Josef Herbert Fürth: Review of J. Zijlstra’s De Omloopssnelheid van het Geld en zijn Betekenis voor Geldwaarde en Monetair Evenwicht (1957)

Josef Herbert Fürth’s review assesses the 1955 second edition of J. Zijlstra’s study of monetary velocity, purchasing power, and monetary equilibrium. Its central judgment is qualified: Zijlstra offers a logically sound clarification of neoclassical monetary concepts, but leaves their empirical foundations and practical policy significance insufficiently developed. Fürth distinguishes the book’s value as a critical reconstruction of earlier theory from the work still needed to make that theory relevant to contemporary economic analysis.

The review first traces Zijlstra’s argument through its principal intellectual sources. Beginning with M. W. Holtrop, the book examines the circular flow of money, the objective and subjective determinants of velocity, and the relationship between the circulation of money and goods, drawing particularly on Arthur W. Marget. It then considers purchasing power through alternative formulations of the quantity theory, Cambridge criticisms—including Keynes’s—and the responses of Howard Ellis and Marget. This structure makes velocity a point of connection between monetary circulation, price determination, and competing explanations of economic activity.

The final part turns to monetary equilibrium. Fürth describes its scope as relatively restricted: beyond a critique of F. A. Hayek’s neutral money, Zijlstra mainly outlines how changes in the determinants of velocity affect the monetary flow, MV, following Hans Neisser and J. G. Koopmans. The distinction between analytical concepts and policy objectives is nevertheless important:

He comments on the various meanings of the concept of monetary equilibrium (stabilization of MV or of the price level) and states that this concept is a tool of monetary analysis rather than a goal of monetary policy.

Here “equilibrium” does not designate an unambiguous condition that authorities should simply pursue. Stabilizing monetary expenditure and stabilizing prices represent different meanings of the term. Fürth’s account credits Zijlstra with identifying that ambiguity, while indicating that the discussion remains more schematic than practically developed.

The review then shifts from exposition to methodological criticism. Fürth regards the book chiefly as a restatement of neoclassical thought, rather than an attempt to solve monetary theory’s fundamental problems through original contributions. His objection concerns neither elementary reasoning nor the plausibility of the assumptions alone, but the absence of evidence supporting them:

He draws logically correct conclusions from reasonable and simple assumptions of basic economic relations, without trying to justify these assumptions by presenting statistical or other factual material.

Logical coherence therefore does not establish empirical adequacy. Fürth sharpens this criticism by pointing to the omission of postwar national accounting and flow-of-funds studies. An omission understandable in the first edition of 1947 is harder to justify in the revised edition, especially given Dutch advances in monetary national accounting associated with Jan Tinbergen and the Netherlands Bank under Holtrop. The book’s historical reconstruction fails to engage developments that could connect its concepts to observable monetary flows.

The decisive practical omission concerns the transmission of monetary policy:

The author also fails to deal with the basic problem that makes the concept of V important for the practical application of monetary policy: Many if not most of the tools of traditional monetary policy (e.g., open-market operations and changes in reserve requirements), while aiming at influencing MV, have a direct and immediate effect only upon the stock of money (M); therefore, V is the most essential element in transforming the effect upon M into effects upon MV and perhaps further into effects upon the flow of goods.

Velocity matters because changing the money stock does not by itself establish the resulting change in monetary expenditure, much less in goods flows. Fürth thus identifies a policy problem that conceptual clarification should help resolve, but which Zijlstra does not adequately address. His concluding appraisal remains favorable: the study recovers neglected contributions and clarifies velocity, preparing the way for a reformulation of monetary theory responsive to economic reality and the renewed importance of monetary policy. Its achievement is preparatory, not a completed integration of theory, evidence, and policy.