Introduction and summary

In addition to the stimulus that I derived from Value and Capital (Hicks, 1939a), I owed a fundamental debt in writing under John Hicks's guidance my Oxford DPhil thesis on The Term Structure of Interest Rates (Masera, 1972). In this chapter, however, I make particular reference to a book of Sir John's – Economic Perspectives (1977a) – that appeared after I had left Oxford for the monetary and economic department of the Bank for International Settlements in Basel.

In a brief yet very dense essay in Economic Perspectives, Hicks reconsiders the evolution of monetary experience and of the theory of money, starting from David Hume's Essay on Money (Hume, 1752). Four main models are presented and critically analyzed: the classical quantity theory; Knut Wicksell's (Interest and Prices, 1936 [1898]); John Maynard Keynes's (A Treatise on Money, 1930, and The General Theory, 1936); and Hicks's own approach (‘Monetary Experience and the Theory of Money’ 1977b).

I have read these essays on many occasions, finding every time new challenges, new insights, and new responses. Recently I went back to Economic Perspectives, to see what I could learn in my attempt to assess the analytical framework behind the current focus, both in the financial industry and in the regulatory environment, on the relationships between capital and risk. Beyond ‘Monetary Experience,’ I found extremely useful insights also in another essay in the book: ‘Capital Controversies: Ancient and Modern’ (Hicks, 1977d).