To commemorate the 100th anniversary of his birthday, the Swiss National Bank started the Karl Brunner Distinguished Lecture Series in 2016.
In his interview with Arjo Klamer, he notably claimed that: "the basic tenet of monetarism is the reassertion of the relevance of price theory to understand what happens in aggregate economics.
This particular conception of monetarism seems closely related to Brunner’s experience at UCLA: "Most distressing was moreover the encounter with a group of economists systematically applying economic analysis (i.e. price theory) to social problems of our world.
The permanent discussion with a subtle mind (Armen A. Alchian), the impact of a lucid philosopher of science (Reichenbach), and the good fortune of questioning and determined students (Allan H. Meltzer, Tibor Fabian, later on Jerry Jordan and others) dispersed the intellectual fogs and gradually structured my thinking about economics and its role in our endeavour to understand the world" (Brunner 1980, p. 403).
These groups bear on descriptions of the transmission mechanism, the dynamic properties of the private sector, the dominance and nature of the monetary impulses and the separation of aggregate and allocative forces" (Brunner 1970, p. 2).
In the above quotation, as well as in other accounts of the main propositions characterizing monetarism, Karl Brunner systematically mentioned the transmission mechanism of monetary policy first.
According to Brunner and Allan Meltzer (1976), a monetarist transmission mechanism is such that "changes in money modify relative prices and initiate a process of substitution that spreads to the markets for existing capital securities, loans and current output" (p. 97).
He actually perceived the transmission mechanism as "a suitable application of relative price theory" to explain output and employment fluctuations (Brunner 1968, p. 18).
Thus "the nature of the monetary order and not the specific actions within a discretionary regime emerged in recent years as the central issue of a more fundamental policy problem" (p. 188).
With full information and in the absence of any transaction costs there is no reason for the occurrence of money, on financial intermediaries and no rationale for many other social institutions...
Under this hypothesis, "people are assumed to know the policy rule used by the monetary (and fiscal) authorities and to have detailed knowledge about the structure of the economy including the size and timing of responses to shocks of various kinds.
A second criticism addressed by Brunner to NCM concerns the intertemporal concept of equilibrium: "I also have strong reservations about crucial aspects of their 'equilibrium approach' " (Klamer 1984, p. 191).
There evolved a gradual understanding that economic analysis offers a systematic approach to the whole range of sociopolitical reality" (Brunner 1984, p. 404).
Brunner further stressed the impossibility of ever obtaining definitive confirmation of any general theory from a finite array of empirical evidence.
At the same time, "it is, however, important to emphasise that actual refutation by a falsifying test statement is a necessary but far from sufficient reason to reject a theory.
Karl Brunner also developed an evolutionary approach of the economic agent (notably inspired by the seminal paper of Armen Alchian (1950)).
According to Brunner (1987), "Resourcefulness, evaluating and maximizing behavior possess a common basis... (for which) the individual is born with a biological and genetic heritage" (p. 371).