Hayek's Hidden Critique of The General Theory
DOI:
https://doi.org/10.6000/1929-7092.2015.04.22Keywords:
Keynes, prices, business cycles, macroeconomic policy, unemploymentAbstract
Hayek is seen as one of the main opponents of Keynes because of the debate about macroeconomics that they had in the early thirties. A few years after this controversy, Keynes published The General Theory ([1936] 1973), and Hayek was expected to criticize Keynes' new model. But, surprisingly, Hayek decided to remain silent and let his opponent go unchallenged. He regretted it ever after. However, this paper argues that in Hayek's work after 1936, there is a criticism of The General Theory that to a certain extent has remained unnoticed. Thus, this approach reopens the great debate between Hayek and Keynes just where they had apparently left it, that is, after the publication of The General Theory.
References
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Cochran, John P. and Fred R. Glahe. 1999. The Hayek-Keynes Debate—Lessons for Current Business Cycle Research. New York: The Edwin Mellen Press.
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Garrison, Roger W. 1984. “Time and Money: The Universals of Macro¬economic Theorizing.” Journal of Macroeconomics 6(2): 197–213.
http://dx.doi.org/10.1016/0164-0704(84)90005-3
Haberler, Gottfried, 1945. “Some observations on the Murray Full Employment Bill”. Review of Economics and Statistics 27(3): 106-109.
http://dx.doi.org/10.2307/1928778
Hayek, Friedrich A. [1941] 1952. The Pure Theory of Capital. London: Routledge and Kegan Paul Ltd.
Hayek, Friedrich A. [1931] 1967a. Prices and Production. New York: Augustus M. Kelly Publishers.
Hayek, Friedrich A. [1950] 1967b. “Full Employment, Planning and Inflation.” Pp. 270-279 in Studies in Philosophy, Politics and Economics. Chicago: University of Chicago Press.
Hayek, Friedrich A. [1958] 1967c. “Inflation Resulting from the Downward Inflexibility of Wages.” Pp. 295-299 in Studies in Philosophy, Politics and Economics. Chicago: University of Chicago Press.
Hayek, Friedrich A. [1959] 1967d. “Unions, Inflation and Profits.” Pp. 280-294 in Studies in Philosophy, Politics and Economics. Chicago: University of Chicago Press.
Hayek, Friedrich A. [1937] 1971. Monetary Nationalism and International Stability. New York: Augustus M. Kelley.
Hayek, Friedrich A. [1939] 1975. “Profits, Interest and Investment.” Pp. 3-72 in Profits, Interest and Investment and other Essays on the Theory of Industrial Fluctuations. Clifton: Augustus M. Kelley.
Hayek, Friedrich A. [1966] 1978a. “Personal Recollections of Keynes and the ‘Keynesian Revo¬lution.’” Pp. 283- 289 in New Studies in Philosophy, Politics, Economics and the History of Ideas. Chicago: University of Chicago Press.
Hayek, Friedrich A. [1974] 1978b. “The Campaign against Keynesian Inflation.” Pp. 291-231 in New Studies in Philosophy, Politics, Economics and the History of Ideas. Great Chicago: University of Chicago Press.
Hayek, Friedrich A. [1936] 1980a. “Economics and Knowledge.” Pp. 33-58 in Individualism and Economic Order. Chicago: University of Chicago Press.
Hayek, Friedrich A. [1942] 1980b. “The Ricardo Effect.” Pp. 220-254 in Individualism and economic order. Chicago: University of Chicago Press.
Hayek, Friedrich A. [1945] 1980c. “The Use of Knowledge in Society.” Pp. 77-91 in Individualism and Economic Order. Chicago: University of Chicago Press.
Hayek, Friedrich A. [1946] 1980d. “The Meaning of Competition.” Pp. 92-106 in Individualism and Economic Order. Chicago: University of Chicago Press.
Hayek, Friedrich A. 1980. 1980s Unemployment and the Unions. The Distortion of Relative Prices by Monopoly in the Labour Market. London: Institute of Economic Affairs.
Hayek, Friedrich A. 1981. “The Flow of Goods and Services.” Unpublished manuscript.
Hayek, Friedrich A. [1988] 1991. The Fatal Conceit. The Errors of Socialism. Chicago: University of Chicago Press.
Hayek, Friedrich A. [1983] 1995. “The Keynes Centenary: The Austrian Critique.” In Contra Keynes and Cambridge: Essays, Correspondence, edited by B. Caldwell. London: Routledge.
http://dx.doi.org/10.7208/chicago/9780226321141.001.0001
Hayek, Friedrich A. [1944] 2009a. “Bad and Good Unemployment Policies.” Pp. 138-142 in A Tiger by the Tail. The Keynesian Legacy of Inflation, edited by S. R. Shenoy. Auburn, Ala.: Ludwig von Mises Institute and Institute of Economic Affairs.
Hayek, Friedrich A. [1944] 2009b. “Review of Sir William Beveridge, Full Employment in a Free Society.” Pp. 151-156 in A Tiger by the Tail. The Keynesian Legacy of Inflation, edited by S. R. Shenoy. Auburn, Ala.: Ludwig von Mises Institute and Institute of Economic Affairs.
Hayek, Friedrich A. [1946] 2009c. “Full Employment Illusions.” Pp. 142-151 in A Tiger by the Tail. The Keynesian Legacy of Inflation, edited by S. R. Shenoy. Auburn, Ala.: Ludwig von Mises Institute and Institute of Economic Affairs.
Hayek, Friedrich A. [1971] 2009d. “The Outlook for the 1970s: Open or Repressed Inflation?” pp. 113-119 in A Tiger by the Tail. The Keynesian Legacy of Inflation, edited by S. R. Shenoy. Alabama: Ludwig von Mises Institute and Institute of Economic Affairs.
Huerta de Soto, Jesús. [1998] 2002. Dinero, Crédito Bancario y Ciclos Económicos. Madrid: Unión Editorial.
Huerta de Soto, Jesús [1982] 2004. “Método y crisis de la Ciencia Económica”. Pp. 59-82 in Estudios de Economía política. Madrid: Unión Editorial.
Hutchinson, Terrence W. 1977. Keynes versus the ‘Keynesians’…? An Essay in the Thinking of J. M. Keynes and the Accuracy of its Interpretation by his Followers. Great Britain: The Institute of Economic Affairs
Keynes, John Maynard. [1932] 1995. “Letter from Keynes to Hayek, March 29, 1932.” Pp. 172-173 in Contra Keynes and Cambridge: Essays, Correspondence, edited by B. Caldwell. London: Routledge.
Keynes, John Maynard. [1933] 1982. “National Self-Sufficiency.” Pp. 233-246 in The Collected Writings of John Maynard Keynes. Vol. XXI: Activities 1931–1939. World Crisis and Policies in Britain and America, edited by D. Moggridge. London: Cambridge University Press.
Keynes, John Maynard. [1936] 1973. The General Theory of Employment, Interest and Money. In The Collected Writings of John Maynard Keynes. Vol. VII. London: St. Martin Press.
Keynes, John Maynard. [1937a] 1977. “How to Avoid a Slump”. Pp. 65-73 Keynes versus the ‘Keynesians’…? An Essay in the Thinking of J. M. Keynes and the Accuracy of its Interpretation by his Followers. Great Britain: The Institute of Economic Affairs
Keynes, John Maynard. [1937b] 1977. “Borrowing for Defense. Is it Inflation?”. Pp. 74-77 In Keynes versus the ‘Keynesians’…? An Essay in the Thinking of J. M. Keynes and the Accuracy of its Interpretation by his Followers. Great Britain: The Institute of Economic Affairs
McCormick, Brian. 1992. Hayek and the Keynesian Avalanche. London: Harvester Wheatsheaf.
Robinson, Austin. 1977. “A Comment”. Pp. 58-60 in Keynes versus the ‘Keynesians’…? An Essay in the Thinking of J. M. Keynes and the Accuracy of its Interpretation by his Followers. Great Britain: The Institute of Economic Affairs
Selgin, George. 1999. “Hayek vs. Keynes on How the Price Level Ought to Behave.” In F.A. Hayek: Critical Assessments of Leading Economists. Vol. III, edited by J. C. Wood and R. D. Wood. New York: Routledge.
Skidelsky, Robert. 2006. “Hayek vs. Keynes: The Road to Reconciliation.” In The Cambridge Companion to Hayek, edited by E. Feser. New York: Cambridge University Press.
http://dx.doi.org/10.1017/CCOL0521849772.006
Tadeu Lima, Gilberto. [2000] 2004. “Capital Controversy in the Birth of Macrotheory: The Hayek-Keynes Exchange in Retrospect.” In F.A. Hayek: Critical Assessments of Leading Economists. Vol IV, edited by J. C. Wood and Robert D. Wood. New York: Routledge.
Tieben, Bert. 1997. “Misunderstandings and Other Coordination Failures in the Hayek-Keynes Controversy.” In Austrian Economics in Debate, edited by Willem Keizer, Bert Tieben, and Rudy van Zijp. London and New York: Routledge.
Vecchi, Nicolò De. 2006. “Hayek and The General Theory”. In The European Journal of the History of Economic Thought.
Wapshott, Nicholas. [2011] 2013. Keynes vs Hayek. El choque que definió la economía moderna. España: Deusto
White, Lawrence H. [2012] 2014. El choque de ideas económicas. Los grandes debates de política económica de los últimos cien años. Barcelona: Antoni Bosch
Caldwell, Bruce. [1998] 2004. “Why Didn’t Hayek Review Keynes’s General Theory?”. Pp. 260-281 In F.A. Hayek: Critical Assessments of Leading Economists, vol. III, edited by J. C. Wood and R. D. Wood. New York: Routledge.
Cochran, John P. and Fred R. Glahe. 1999. The Hayek-Keynes Debate—Lessons for Current Business Cycle Research. New York: The Edwin Mellen Press.
Dillar, Dudley. [1948] 1949. The Economics of John Maynard Keynes. The Theory of a Monetary Economy. New York: Prentice-Hall.
Feito, José Luis. 1999. Hayek y Keynes: El Debate Económico de Entreguerras. La Polémica sobre las Causas y Remedios de las Recesiones. Madrid: Círculo de Empresarios.
Garrison, Roger W. 1984. “Time and Money: The Universals of Macro¬economic Theorizing.” Journal of Macroeconomics 6(2): 197–213.
http://dx.doi.org/10.1016/0164-0704(84)90005-3
Haberler, Gottfried, 1945. “Some observations on the Murray Full Employment Bill”. Review of Economics and Statistics 27(3): 106-109.
http://dx.doi.org/10.2307/1928778
Hayek, Friedrich A. [1941] 1952. The Pure Theory of Capital. London: Routledge and Kegan Paul Ltd.
Hayek, Friedrich A. [1931] 1967a. Prices and Production. New York: Augustus M. Kelly Publishers.
Hayek, Friedrich A. [1950] 1967b. “Full Employment, Planning and Inflation.” Pp. 270-279 in Studies in Philosophy, Politics and Economics. Chicago: University of Chicago Press.
Hayek, Friedrich A. [1958] 1967c. “Inflation Resulting from the Downward Inflexibility of Wages.” Pp. 295-299 in Studies in Philosophy, Politics and Economics. Chicago: University of Chicago Press.
Hayek, Friedrich A. [1959] 1967d. “Unions, Inflation and Profits.” Pp. 280-294 in Studies in Philosophy, Politics and Economics. Chicago: University of Chicago Press.
Hayek, Friedrich A. [1937] 1971. Monetary Nationalism and International Stability. New York: Augustus M. Kelley.
Hayek, Friedrich A. [1939] 1975. “Profits, Interest and Investment.” Pp. 3-72 in Profits, Interest and Investment and other Essays on the Theory of Industrial Fluctuations. Clifton: Augustus M. Kelley.
Hayek, Friedrich A. [1966] 1978a. “Personal Recollections of Keynes and the ‘Keynesian Revo¬lution.’” Pp. 283- 289 in New Studies in Philosophy, Politics, Economics and the History of Ideas. Chicago: University of Chicago Press.
Hayek, Friedrich A. [1974] 1978b. “The Campaign against Keynesian Inflation.” Pp. 291-231 in New Studies in Philosophy, Politics, Economics and the History of Ideas. Great Chicago: University of Chicago Press.
Hayek, Friedrich A. [1936] 1980a. “Economics and Knowledge.” Pp. 33-58 in Individualism and Economic Order. Chicago: University of Chicago Press.
Hayek, Friedrich A. [1942] 1980b. “The Ricardo Effect.” Pp. 220-254 in Individualism and economic order. Chicago: University of Chicago Press.
Hayek, Friedrich A. [1945] 1980c. “The Use of Knowledge in Society.” Pp. 77-91 in Individualism and Economic Order. Chicago: University of Chicago Press.
Hayek, Friedrich A. [1946] 1980d. “The Meaning of Competition.” Pp. 92-106 in Individualism and Economic Order. Chicago: University of Chicago Press.
Hayek, Friedrich A. 1980. 1980s Unemployment and the Unions. The Distortion of Relative Prices by Monopoly in the Labour Market. London: Institute of Economic Affairs.
Hayek, Friedrich A. 1981. “The Flow of Goods and Services.” Unpublished manuscript.
Hayek, Friedrich A. [1988] 1991. The Fatal Conceit. The Errors of Socialism. Chicago: University of Chicago Press.
Hayek, Friedrich A. [1983] 1995. “The Keynes Centenary: The Austrian Critique.” In Contra Keynes and Cambridge: Essays, Correspondence, edited by B. Caldwell. London: Routledge.
http://dx.doi.org/10.7208/chicago/9780226321141.001.0001
Hayek, Friedrich A. [1944] 2009a. “Bad and Good Unemployment Policies.” Pp. 138-142 in A Tiger by the Tail. The Keynesian Legacy of Inflation, edited by S. R. Shenoy. Auburn, Ala.: Ludwig von Mises Institute and Institute of Economic Affairs.
Hayek, Friedrich A. [1944] 2009b. “Review of Sir William Beveridge, Full Employment in a Free Society.” Pp. 151-156 in A Tiger by the Tail. The Keynesian Legacy of Inflation, edited by S. R. Shenoy. Auburn, Ala.: Ludwig von Mises Institute and Institute of Economic Affairs.
Hayek, Friedrich A. [1946] 2009c. “Full Employment Illusions.” Pp. 142-151 in A Tiger by the Tail. The Keynesian Legacy of Inflation, edited by S. R. Shenoy. Auburn, Ala.: Ludwig von Mises Institute and Institute of Economic Affairs.
Hayek, Friedrich A. [1971] 2009d. “The Outlook for the 1970s: Open or Repressed Inflation?” pp. 113-119 in A Tiger by the Tail. The Keynesian Legacy of Inflation, edited by S. R. Shenoy. Alabama: Ludwig von Mises Institute and Institute of Economic Affairs.
Huerta de Soto, Jesús. [1998] 2002. Dinero, Crédito Bancario y Ciclos Económicos. Madrid: Unión Editorial.
Huerta de Soto, Jesús [1982] 2004. “Método y crisis de la Ciencia Económica”. Pp. 59-82 in Estudios de Economía política. Madrid: Unión Editorial.
Hutchinson, Terrence W. 1977. Keynes versus the ‘Keynesians’…? An Essay in the Thinking of J. M. Keynes and the Accuracy of its Interpretation by his Followers. Great Britain: The Institute of Economic Affairs
Keynes, John Maynard. [1932] 1995. “Letter from Keynes to Hayek, March 29, 1932.” Pp. 172-173 in Contra Keynes and Cambridge: Essays, Correspondence, edited by B. Caldwell. London: Routledge.
Keynes, John Maynard. [1933] 1982. “National Self-Sufficiency.” Pp. 233-246 in The Collected Writings of John Maynard Keynes. Vol. XXI: Activities 1931–1939. World Crisis and Policies in Britain and America, edited by D. Moggridge. London: Cambridge University Press.
Keynes, John Maynard. [1936] 1973. The General Theory of Employment, Interest and Money. In The Collected Writings of John Maynard Keynes. Vol. VII. London: St. Martin Press.
Keynes, John Maynard. [1937a] 1977. “How to Avoid a Slump”. Pp. 65-73 Keynes versus the ‘Keynesians’…? An Essay in the Thinking of J. M. Keynes and the Accuracy of its Interpretation by his Followers. Great Britain: The Institute of Economic Affairs
Keynes, John Maynard. [1937b] 1977. “Borrowing for Defense. Is it Inflation?”. Pp. 74-77 In Keynes versus the ‘Keynesians’…? An Essay in the Thinking of J. M. Keynes and the Accuracy of its Interpretation by his Followers. Great Britain: The Institute of Economic Affairs
McCormick, Brian. 1992. Hayek and the Keynesian Avalanche. London: Harvester Wheatsheaf.
Robinson, Austin. 1977. “A Comment”. Pp. 58-60 in Keynes versus the ‘Keynesians’…? An Essay in the Thinking of J. M. Keynes and the Accuracy of its Interpretation by his Followers. Great Britain: The Institute of Economic Affairs
Selgin, George. 1999. “Hayek vs. Keynes on How the Price Level Ought to Behave.” In F.A. Hayek: Critical Assessments of Leading Economists. Vol. III, edited by J. C. Wood and R. D. Wood. New York: Routledge.
Skidelsky, Robert. 2006. “Hayek vs. Keynes: The Road to Reconciliation.” In The Cambridge Companion to Hayek, edited by E. Feser. New York: Cambridge University Press.
http://dx.doi.org/10.1017/CCOL0521849772.006
Tadeu Lima, Gilberto. [2000] 2004. “Capital Controversy in the Birth of Macrotheory: The Hayek-Keynes Exchange in Retrospect.” In F.A. Hayek: Critical Assessments of Leading Economists. Vol IV, edited by J. C. Wood and Robert D. Wood. New York: Routledge.
Tieben, Bert. 1997. “Misunderstandings and Other Coordination Failures in the Hayek-Keynes Controversy.” In Austrian Economics in Debate, edited by Willem Keizer, Bert Tieben, and Rudy van Zijp. London and New York: Routledge.
Vecchi, Nicolò De. 2006. “Hayek and The General Theory”. In The European Journal of the History of Economic Thought.
Wapshott, Nicholas. [2011] 2013. Keynes vs Hayek. El choque que definió la economía moderna. España: Deusto
White, Lawrence H. [2012] 2014. El choque de ideas económicas. Los grandes debates de política económica de los últimos cien años. Barcelona: Antoni Bosch
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Published
2015-12-14
How to Cite
Sanz, D., & Morillo, J. (2015). Hayek’s Hidden Critique of The General Theory. Journal of Reviews on Global Economics, 4, 212–224. https://doi.org/10.6000/1929-7092.2015.04.22
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Special Issue - Hayek, Keynes and the Crisis: Analyses and Remedies. An Introduction
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