People who believe that the government must manage the economy have been crowing about the “return” of John Maynard Keynes. Supposedly, now that federal policy makers have seen the light, they won’t go back to those silly old ideas about the efficiency of competitive markets and scurrilous public choice arguments on how poorly the political system works.
And there are still a few people who think that Keynes was a great intellectual fraud and his theories utter bunk. Here is a splendid letter in today’s Wall Street Journal praising two books that tear Keynes limb from limb.
Nothing to Lose But Our Keynes
In his review of “Keynes: The Return of the Master” (Bookshelf, Sept. 21), N. Gregory Mankiw says that the author, Robert Skidelsky, “fails to give Keynes’s intellectual opponents their due.” The best evidence of this is not Mr. Skidelsky’s treatment of the economist Robert Lucas, but rather the fact that he makes no mention of two of the most devastating critiques of Keynesian economics ever written: “The Failure of the ‘New Economics,’ ” by Henry Hazlitt, and “Keynesianism?Retrospect and Prospect,” by W. H. Hutt. (Mr. Skidelsky’s bibliography and index list neither Hazlitt nor Hutt.)
Hazlitt’s book is virtually a page-by-page refutation of John Maynard Keynes’s most famous work, “The General Theory of Employment, Interest and Money,” and both books show considerable prescience with regard to the stagflation that emerged in the 1970s as a result of Keynesian policies.
Before policy makers return to “the master” to fix our current economic problems, they should re-examine why Keynes’s ideas were abandoned in the first place, and recall Aldous Huxley’s observation that “facts do not cease to exist because they are ignored.”
John C. Webb
Columbus, Ohio