Fifteen years after the Global Financial Crisis: Recessions and Business Cycles in the History of Economic Thought

Richard Kahn and the post-war Cambridge approach to speculation in organised markets

Paesani Paolo, University of Rome Tor Vergata
Rosselli Annalisa, University of Rome Tor Vergata

The emergence of the post-war Cambridge approach to the analysis of speculation, with its Marshallian and Keynesian roots (Kaldor 1939, Blau 1944), represents an important development in the post-Keynesian analysis of financial markets (Kregel 1998, Rezende 2015). Building on previous research (Paesani and Rosselli 2014, 2020, 2021) and new archival material, we reconstruct this approach, focusing on the contributions of Richard Kahn. These contributions, made mainly between the 1950s and the early 1970s, combine theoretical insights into how different categories of economic agents respond to uncertainty, beliefs, conjectures and liquidity preferences (Kahn 1954, Marcuzzo 2020) with Kahn's direct knowledge of commodity and financial markets. This knowledge came from Kahn's role as Assistant Bursar and later Bursar of King's College, where he learned the job from Keynes, from his exposure to commodity markets and their problems, during the Second World War (Kahn and Marcuzzo 2020) and afterwards (Dimand and Dimand 1990, Fantacci et al. 2011), and from his experience, while working as a consultant to the FAO (Palma 1998, Rosselli 2017). The combination of formal thinking with knowledge of economic problems and a concern to find workable solutions, so typical of Cambridge economics (Walston and Harcourt 2012), underlies Kahn's views on destabilising speculation in commodity and foreign exchange markets and how to curb it (Kahn 1973). Reconsidering these views today is important both to preserve the memory of one of the main exponents of the first generation of Cambridge Keynesians, and for the interest of Kahn’s insightful contribution to the time-honoured debate on the role of speculation in organised markets.

Area: Eshet Conference

Keywords: Richard Kahn, speculation, Cambridge tradition

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