The Failure of the New Economics

Features

• Cover Type: Paperback with 451 pages
• Published by: Ludwig von Mises Institute
• Edition: 1st Edition March 2, 2007
• Written in: English
• ISBN 10 Number: 1933550112
• ISBN 13 Number: 978-1933550114
• Book Dimensions: 8.4 x 5.5 x 1.2 inches
• Weighs: 1.4 pounds

Product Description
Henry Hazlitt did the seemingly impossible, something that was and is a awesome service to all people everywhere. He wrote a line-by-line commentary and refutation of one of the most destructive, fallacious, and convoluted books of the century. The target here is John Maynard Keynes's General Theory, the book that appeared in 1936 and swept all before it.

In economic science, Keynes changed everything. He supposedly demonstrated that prices don't work, that private investment is unstable, that sound money is intolerable, and that government was needed to shore up the system and save it. It was simply amazing how economists the world over put up with this, but it happened. He converted a whole generation in the late period of the Great Depression. By the 1950s, almost everyone was Keynesian.

But Hazlitt, the nation's economics teacher, would have none of it. And he did the hard work of actually going through the book to evaluate its logic according to Austrian-style logical reasoning. The result: a 500-page masterpiece of exposition.

Murray Rothbard was blown away.

Reader Reviews
Henry Hazlitt critiqued Keynes at a time when Keynesian ideas dominated professional opinion (1959). Hazlitt lacked credentials as an economist, but he still weighed in with an effective critique of Keynes. First of all, Hazlitt makes the historical point that the ideas attributed to Keynes were largely not original to Keynes. While it is true that Keynes was involved in the development and popularization of what came to be known as Keynesian economics, the fact of the matter is that other economists published similar ideas years before Keynes, and aggregate demand type explanations of The Great Depression were already widely known and well on the way to broad acceptance. Hazlitt also defends the idea that excessively high wages are the primary cause of unemployment, and rightly so. A recent study by two UCLA economists confirms that Great Depression unemployment was driven by excessively high wages. Hazlitt also picks apart the details of Keynes theoretical arguments, and defends Say's Law of Markets. Hazlitt further points out the absurdity of Keynes' contention that capital can be made abundant, so the marginal efficiency of capital can go to zero. Hazlitt also notes that Keynes advocated ultimate policies that would result in socialism (i.e. the euthanasia of the rentier and the socialization of investment). Hazlitt pointed to serious deficiencies in Keynes' so called General Theory. In doing so he was ahead of the trend among professional economists, who rejected Keynesian economics in the late sixties and early seventies. Nowadays there is less need for a critique of Keynes actual writings, because his "General" theory is seldom read, even by professional economists. Consequently, Hazlitt's book may fall into obscurity. Yet it is important to note that Hazlitt was able to critique Keynesian ideas simply from having familiarized himself with proper economic concepts (i.e. by reading Mises and Hayek). The Failure of the New Economics is at this point primarily for those interested in history.