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June 22, 2005



Why did Lawson give up on monetarism? Why did he replace it by "shadowing" the Deutschmark, which meant that he was 'steering'the British economy by reference to German money supply figures rather than British ones?
We laymen can find such things a bit of a puzzle.

Patrick Crozier

I seem to remember the argument was that no one could decide which measure of money to use.

In his biography, Lawson devotes about a paragraph to this. His argument was that we would never be able to impose the necessary discipline on ourselves so we needed someone from outside to do it.

Does date it somewhat.

Angry Economist

Lawson got a lot of things wrong, like causing the recession of the late 1980s. Did this blunder lead him to ditch his monetarist stance? Personally I think that there has only ever been 'pretend' monetarism in the UK.

Most 'monetarist' stances were never fully monetarist anyway but always used other economic tools which would have made Friedman et al shiver.

The problem with measuring money was that they didn't use to count credit card debt as money. So they underestimated the demand for money.


I think the Lawson case is interesting because there's a good chance that it was just a matter of intellectual error, rather than the usual political chicanery. No danger of anyone ever attributing any part of Toni's record to intellectual anything, eh?


Chris Dow and Iaian Saville - both former Bank of England economists, wrote a very interesting book on british monetary policy , including the monetarism experience - and why it was all rubbish. Very good read. Very instructive.

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