THE SMITH CENTER

for Private Enterprise Studies

September Column

About William Harold Hutt

by

Charles W. Baird

Emeritus Professor of Economics and Former Director of the Smith Center
California State University

William H. Hutt (1899-1988), was a classical liberal economist who spent most of his professional life at the University of Cape Town in South Africa. He received his Ph. D. from the London School of Economics and in 1928, at the invitation of Arnold Plant, moved to Cape Town. From his first book, The Theory of Collective Bargaining (London: Staples 1930), to his last, The Keynesian Episode: A Reassessment (Indianapolis: Liberty Press, 1979), and in journal articles he continued to write until 1983, Hutt was a stalwart advocate of the rule of law, limited government and free markets. According to Thomas Hazlett, Hutt "may be the most important economist of [the 20th] century.

There are two reasons why Hutt's work is not well known outside of South Africa. First, South Africa was, and to some extent still is, considered remote and inaccessible to European and American economists who tend to assume that anything worthwhile in economics must be published in the Northern Hemisphere, in a short list of prestigious journals. Second, Hutt always believed that much of the vocabulary used by professional economists was confusing and misleading to non-economists. He tried to create an alternative vocabulary with which to explain his ideas. He believed that reasonable people could come to a consensus through logical arguments developed with a precise vocabulary. As a result mainstream economists always found Hutt hard to understand, and they passed him off as a bit strange if not a crank. Armen Alchian once told me (and many others) that Hutt's Theory of Idle Resources (1939) was the best work ever done on macroeconomics; yet, he said, is was very difficult to grasp. Dwight Lee tells me that he once tried to read the Theory of Idle Resources, but he gave it up because it was too difficult to learn Hutt's unique vocabulary.

This is a great loss to contemporary classical liberal economists. Hutt's approaches to theory and public policy would, if more widely read and understood, be of significant usefulness in promoting the principles of classical liberalism To that end I put together a conference on Hutt's economics which was sponsored by the Liberty Fund on Indianapolis, Indiana and held in Chattanooga, Tennessee, September 13-16, 2003.

The conference consisted of six sessions, each devoted to different aspects of Hutt's work. What follows are the topics of each session together with readings that I recommend for any who wish to study the topics.

I. Hutt's macroeconomics. He was one of the very few who, from the beginning, resisted the Keynesian onslaught.

Recommended reading: (1) Steven Horwitz, " WH Hutt on Price Rigidities and Economic Disorder," which is Chapter 6 in Horwitz's Microfoundations and Macroeconomics, New York: Routledge. 2000: 176-202.

(2) WH Hutt, The Keynesian Episode: A Reassessment, Indianapolis: Liberty Press, 1979: Chapters 3, 5, and 6.

II. Hutt's work on the economics of race relations. He was a precursor of Becker and Sowell.

Recommended reading: (1) WH Hutt, The Economics of the Colour Bar, London: Andre Deutsch, 1964: Chapters 1-3 and 18.

(2) Jennifer Roback, "Racism and Rent Seeking," Economic Inquiry, Volume 27, No 4, (1989).

(3) S Hugh High, "WH Hutt and Apartheid," Managerial and Decision Economics, Special Issue, Winter, 1988: 59-64.

III. Hutt on consumer sovereignty and competition policy. He coined the term "consumer sovereignty," and he explained in depth why it and control of monopoly practices are prerequisites to a properly functioning market economy.

Recommended reading: (1) WD Reekie, "Consumer Sovereignty Revisited," Managerial and Decision Economics, Special Issue, Winter, 1988: 17-25.

(2) Basil Yamey, "Professor Hutt on Monopoly Policy," Managerial and Decision Economics, Special Issue, Winter 1988: 27-31.

(3) WH Hutt, Economists and the Public, London: Jonathan Cape, 1936, Chapter 16

IV. Hutt on the role of economists in public policy. Hutt was very clear about what influence economists can and should have on public policy. His views apply now as much as they did when he wrote them.

Recommended reading: (1) WH, Hutt, Economists and the Public, London: Jonathan Cape, 1936: Chapters 1, 13, and 14..

(2) WH Hutt, Politically Impossible?, London: IEA, 1971: 1-27 and 55-99.

V. Hutt's labor economics. Hutt was clearly the most outspoken and vigorous foe of compulsory and monopoly unionism of the 20th century. His analysis of how labor markets work is especially clear and cogent.

Recommended reading: (1). WH Hutt, The Strike Threat System, New Rochelle, NY: Arlington House, 1973: Chapters 1, 3, 5 and 7.

CW Baird, "Equality FOR the Labor Market: An Appreciation of WH Hutt," Journal of Labor Research, Spring 1997: 239-264.

VI. Hutt's place in the history of economic ideas and classical liberalism. This will be a retrospective discussion on the meaning of Hutt's work.

Assigned reading: Morgan O. Reynolds, WH Hutt: An Economist for the Long Run, Chicago: Gateway Editions, 1986: 5-152.