that he

brought to this work. Their combination became the elements for his interventionism.

The Task of the Economist

Simons set up a twofold task for the professional economist. First, he should

work to solve current problems. The 1933 book review of T.E. Gregory’s book about the

gold standard provided an early indication of Simons’s belief that the economist served to

solve problems. He admired the book because,

There are in it no brilliant dialectical flights; no concepts loosely defined and

algebraically manipulated; no mystical averages slipped innocently into amazing

equations. One only finds elegant, straightforward exposition of how the gold

standard works . . . The author has rendered a real service in presenting clearly

and concisely a kind of economics which is indispensable to understanding

current problems . . . (Simons 1933b, 137).

But even more critical to explaining his orientation toward problem solving were

the two factors spurring the increase in Simons’s professional activity in the early 1930s.

In part, like many of his fellow economists, he was responding to the “economic chaos”

of the Great Depression (Simons 1934a, 56). It is hard to empathize with the shock and

anxiety accompanying the dizzying decline in the American economy at the beginning of

the Great Depression – hundreds of failed banks, a 25% rate of unemployment, and a

25% decline in real output. But, if it were possible to comprehend this situation, it would

not be difficult to imagine any formerly unremarkable economist stirred to action by the

devastating impact of the Great Depression on so many in American society. But

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Simons was galvanized by more than the economic decline; he was responding to the

“chaos of political thought” he believed underlying early New Deal policies (1934a, 77).

As historian Otis Graham has described: “The ‘hundred days’ were a whirlwind, an

impossibly brief period in which to enact, let alone understand, the mass of legislation

that was made law. These were days of intellectual confusion for both the administration

and onlookers, but the confusion was harder to bear from the outside” (1967, 27).

Simons’s August 1933 review of the Beard volume provided an early glimpse of his

growing alarm as one of the onlookers that advocates of national planning and a managed

economy had captured the minds of policymakers, spelling doom for classical liberalism:

The operation of a sort of control through competition permits a division of labor

whereby governments may confine themselves to tasks and functions least

incompatible with democracy. To burden the political system heavily with tasks

which competition has performed heretofore (very imperfectly, to be sure) is to

guarantee drastic changes in the fundamental character of the system. Mr. Beard

invites us to contemplate a mongrel system, of democratic government, private

monopoly, and public control of relative prices and relative wages. This has been

tried latterly in Germany. Moreover, it was just this kind of system that gave rise

to the Wealth of Nations (1933e, 550).

By the time Simons wrote the Positive Program, planning advocates, such as Tugwell

had emerged as respected members of Franklin D. Roosevelt’s “Brains Trust” and were

working successfully to pass laws like the Agricultural Adjustment Act (AAA) and the

National Industrial Recovery Act (NRA) that legislated the “mongrel system” Simons

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feared would spell the doom for classical liberalism in America.8 He was also alarmed

that the politicians were ignoring the earlier examples of Italy and Germany where he

perceived that national planning had ultimately resulted in fascism.

In addition to solving problems, Simons believed that the second aspect of the

economist’s task comprised both the professional and the moral responsibility of

objective-advocate.9 Advocacy entailed drawing on the analysis of current problems to

convince others of the merits of accompanying policy positions. Objectivity required

seeking to influence fellow experts, rather than the general public, in free discussions.

Morality necessitated advocacy no matter how futile that measured conversation might

appear.

That Simons took this role as objective-advocate seriously is immediately evident

in the Positive Program. In his first widely circulated essay, rather than presenting a

carefully reasoned theoretical analysis about income taxation, the subject of his

dissertation, he chose to write a “frankly propagandist tract” (Simons 1934a, 40). The

substance of the essay consisted of a twofold scholarly investigation: a “general analysis”

of the necessary conditions for a system of classical liberalism and a delineation of the

policy proposals designed to move toward those conditions (Simons 1934a, 41).

Following the practice of his mentor Fetter, he ended the essay by moderating his

advocacy via addressing it to a group of fellow experts:

This tract is submitted in the hope of promoting a consensus of opinion within a

group which might now perform an invaluable service in intellectual leadership.

The precious measure of political and economic freedom which has been won

8 See Barber (1996) chapters 2-3. 9 See Furner (1975) for a general discussion of the objective-advocacy that characterized American economics during the interwar period.

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through the centuries may soon be lost irreparably; and it falls properly to

economists, as custodians of the great liberal tradition out of which their

discipline arose, to point the escape from the chaos of political thought which

warns of what impends (Simons 1934a, 76-7).

That Simons took on a task that many perceived as abandoned is evident in some

of the comments he received about the Positive Program and its policy

recommendations. For example, Irving Fisher stated: “I am greatly interested and

pleased to think that you are courageously reverting to the unpopular laissez faire” (1934,

2). Likewise, Fetter said: “I am strongly sympathetic with all that you have been writing

along theses lines and feel that you are helping to make amends for the quasi-criminal

neglect of the liberal economists to present their case in recent years” (1936, 1).

The Ideas

Several intellectual strands also formed the elements of Simons’s interventionism.

First, once he embedded the classical liberal state in an organic society, a larger role for

the government became possible. Second, his interpretations of the theory of imperfect

competition and monetary theory also added to the interventionist bent of the Positive

Program.

Classical Liberalism

It was in the midst of his concentrated activity of 1933 that Simons first publicly

declared his allegiance to classical liberalism. This announcement occurred in speech on

the New Deal he gave to the Social Workers Discussion Group in June:

Tonight I must talk, I believe for the first time of my life, as an extreme

conservative, as an exponent of that much ridiculed political philosophy,

nineteenth century liberalism – as one who believes firmly that the present

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generation, the so-called brain trust, needs nothing as badly as an understanding

of Adam Smith (Simons 1933d, 1).

This commitment to classical liberalism goes on to permeate his subsequent writings, but

the introduction to the posthumously published collection of his major essays about

economic policy provides the most comprehensive discussion of his political-ethical

philosophy. He titled this introduction his political credo and characterized it as a

"display of fragmentary ideas and opinions" about "practical ethics, a political-economic

philosophy, or a clear-cut ideological position" (Simons 1945, 1). What also becomes

clear in this essay is the interrelationship between his political-ethical philosophy and his

organic understanding of society.

As a classical liberal, Simons believed that liberty and equality should serve as the

standards for guiding the conduct of individuals in society. By liberty he meant the

"freedom to associate or disassociate" in a variety of settings, including the economy, the

political realm and social discourse (Simons 1945, 3). By equality, he meant equality of

opportunity to participate in economic, political and social activity.

At the same time, Simons conceived of liberty and equality as merely "relatively

absolute absolute" standards for guiding conduct. This provisional view of liberty and

equality as ethical standards stemmed from his conception of society as organic. Simons

described society not as a static collection of rational individuals or a "mere aggregate of

reified aspects"; rather he viewed society as "a living, functioning organization or

'organism'" that changed over time (1945, 2). He also believed that the classical liberal

society represented a higher level of social development: “Liberalism is an optimistic

view of man and society. It surveys recent centuries and calls them mainly good, each

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better than the one before, each achieving greatly and bequeathing enlarged

potentialities” (Simons 1945, 3). These potentialities included greater freedom for all,

the growth of knowledge over superstition, and the economic progress that checked

population increases. (See Simons 194, 2-3).

Simons coupled his ethical commitment to classical liberalism with the concept of

the social organism to fashion his vision of the good society. As a classical liberal, the

"aspectual qualities" of his good society consisted of liberty, equality and commutative

justice. At the same time, because Simons conceived of society as organic, classical

liberalism's "good society is not static conception but essentially social process whose

goodness is progress" (1945, 1-2). Liberty took on the prominent role in social process

"as both a requisite and a measure of progress" (1945, 1). As a requisite of progress in

the good society, liberty enabled freedom of association in social discourse, economic

activity, and political action. In social discourse, it allowed the organized, free

discussions that established moral consensus as the social organism changed. In the

economic realm, liberty ensured commutative justice, which in turn, insured the most

efficient production of the largest amount of goods and services. Drawing on the

marginal productivity theory of income distribution developed earlier by John Bates

Clark, Simons stated that commutative justice occurred when individuals enjoyed liberty,

or the freedom to exchange goods and services, in organized markets; the result of this

voluntary exchange was that each would be rewarded "according to the productivity of

his property, capital, or capacity (including personal capacity)" (1945, 5). Simons

acknowledged that commutative justice did take for granted "an existing distribution of

capital, among persons, families, communities, regions, and nations" and often resulted in

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an inequality of income that hindered freedom of association (1945, 5). Thus to level

incomes, Simons's vision of the good society also included equality of opportunity to

level human "capacity, capital, and possessed power" prior to production (S1945, 6). In

the political realm, liberty insured dispersion of private political power.

The one concentration of power Simons sanctioned in the good society was the

"monopoly of violence" given to the central government. This exception stemmed from

his multifaceted view of human nature, which extended the pursuit of self-interest to both

individuals and groups. He assumed that individuals followed their own self-interest in

social activity. He also emphasized that members of organized groups and politicians

followed their own self-interest in political activity. At the same time, this pursuit of

self-interest was colored by human’s “destructive, fighting propensities” (Simons 1937,

3). As a result, in social activity, a conflict, rather than a harmony, of interest could

prevail.

His description of economic activity provides one example of this understanding

of human behavior. He characterized economic activity as “petty warfare . . . within

groups” (Simons 1934a, 44). As long as economic activity took place within a “stable

framework of legal rules . . . [of] competition, limited rights of private property, and free

exchange,” the pursuit of self interest resulted in “a kind of private warfare” which

produced the most output and consequently benefited all members of society (Simons

1937, 3). On the other hand, once economic groups organized, “economic warfare loses

all its virtues and becomes destructive and exploitative, like organized fighting generally”

(Simons 1937, 3). Thus, in Simons’ understanding, the pursuit of self-interest resulted in

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harmony only when the government used its monopoly of violence to control humans’

fighting propensities according to predictable rules of law.

Theoretical Analysis

Simons was stirred to create the Positive Program to solve the problem of the

Great Depression. His theoretical analysis of this problem was twofold: “The depression

is essentially a problem (1) of relative inflexibility in prices which largely determine

costs and (2) of contraction in the volume and velocity of effective money” (1934a, 74).

In line with the pluralism of interwar economics, Simons used several methods in his

analysis: the theoretical deduction of neoclassical economics combined with an

examination of evolving economic institutions, similar to the approach his teacher Knight

had recommended in the late 1920s. This combination resulted in “the development of

more ‘realististic’ theories” of imperfect competition and money, a trend of interwar

economics (Morgan and Rutherford 1998, 7).

To study imperfect competition, Simons appeared to take cues from Fetter’s

Masquerade of Monopoly rather than the focus of his more famous contemporaries, Joan

Robinson in The Theory of Imperfect Competition (1933) and Edward Chamberlin in The

Theory of Monopolistic Competition (1933). He developed a cartel model that described

industry, rather than individual firm, behavior.10 This choice drew on his observations of

the evolution of the American economy up until the 1930s. In essence, he characterized

the industrial organization of the U.S. economy between the wars as that of an “enterprise

economy” due to the prevalence of large-scale organizations, or enterprises, that he

associated with the “intricate division of labor” of an advanced industrial society (Simons

10 His student Patinkin later described this model in graphical and mathematical language drawing Simons’s Economics 201 Syllabus (See Patinkin 1947).

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1936, 164 and 1934a, 45). He attributed this concentration to both economic and

institutional factors.

Simons cited technological change as the economic source of the concentration of

industry. In the last half of the nineteenth century, small enterprises developed new

technologies to reorganize production such that economies of scale lowered costs and

increased profits. Initially these large-scale organizations conferred social benefits due to

their greater efficiency in the utilization of resources. But Simons observed that by the

1930s these organizations had grown so large that diseconomies of scale had started to

occur (1934a, 59). To maintain their profitability, smaller production units had merged

into larger enterprises to achieve economies of scale in merchandising, financing,

research and development (Simons 1934a, 59 and 1945, 34-5). As a result, enterprises

remained profitable, going concerns even though they did not employ efficient

production techniques (Simons 1934a, 71-2 and 1945, 35).

Simons also maintained that trade unions had developed in response to the new

techniques of production as well. Initially, Simons viewed trade unions as socially

useful, because they counteracted the power of enterprises in wage and benefit

negotiations. But, like corporations, some trade unions had evolved such that they were

not longer conferring social benefits. Rather by the 1930s the only effectively organized

groups were craft unions whose members already possessed the unique skills that enabled

them to demand and to receive high wages. As a result, trade unions had consolidated

economic and political power for skilled workers at the expense of the unskilled (Simons

1934a, 49).

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Simons also cited a group of institutional factors – the current interpretation and

enforcement of relevant laws – as sources of concentration. In relation to enterprises,

examples included, securities laws, the rule of reason interpretation of the Sherman Act,

both the Hoover administration’s promotion of trade associations and the Roosevelt

administration’s National Industrial Recovery Act of 1933 (NRA), tariffs and agricultural

subsidies, and recent regressive tax reforms (Simons 1934a, 34, 42, 45-6, 49 and 53). In

relation to trade unions, the prime example was section 7a of the NRA which gave

workers the right to join unions and bargain collectively and required industrial codes to

set minimum wages and maximum hours. Simons also stressed the role of interest group

politics as an institutional factor that affected the development of the enterprise economy.

In a democratic, capitalistic system, it was in the best interest of articulate, organized

producer and labor groups to appeal to politicians for legislation that increased their

revenues and wages. “It is in the nature of the political process to conciliate such groups”

at the expense of consumers who are “unorganized and inarticulate, and, representing

merely the interest of the community as a whole” (Simons 1934a, 50). As a result, these

groups often used the political process to gain and consolidate monopoly power.11

Deriving from his observations that economic and institutional changes had led to

a “disappearance of competition” and an accompanying inflexibility in prices, Simons

analyzed two types of cartels -- producer and labor, because they had emerged as “the

organization basis for which the National Recovery Act has sought to establish

everywhere” (1934a, 43 and 47). He based the model of producers on four assumptions:

(1) the output and pricing decisions of members of the cartel are interdependent; (2) the

11 While Simons appears to anticipate certain aspects of public choice theory later developed by his student and Nobel Laureate James M. Buchanan, Simons does not provide a fully fleshed out model of interest group behavior of his own.

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cartel can set output limits for existing firms; (3) the cartel cannot control the level of

investment made by existing firms or potential entrants; and (4) the cartel cannot prevent

newcomers entering the industry (Simons 1934a, 47). Deriving from these assumptions,

Simons made two predictions. First, because price maintenance allowed existing firms

to earn high returns, eventually new firms were attracted to enter the industry and were

assigned an output quota. The cartel reduced the output quota of the other firms and the

utilization of plant capacity decreased. As a result, a “gross wastage of investment”

occurred due to an increase in excess capacity because the cartel could control the

investment plans of its current and potential members (Simons 1934a, 48). Second, in

long run equilibrium, the cartel produced until average cost equals price as firms entered

the industry, but that price exceeded marginal cost, thereby negating the allocative

efficiency of perfect competition (Simons 1934a, 48).

Simons also analyzed advertising and merchandising in relation to the cartel

model. He cited the costs of advertising and merchandising as an additional incentive for

a firm to join a trade association or cartel. Firms can increase their profits if they can use

advertising to manipulate favorably the demand for their product. But because the

actions of firms are interdependent, eventually they counter the success of one firm’s

advertising by advertising of their own. As a result, “all of them may end up with about

the same volume of business as if none had advertised at all” (Simons 1934a, 71). In

addition, they had to bribe retailers with high mark-ups to sell their products, and they

had to prevent consumers from purchasing from wholesalers. An “absurd proliferation of

small retail establishments” followed (Simons 1934a, 71). Thus, Simons later argued that

studying imperfect markets by focusing on product differentiation undertaken by

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individual firms, as described by Robinson and Chamberlin was “fundamentally

irrational” (1944, 325).12

Instead, by joining a cartel, theoretically a firm should be able to lower its

advertising costs and eliminate this waste because the members can agree not to use

advertising to compete. But Simons argued that once organized, the cartel “tend[ed] to

change the form of advertising rather than necessarily to reduce the total of such outlays;

selling activities become competitive among industries instead of merely within

industries” (1934a, 72). Due to these results, Simons viewed advertising and

merchandising as a source of waste and economic inefficiency from both the firm and

society’s perspectives.

Simons analyzed trade unions as cartels as well. Like firms in a cartel, he

assumed labor joined trade unions to maintain “a standard rate of pay through collective

bargaining. . . . above the competitive level” (Simons 1934a, 48). Simons predicted four

results of cartels in labor markets. First, the number of workers within the unionized

industries declined as firms moved to substitute relatively less expensive capital for more

expensive labor. Second, the number of firms within unionized industries declined due to

the higher costs of production. Third, if the trade union allowed labor to join freely and

rationed the hours worked in response, initially the occupation grew as the increase in

wage rates offsets the decline in hours worked. Eventually, free entry and the subsequent

rationing of work hours caused the members to be “no better off than they would have

been without any organization at all” (Simons 1934a, 48). On the other hand, if the trade

12 In his 1946 The Theory of Price, Stigler included a discussion about the theory of imperfect competition which also rejected Chamberlin’s ideas about monopolistic competition, disagreeing with his “abandonment of the industry concept” and arguing “that combinations are of basic importance” (Hammond and Hammond 2006, 62)

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union can prevent entry, if a seniority system exists, or “if the demand for this kind of

labor is highly elastic,” labor was diverted “into less important less remunerative

occupations” (Simons 1934a, 49). Whether entry was free or restricted, the community

suffered from higher output prices and an inefficient allocation of labor.

Simons used orthodox theory -- Irving Fisher’s version of the quantity theory -- as

a starting point to study the secondary cause of the depression: “contraction in the volume

and velocity of effective money” (1934a, 74). Fisher’s had added consideration of

checkable deposits to his form of the quantity theory:

MV + M’V’ = PT

where M was the quantity of money in circulation, V was the velocity of its circulation,

M’ is “the total deposits subject to transfer by check,” V’ is the velocity of their

circulation, P is the price level and T is the volume of trade (Fisher [1911] 1925, 48).

Fisher maintained that the price level varied directly with the quantity of money,

provided that the velocity of circulation and the volume of trade remained unchanged.

Given that these conditions held, by controlling the supply of money, the monetary

authority could normally stabilize the price level. Yet Fisher acknowledged that this

“tendency” depended on the stability of velocity, the ability of the central government to

control the supply of money in circulation and a fully flexible price structure.

In his extension of Fisher’s theory, Simons drew on his observations about the

concentrated nature of the enterprise economy and assumed that there existed “limited

flexibility in prices and wages” (1936, 165). He then focused his investigation on the

other two factors, which prevented the tendency postulated by Fisher from holding:

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changes in velocity, or hoarding and dishoarding, and the central government’s ability to

control the supply of money.

In Simons’s analysis, neither condition held due to the way in which the financial

structure had evolved up until the 1930s. In essence, he argued that the financial

structure was characterized by a competitive mix of public and private institutions that

supplied the “medium of circulation” in a fashion that “alternately expanded[ed] rapidly

and contracte[ed] precipitously the quantity of paper currency in circulation” (Simons

1934a, 54). First, existing financial regulations allowed “an indefinite number of

agencies, government and private” to supply money (Simons 1936, 174). The principal

issuers were commercial banks, because the government had given “special status . . . to

the obligations of banks” through laws that provided for special charter, regulation,

supervision, guaranty and bankruptcy protection (Simons 1936, 167 and 333n). They

supplied money and money substitutes in the forms of currency, demand deposits, time

deposits, and treasury certificates. In addition, existing law permitted other institutions to

create money substitutes. Examples included the corporation’s ability to “financ[e] via

the open book account (book credit) and instalment sales” (Simons 1936, 171). Second,

existing legal regulations created an elastic medium of circulation, primarily because the

fractional reserve system required deposit banks to retain only a portion of their

creditors’s deposits on hand. As a result, the quantity of excess reserves became the basis

for the banks’s capacity to create and to destroy money and money substitutes by making

and calling in loans (Simons 1933c and 1934a, 54). The elastic nature of money was

exacerbated by the customary banking procedures of investing primarily in short-term

commercial paper and holding only “small cushions of owner equities” (Simons 1936,

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167). These practices encouraged bankers to demand repayment of loans and,

consequently, shrink the supply of money and money-substitutes “in the face of the

slightest uncertainty” (Simons 1936, 167). As a result, bankers possessed both the

incentive and the capacity for “precipitating chaotic liquidation” and a subsequent

general deflation by forcing businesses to pay back the short-term loans they obtained for

working capital (Simons 1936, 328n).

Why Was Simons Interventionist?

By the mid-1930s, it seemed that some of the “chaos of political thought” that had

impelled Simons to create the Positive Program had diminished in influence. In May

1935, the Supreme Court decided that the NRA and its system of national planning

unconstitutional. By the end of 1936, proponents of national planning, including

Tugwell, had left the government. Nonetheless, as Graham has described, many of the

surviving members of the first generation of progressive social scientists were still

fighting against the New Deal (1967). And in an April 1937 speech about “the relation of

the state to social and economic activity,” Simons, one of their students, continued to

emphasize the position of the Positive Program that the state must intervene:

You may have inferred yesterday, that like some economists at the beginning of

the 19th century, I had a very low opinion of the ability of governments to do

anything very useful. Frankly, I do sympathize will [sic] the old notion that

government governs best which governs least. This maxim still contains too much

truth to be discarded outright. But obviously the democratic state must govern in

some directions, of [sic] only remain democratic, to preserve internal peace, and

to provide the framework of rules without which freedom would merely be chaos,

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and free enterprise simply brigandage. The scheme of policy for which I plead

may be called laissez-faire, for historical reasons; but a modern program of laissez

faire cannot be a do-nothing program by any means (1937, 1).

For a while, Simons seemingly became reassured by the antitrust investigations

led by Thurman Arnold under the auspices of the Temporary National Economic

Committee (TNEC) from 1938 to 1941.13 But he also became increasingly alarmed by

the growing power of industrial unions and the inability to talk about this power in public

discourse, ultimately expressing his distress in the controversial 1941 article “Some

Reflections on Syndicalism.” Nonetheless, despite these changes, his 1944

recommendations for a postwar economic policy continued similar themes from the

Positive Program: “dismantling of tariff barriers,” organizing for “united action in

matters of monetary and fiscal policy,” and undertaking effective antimonopoly policies

to deal with cartels and “merely private economics of size in selling and advertising”

(Simons 1944, 244 and 247). He also consistently advocated for tax policies that

promoted income equality. Thus Simons remained highly interventionist for someone

Aaron Director characterized as “the head of [the] ‘school’” of what would become

Chicago economics (1948, v).

Earlier explanations of Simons’s interventionism have focused on two main

factors – ignorance about contemporary facts and subsequent theory and the historical

context in which he lived and wrote. That Simons did not know about contemporary

facts is just wrong. That he would have become less interventionist if he knew about

later theoretical developments stands as pure conjecture. What remains as correct is that

the historical context is crucial in explaining his interventionism, but in a different way 13 See Simons 1941 for his review of Arnold’s The Bottlenecks of Industry (1940).

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than described by earlier interpreters. Simply stated, Simons worked in the climate of

interwar pluralism. As a result, he looked through the world with a different set of

lenses, colored primarily by elements of progressive social science that the pluralism of

interwar economics allowed to linger. First, he persisted with the outlook that it was

proper for the professional economist to serve as an objective-advocate, that is, to

contribute actively to free discussion that changed social standards. Second, he worked

from an organic conception of social development in which evolving institutions featured

prominently, that, in turn, altered his understanding of classical liberalism. Finally, he

carried on with a greater emphasis on the evil of private monopoly and on equality and

distributive justice.

A 1934 exchange of letters with Friedrich von Hayek about the Positive Program

reveals that one of Simons’s interventionist policies served in part as a means to build

that a consensus of opinion against the increasing power of the early New Dealers as

advocates of national planning. In an earlier letter, Hayek had expressed doubts about the

recommendation to socialize natural monopolies. Simons responded:

As regards public ownership of the railroads, I may confess privately to having

used a low, debating trick. Most of our so-called ‘liberals’ and ‘New-Dealers” are

really asking us to adopt for industry a scheme of things closely comparable in

essentials to that which we have been practicing in the case of the railroads. I am

willing to prostitute my judgment somewhat, in advocating government

ownership, in order to vent my spleen fully as to the merits of a grand system of

private monopoly with government regulation of prices and wages. (1934b, 2).

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Thus while attempting to build a consensus of opinion among his fellow economists in a

context in which those that had the ear of politicians were attempting full-scale national

planning, Simons was not above offering some limited policy sops to his fellow

academic-experts.

But beyond his desire to influence particulars in the current debate about

economic policy, his interventionism stemmed from his acceptance of the economist’s

task to solve problems and advocate. As he wrote to Hayek in 1934 in language with

religious overtones: “If my proposals seem, as a whole, too drastic, let me explain that

both the religion of freedom, and intellectual interests along liberal lines, seem deader

here than in England. One must struggle as hard with friends as with enemies; the

competent people are mainly, like Frank Knight, ready to abandon all their hope and

faith, and to occupy themselves largely with explanations of why the deluge is both

imminent and inevitable” (1934b, 2).14 Thus, unlike Knight, who by 1932 had decided

with great dejection that demagogy had overtaken intelligent conversation, Simons

remained true both to the classical liberal ideal of free discussion and the reform impulse

of his progressive roots to the end of his life.15 By the end of the 1930s, he was giving

speeches, such as the one cited above, to numerous respectable upper-class groups, such

as the League of Woman Voters. In the 1940s, he began to advocate his views in the

popular press, including Fortune and Time. He continued to advocate unpopular

14 In 1942, Simons made a similar statement to Fetter: Knight’s “usefulness was ultimately limited, partly, because of a kind of political diffidence, defeatism, and irresponsibleness” (1942, 1). Knight’s 1932 lecture “The Case for Communism: From the Standpoint of an Ex-Liberal” most certainly added to Simons’s despair about Knight (Knight 1991). 15 See Knight (1932) for a discussion about the impossibility of reform via free discussion. Emmett (1998b) describes Knight’s rejection of this aspect of progressive social science.

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positions in specialized journals, such as a critique of organized labor in the Journal of

Political Economy in 1944.

In the 1940s Simons also continued the work to build “a consensus of opinion

within a group . . . [that] could perform an invaluable service in intellectual leadership”

by doing the groundwork for an international organization that would keep alive the

discussion about classical liberalism during the years of the Keynesian consensus (1934a,

p. 76). He made a proposal to set up an “Institute of Political Economy” at the University

of Chicago that “ would preserve and promote the ‘traditional-liberal political

philosophy’ of ‘Chicago economics’” (Bowler 1974, p. 9). At the time of his death in

1946, Hayek carried Simons’s idea forward. First, Hayek with financial backing from the

Volker Fund organized the Free Market Study led by Aaron Director to write ‘An

America Road to Serfdom’ and to develop a description of an effective, liberal system

(Van Horn and Mirowski 2009). Later Hayek founded the Mont Pelerin Society as a

sympathetic forum for individuals interested in the traditional-liberal political

philosophy.16

The second aspect of Simons’s interventionism brought the ideas of organicism

and institutional change to bear on classical liberalism. First, Simons worked from an

16 Irony abounds in the respective positions taken by Simons and Knight regarding the possibility of free discussion. For the determination of Simons to serve as an advocate for classical liberalism repeatedly left him in a vulnerable position professionally, and it was often through Knight’s protection that he was able to maintain employment at the University of Chicago. For example, in the early 1930s Paul Douglas did not want to give Simons tenure, because he had no publications and students reported that he could not teach well. When the “Positive Program” was published Douglas said: “’I like that report. It’s skillful propaganda. But it isn’t basic scholarship and we shouldn’t be giving our few jobs on that basis’” (Stigler in Kitch 1983, 177). Knight responded: “’Any discussions of his imperfections is a personal attack on me’” (Stigler in Kitch 1983, 177). Knight’s stand insured that Simons retained his position at Chicago, but at the cost of great divisiveness in the economics department. This tension was ultimately resolved by sending Simons to teach in the law school in 1939. And despite the protection of Knight, Simons paid a price for meeting his moral responsibility to advocate. According to Stigler: “The further delay in reaching his professorship (1945) was due to the opposition of dean who was incensed by Simons’ attack on labor in his famous essay, ‘Some Reflections on Syndicalism’” (Stigler 1974, 167).

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organic conception of social development, a holdover from progressive social scientists,

such as his teacher Taylor. Second, he followed the 1920s call of Knight to including

analysis of evolving institutions elements of his theoretical analysis. As a result, he

recast laissez faire to become a positive, rather than negative, guide to state action.

Organic thinking first influenced the theoretical analysis that Simons completed to

support the proposals of the Positive Program. His examination of what he identified as

causes of the depression -- price inflexibility and monetary contraction -- were

conditioned by his observations of the evolution of the American economy up until the

1930s. He did not employ the model of perfect competition to describe the ideal of a

competitive equilibrium, when the economy had evolved to the point where the real

problem was inflexible prices. Rather he used a more realistic model of the cartel. Based

on that analysis, he recommended that to disperse the concentrated economic and

political power of the enterprise economy, the state had to intervene to break up

monopolies, even at the cost of economic efficiency. Likewise, in his adaptation of the

quantity theory, his observations of the actual financial system persuaded him that he

could not assume that the monetary authority could control the supply of money. As a

result, to save the organizing principle of classical liberalism, he recommended the more

radical reform of 100% reserves and the more discretionary policy of stabilizing the price

level, rather than the quantity of money.

Organic thinking also influenced his vision of the good society, when Simons

modified the ethics of classical liberalism to take into account the concept of a social

organism. In essence, individuals cooperate to make up an evolving social organism. As

knowledge and external conditions alter, the social organism gradually changed, ideally

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on the basis of organized, free discussion by those individuals. An ethical society would

be one that insures that a maximum number of individuals possess the maximum amount

of freedom to participate in the process of organized, free discussion. Thus, it was on

that basis of its potential to create maximum freedom for the social process of discussion

that Simons opted for the ethical system of classical liberalism over other principles of

economic control.

By the 1930s, due the failure of previous economic policy, Simons believed that

the social organism had evolved such that great concentrations of power existed,

seriously impeding the ability of individuals to participate in the social process of free

discussion. In response, the character of laissez faire also had to change to activist

planning “to sustain freedom” (Simons 1945, 3). In the economic realm, the focus of

planning consisted of “seek[ing] to establish and maintain conditions such that it may

avoid the necessity of regulation of ‘the heart of the contract’ – that is to say the necessity

of regulating relative prices” (Simons 1934a, 42). These conditions included: the

maintenance of competition via strong enforcement of antitrust, free trade and taxation of

advertising; the control of the currency through the radical change of 100% reserves and

implementation of the more discretionary rule of stabilizing the price level; and

equalization of opportunity via the institution of more progressive taxation and increase

of social welfare activities. By recasting laissez faire to planning to sustain freedom,

Simons ultimately expanded the role of the central government to intervene in economic

activity, primarily to insure greater equality in the opportunity to participate in the great

conversation that set the ethical standards guiding the evolution of the social organism.

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Concluding Remarks

When Henry Simons died in 1946, he left a galvanizing blueprint for saving the

classical liberal state, one that included both policy recommendations and a plan for

garnering the public opinion necessary to put them into action. Unfortunately for his

followers, many of the particular recommendations called for increasing the power of the

central government, a direction they later considered an anathema. As such, it was not

surprising that they faced a dilemma. In the early years, while members of the Chicago

School were working to gain influence for their free market principles, the members of

his school explained away the awkward interventionist elements by appealing to his lack

of knowledge of contemporary facts, his unawareness of the later growth in government,

his ignorance of subsequent theoretical developments, and the interventionist climate of

the 1930s and 1940s. When they began to win influence after the failure of Keynesian

economics to deal with the stagflation in the 1970s, it is not surprising that they gave up

trying to rescue the classical liberal reputation of Henry Simons. Likewise, it is not

unexpected that Van Horn and Mirowski discovered that the classical liberal Simons and

the neoliberal post-1946 Chicago School diverged regarding their conceptions of the

presence and importance of monopoly power. Classical liberals, like Simons, abhorred

all accretions of power, whether by private firms or by labor unions, because they

diminished equality and the concurrent ability of individuals to compete in the economy

and to participate meaningfully in the conversations about political change. In fact, one

wonders if Simons would have supported the theoretical and policy directions the

Chicago School took after his death.

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It is also significant of that while these individuals renounced and then rebuilt the

theoretical and policy underpinnings of his analysis, they employed, with much greater

success, Simons’s legacy of advocacy first demonstrated in the Positive Program. After

his death, Hayek and Director successfully created the Mont Pelerin Society as a means

for neoliberals to build the consensus of opinion essential to counteracting Keynesian

economics. Later, Friedman emerged as an effective advocate to both his fellow

economists, winning the 1976 Nobel Prize for his economic research, and policymakers

and the wider public, with the publication of Capitalism and Freedom (1962) and Free to

Choose (1980). His work and that of other Chicago economists has gone on to play a

crucial role in guiding the functioning of the economy over the next decades. Likewise,

Hayek’s The Road to Serfdom (1944) continues to inspire modern-day libertarians. Thus,

a peculiar legacy emerges from the work of Henry Simons: that while his disciples

rejected crucial aspects of his policies to save classical liberalism, they employed with

greater success, the task to advocate that he learned from progressive social scientists and

continued during the pluralist environment of interwar economics.

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by J. Eatwell, M. Milgate, and P. Newman. New York: Stockton Press. Robinson, Joan. 1933. The Economics of Imperfect Competition. London: Macmillan. Ross, Dorothy. 1991. The Origins of American Social Science. Cambridge: Cambridge

University Press. Rutherford, Malcolm. 2010. “Chicago Economics and Institutionalism.” In The Elgar

Companion to the Chicago School of Economics, Edited by Ross B. Emmett, 25-39. Cheltenham, UK: Edward Elgar.

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Association for Evolutionary Economics and Division of Research, Graduate School of Business Administration, Michigan State University.

Simons, Henry C. 1923. “The Tax Exemption Question.” Journal of Business I4 (March):

9-12, 24. . 1926. Review: Harry Gunnison Brown, The Economics of Taxation, Journal of

Political Economy (February): 134-36. . 1929. Review: Harrison B. Spaulding, The Income Tax in Great Britain and the

United States, Journal of Political Economy (June): 373-75. . 1933a. “Syllabus Materials for Economics 201.” Chicago: University of Chicago

Bookstore. . 1933b. Review: T.E. Gregory, The Gold Standard and its Future, Journal of

Political Economy (February): 137. . 1933c. “Banking and Currency Reform.” (March): Memorandum. . 1933d. Notes from talk given June 7, 1933 at the Harmony Cafeteria to the

Social Workers Discussion Group on the New Deal. Box 9, File No. 5, The Henry C. Simons Papers, Special Collections, Joseph Regenstein Library, University of Chicago, Chicago.

. 1933e. “Mercantilism as Liberalism,”a review article on Charles A. Beard

(Ed.), America Faces the Future, Journal of Political Economy (August): 548-51. . 1933f. “Banking and Business Cycles” and “Long-time Objectives of Monetary

Management.” (November): Memoranda.

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_____. .1934a. A Positive Program for Laissez Faire: Some Proposals for a Liberal

Economic Policy, Repr. in Economic Policy for a Free Society, 40. Chicago: The University of Chicago Press, 1948.

. 1934b. Letter from Simons to Friedrich A. von Hayek, December 18, 1934. Box

3, File No. 40, The Henry C. Simons Papers, Special Collections, Joseph Regenstein Library, University of Chicago, Chicago.

_____. 1935. Review: Lauchlin Currie, The Supply and Control of Money in the United

States, Journal of Political Economy (August): 555-58. _____. 1936. “Rules vs. Authority in Monetary Policy,” Repr. in Economic Policy for a

Free Society, 160-83. Chicago: The University of Chicago Press, 1948. _____. 1937. ”Speech” Box 9, File No. 2. The Henry C. Simons Papers, Special

Collections, Joseph Regenstein Library, University of Chicago, Chicago. . 1938. Personal Income Taxation, Chicago: University of Chicago Press. ____ _. 1939. Review: Alvin Harvey Hansen, Full Recovery or Stagnation? Journal of

Political Economy (April): 272-76. . 1941. “Some Reflections on Syndicalism.” Repr. in Economic Policy for a

Free Society, 121-59. Chicago: The University of Chicago Press, 1948. . 1942. Letter from Simons to Frank A. Fetter, Sr., July 6, 1942. Box 2, File No.

61. The Henry C. Simons Papers, Special Collections, Joseph Regenstein Library, University of Chicago, Chicago.

. 1944. “Economic Stability and Antitrust Policy.” Repr. in Economic Policy for a

Free Society, 107-120. Chicago: The University of Chicago Press, 1948. _____. 1945. “Introduction: A Political Credo,” In Economic Policy for a Free Society,

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166-170. Chicago: University of Chicago Press, 1982. Taylor, Fred M. 1918. Principles of Economics, 5th ed. Ann Arbor: The Ann Arbor Press. Van Horn, Rob. 2009. “Reinventing Monopoly and the Role of Corporations: The Roots

of Chicago Law and Economics,” in The Road from Mont Pelerin. Eds. P. Mirowski and Dieter Plehwe. Cambridge, MA: Harvard University Press.

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. and Philip Mirowski. 2009. “The Road to a World Made Safe for Corporations: The Rise of the Chicago School of Economics,” in The Road from Mont Pelerin. Eds. P. Mirowski and Dieter Plehwe. Cambridge, MA: Harvard University Press.

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