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Some years ago, I proposed (Glasner 1985) what then seemed to be a novel interpretation of classical monetary theory. Relying on work by Laidler ([1972] 1975), Thompson (1974), Frenkel and Johnson (1976), Girton and Roper (1978), and McCloskey and Zecher (1976), I suggested that notwithstanding the conventional identification of classical monetary theory with the quantity theory of money-and a rather crude version of the quantity theory, at that-many leading classical theorists espoused a monetary theory very different from the quantity theory. The difference between the two theories, I argued, is that the quantity theory treats the stock of money as an exogenous variable to which prices adjust, whereas the other (antiquantity-theoretic) theory treats the absolute level of prices, fixed by the convertibility of money into a real commodity, as an exogenous variable to which the stock of money adjusts. I further argued that much of the history of classical monetary theory could be understood as a dialectic between these two clashing theories.
Until the early 1970s the notion that the quantity theory was the dominant, if not the only, monetary paradigm in classical economics was not even up for debate. The works cited above laid the foundation for my own challenge to the consensus. What role my 1985 article and a subsequent one (Glasner 1989b) had in upsetting the consensus about the quantity theory in classical economics is better left to others to sort out (see Skaggs 1999). But whatever its significance, my contribution to this reassessment of classical monetary theory elicited critical responses from two distinguished historians of economic thought, Mark Blaug (1995) and D. P O'Brien (1995).
Blaug (1995, 32-33) charges that I misrepresented my antiquantitytheoretic version of classical monetary theory as the exclusive classical monetary theory when, in fact, the quantity theory was integral to classical monetary theory, and that I mistakenly included David Ricardo, Henry Thornton, and J. S. Mill in the antiquantity-theory camp. O'Brien ( 1995, 54) contends that the theory I ascribed to classical monetary theorists bears no likeness to classical monetary theory. Moreover, the theoretical model underlying my version of classical monetary theory, O'Brien argues, is based on a series of untenable theoretical assumptions that the classical economists would never have entertained.
In responding to these issues, I...