Nicholas Johannsen
Encyclopedia
Nicholas August Ludwig Jacob Johansen was a German-American amateur economist, today best known for his influence on and citation by John Maynard Keynes
. He wrote under two pen names: A. Merwin and J.J.O. Lahn.
, he was recognized as one of the most significant influences on The General Theory, and he is cited in Keynes's 1930 Treatise on Money (p. 90). He is credited with devising an early form of effective demand
, independent discovery of the multiplier
, and less recognized contribution to monetary economics and business cycle theory; .
His 1903 Der Kreislauf des Geldes und Mechanismus des Sozial-Lebens (The Circuit Theory of Money, written in German) can be seen as an early work in monetary circuit theory
.
Crucially, he distinguished the roles of savings and investment – since only investment is directly productive, savings may be harmful to the economy, and may "tend to impoverish others" – a form of the paradox of thrift
.
In his last years (1928), he warned of an upcoming long period of stagnation, which may be seen as prophesying the Great Depression
.
John Maynard Keynes
John Maynard Keynes, Baron Keynes of Tilton, CB FBA , was a British economist whose ideas have profoundly affected the theory and practice of modern macroeconomics, as well as the economic policies of governments...
. He wrote under two pen names: A. Merwin and J.J.O. Lahn.
Influence
He was largely unrecognized in his lifetime, but following the Keynesian RevolutionKeynesian Revolution
The Keynesian Revolution was a fundamental reworking of economic theory concerning the factors determining employment levels in the overall economy. The revolution was set against the then orthodox economic framework: neoclassical economics....
, he was recognized as one of the most significant influences on The General Theory, and he is cited in Keynes's 1930 Treatise on Money (p. 90). He is credited with devising an early form of effective demand
Effective demand
In economics, effective demand in a market is the demand for a product or service which occurs when purchasers are constrained in a different market. It contrasts with notional demand, which is the demand that occurs when purchasers are not constrained in any other market...
, independent discovery of the multiplier
Multiplier (economics)
In economics, the fiscal multiplier is the ratio of a change in national income to the change in government spending that causes it. More generally, the exogenous spending multiplier is the ratio of a change in national income to any autonomous change in spending In economics, the fiscal...
, and less recognized contribution to monetary economics and business cycle theory; .
His 1903 Der Kreislauf des Geldes und Mechanismus des Sozial-Lebens (The Circuit Theory of Money, written in German) can be seen as an early work in monetary circuit theory
Monetary circuit theory
Monetary circuit theory is a heterodox theory of monetary economics, particularly money creation, often associated with the post-Keynesian school....
.
Crucially, he distinguished the roles of savings and investment – since only investment is directly productive, savings may be harmful to the economy, and may "tend to impoverish others" – a form of the paradox of thrift
Paradox of thrift
The paradox of thrift is a paradox of economics, popularized by John Maynard Keynes, though it had been stated as early as 1714 in The Fable of the Bees, and similar sentiments date to antiquity...
.
In his last years (1928), he warned of an upcoming long period of stagnation, which may be seen as prophesying the Great Depression
Great Depression
The Great Depression was a severe worldwide economic depression in the decade preceding World War II. The timing of the Great Depression varied across nations, but in most countries it started in about 1929 and lasted until the late 1930s or early 1940s...
.