"I started as a Keynesian, and I am still one—which is not to say that I have not learned. The crude, as we sometimes say, hydraulic Keynesianism of the early postwar period certainly needed improvement. And I’ll even say how and where. The foundation of what we think of as Keynesian economics— and you understand that I’m not at all concerned with what Keynes really meant, I am talking about American Keynesianism—was built on the observation that, over the business cycle, prices are slow variables and quantities are fast variables. If you pick up any elementary text, if the market is in disequilibrium, the reflex reaction is that when demand is in excess, prices will rise and that will eliminate the excess demand. And if there is excess supply, prices will fall and that will eliminate the excess supply as consumers buy more. Then you go on to ask what kinds of institutions—monopoly, regulation, cartelism, whatever—will prevent that adjustment from taking place. But the first thing you think of is prices."