LORIE TARSHIS was an eminent and original Keynesian economist.
He was introduced to JM Keynes (of A Treatise on Money) at the University of Toronto in the late 1920s; he came to Trinity College, Cambridge, in the early 1930s to read for the Economics Tripos. He went to the lectures which became Keynes's General Theory in 1936 (Tarshis's lecture notes were a significant input into Thomas K. Rymes's 1989 'notes of a representative student', Keynes's Lectures, 1932-35). Tarshis obtained a First in an exceptional year (1934) and stayed on to do one of the earliest PhDs in the Faculty of Economics and Politics.
His dissertation 'The Determinants of Labour Income' was a pioneering work which, disgracefully, was never published. Tarshis used the insights of the theory of imperfect competition in Richard Kahn's lectures on 'The Economics of the Short Period' and Joan Robinson's Economics of Imperfect Competition (1933) explicitly to establish realistic microeconomic foundations for the macroeconomic system of The General Theory, in order to explain the distribution of the total product between wages and profits (as well as the levels of overall employment and output, and the general price level).
Tarshis thus discovered, independently, the macro theories of distribution, now principally associated with Michal Kalecki and Nicholas Kaldor - a discovery which brought Tarshis and Kalecki close together when they met in Cambridge in the late 1930s. Tarshis also played a vital role in converting Abba Lerner from his LSE-Hayekian stance to Keynesianism. Lerner regularly visited Tarshis at Trinity to argue the respective merits of their champions - always after lunch, for Tarshis, a true North American, could not stand the smell of the Marmite sandwiches which Lerner ate in his rooms.
In 1936 Tarshis went back to North America to teach economics at Tufts University in Boston. There he met at Harvard seminars other ardent 'youngsters' - Paul Samuelson, James Tobin, for example - who were propagating Keynes's message. With some of them, he wrote An Economic Program for American Democracy (1937); its arguments had an important impact on Roosevelt's advisers for the 1938 budget. Tarshis's papers on real and money wages and the cycle, published in the American Economic Review and the Economic Journal in 1938 and 1939, together with John Dunlop's 1938 paper on the same theme, led Keynes in 1939 to modify his views on their relationship in The General Theory and to sketch a very early example of what we now call normal cost pricing.
During the Second World War Tarshis became, in effect, a 'boffin' in the US Air Force. (Flattered at receiving a personal 'we want you' telegram from FDR, Tarshis became a US citizen and joined up - he found out afterwards that every eligible person received one.) With his great chum George Housner, Tarshis advised on bombing raids and other puzzles. When Tarshis and Housner 'liberated' Rome, they also met Inga Rappaport, who was to become Tarshis's wife.
Tarshis moved to Stanford in 1946. He taught there for 25 years and was the department's chairperson for many of them. In between leaving Tufts and settling in Stanford, he published the first introductory textbook in North America to contain an exposition of Keynesian economics. It was deeply and intelligently true to Keynes's vision. There are still many people who say that Tarshis's exposition of the Keynesian system is the best they have ever read. Certainly, because Tarshis made aggregate supply factors as important as aggregate demand in determining the point of effective demand, his version of Keynes's analysis would have provided the basis both for understanding the 'stagflation' episode and providing appropriate policies to overcome it. It would also have limited the damage (now happily coming to an end) that has been done because of the different way in which Keynesian thinking came through the textbooks into the profession, especially in the United States.
Why this should have happened is related to the second disgraceful treatment of Tarshis during his academic life. When he was teaching at Williams in the summer of 1947 he began to get disquieting news about his book. An anti-New Dealer, Merwin K. Hart, led the attack through a pamphlet, written by Rose Wilder Lane, which was sent to the trustees of every university in the country. (William Buckley Jnr joined in later, devoting a chapter to Tarshis's book in God and Man at Yale.) As a result many departments reneged on their initial decision to prescribe the book so that sales were only respectable, not all-embracing.
Paul Samuelson's introductory textbook with its less satisfactory way of expositing Keynes's theory thus became the dominant textbook when it was published the next year. (He received the tail-end of these pre-McCarthyite attacks, but not enough to damage his sales.)
In the early 1970s, Tarshis, sickened by the Vietnam war and worried about the growing illiberalism in the US, returned to Canada. There, he built up a fine team of young economists at Scarborough College, in the University of Toronto. When he 'retired' (in 1978) he went, first, as research director to the Ontario Economic Council and then, in 1982, back to teaching at Glendon College, York University, Toronto. His last years were marred by serious ill-health - the onset of Parkinson's disease and neurological problems, which meant that he spent his last 18 months in a nursing home, devotedly cared for, as ever, by Inga.
Tarshis always worked on issues that had been dear to Keynes's heart - theories of employment and inflation, international monetary matters, the appropriate policies with which to deal with economic and social problems in interrelated democratic societies. (As a Canadian he was always an open-economy person.) He has left us a definitive paper on the aggregate supply function (1979), astute analyses of the dangers inherent in the Euro-dollar market ('the financial San Andreas fault - we know there will be an earthquake but we don't know when') and of what to do about the debt crisis of the developing countries.
Because he was so clear-headed concerning the interrelationships of the micro and macro aspects of economies, he was never seduced by the worst heresy of modern economics, using the representative agent to analyse systemic problems. But it was by personal contact in discussion, criticism and enthusiastic support that he had his greatest influence, for he was an old-fashioned teacher par excellence. Through students and colleagues the essential soundness of Keynes's message was imparted, quietly and unobtrusively but with conviction and persuasion, not least by Lorie Tarshis. His ire and scorn were reserved for the stupid, the insensitive and the inhumane who, failing to see the soundness of the approach, unwittingly pushed capitalism towards the abyss from which Keynes had tried to rescue it well over 50 years ago. The acid test for Tarshis was whether you thought causality ran from employment to the real wage. If you did, you shared his 'vision' and enjoyed the privilege of his friendship and companionship.
Two things remain to be stressed. First, his love of sport - he remained an excellent squash player well into his seventies. Secondly, and most importantly, his rich family life with Inga and their daughter, Tanya. Inga and Lorie were also on excellent terms with the three children from his first marriage to Elizabeth Kent.
Tarshis came from the Toronto Jewish community though neither side of his family, nor Lorie himself, lived completely or even predominantly within it. His father, Dr Singer, a GP who was also City Coroner, died when Lorie was very young. Lorie took the surname of his stepfather, a Toronto businessman, of whom he was very fond. Tarshis had relatives who supported and appreciated the arts, and his own strong love and extensive knowledge of painting, sculpture, books (Blake was his passion), music and live theatre came naturally from this background.
Inga, herself deeply cultured with a background embedded in knowledge and appreciation of the arts (she is a singer and her father was an antiquarian bookseller in Rome), was the ideal companion for the rich and satisfying private life of culture which unobtrusively characterised the Tarshises. But, most of all, their many friends, young and old, cherish having been themselves included within the great warmth, concern and love which Inga and Lorie had for each other.
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