348 47. The IS-LM diagram Warren Young Whether the IS-LM diagram has been praised as ‘the core of modern macroeconomics’, vilified as ‘bastard Keynesianism’, or utilized as a common analytical device for debate between ‘fiscalists’ and ‘monetar- ists’, it has been at the forefront of economic discourse from the late 1930s onwards. In this survey, I focus on the origin of the diagram in its CC-LL (Hicks, 1936) and IS-LL (Hicks, 1937) vintages. I then proceed to deal with the cardinal difference in derivation between Hicks’s IS-LL (1937) and Hansen’s IS-LM diagrams (1949). Finally, the impact of the diagram on interpretations and representations of Keynes’s General Theory is assessed. Extensions to the diagram are also dealt with in the closed- economy context; the open-economy setting of the diagram will be dealt with in chapter 48. HICKS’S SEPTEMBER 1936 CONFERENCE DIAGRAM Hicks’s account of the genesis of his 1937 diagram is that it emanates directly from the use of his ‘Value and Capital methods’ of reducing a three equation system into two, and the concomitant diagrammatic repre- sentation of these resultant equations (Young, 1987, 98–102). While other ways of generating the diagram have been described elsewhere (Young, 1987, 94–97), for our purpose here, Hicks’s account is taken at face value, as he only claimed ‘responsibility’ for the IS-LL diagram, and not the equations now considered to be ‘IS-LM’ (Young, 1987). But there is a version of his diagram that predates the 1937 IS-LL diagram. This version – the CC-LL diagram – was presented by Hicks himself on the morning of 26 September 1936 at the ‘symposium on Keynes’, at which Harrod and Meade also presented their interpretations of Keynes’s system. It should be recalled here that as Hicks himself wrote to Meade, in his own conference paper, he borrowed Harrod’s equations and Meade’s notation, and would have to produce his own paper ‘out of M2364 - BLAUG PRINT.indd 348 6/7/10 15:14:41