” Whatever one may think of Keynes as an economist, nobody who knew him will deny that he was one of the outstanding Englishmen of his generation. Indeed, the magnitude of his influence as an economist is probably as much due to the impressiveness of the man, the universality of his interests, and the power and persuasive charm of his personality as to the originality or theoretical soundness of his contribution to economics… As a scholar he was incisive rather than profound and thorough, guided by strong intuition which would make him try to prove the same point again and again by different routes.” F.A. Hayek, ‘Review of Harrod’s Life of Keynes in The Journal of Modern History June 1952
“It may be doubted whether ‘his flair for global estimates which, not least due to his influence, has now become the fashion, and his general habit of thinking in terms of aggregates and averages, have been beneficial to the understanding of economic phenomena. Economic activity is not guided by such totals but always by relations between different magnitudes, and the practice of always thinking in ‘global’ totals can be most misleading.” F.A. Hayek, ibid.
“The main reproach to which Keynes laid himself open was that he presented as a ‘General Theory’ what was essentially a tract for his times. It was the successful one of repeated attempts he made to justify his practical inclinations by theoretical argument. It succeeded partly because it provided a highly sophisticated support for demands which are always popular in times of depression and partly because it was expressed in a form congenial to the scientific fashions of the moment. Yet it was based on assumptions even more unrealistic than those Keynes ascribed to what he called classical economics. If it was a defect of the latter that it assumed for a first approach that there existed no reserves of unused resources, Keynes was even more unrealistic in assuming that there existed always ample reserves of all resources. In short he assumed away that scarcity of resources which is the root of all our economic problems.” F.A. Hayek, ‘Symposium on Keynes: Why?’ The Christian Science Monitor, September 1959
“Keynes was not a highly trained or a very sophisticated economic theorist. He started from a rather elementary Marshallian economics and what had been achieved by Walras and Pareto, the Austrians, the Swedes, was very much a closed book to him. I have reason to doubt whether he ever fully mastered the theory of international trade; I don’t think he had ever thought systematically on the theory of capital, and even in the theory of the value of money his starting point – and later the object of his criticism – appears to have been a very simple, equation-of-exchange-type of the quantity theory rather than the much more sophisticated cash-balances approach of Alfred Marshall.” F.A. Hayek, ‘Personal Recollections of Keynes and the Keynesian Revolution’, The Oriental Economist, January 1966.
“He was so many-sided that when one came to estimate him as a man it seemed almost irrelevant that one thought his economics to be both false and dangerous. If one considers how small a share of his time and energy he gave to economics, his influence on economics and the fact that he will be remembered chiefly as an economist is both miraculous and tragic.” F.A. Hayek, ibid.
“It will not be easy for future historians to account for the fact that, for a generation after the untimely death of Maynard Keynes, opinion was so completely under the sway of what was regarded as Keynesianism, in a way that no single man had ever before dominated economic policy and development. Nor will it be easy to explain why these ideas rather suddenly went out of fashion, leaving behind a somewhat bewildered community of economists who had forgotten much that had been fairly well understood before the ‘Keynesian Revolution’. There can be no doubt that it was in Keynes’ name and on the basis of his theoretical work that the modern world has experienced the longest period of general inflation, and has now again to pay for it by a widespread and severe depression.” F.A. Hayek, ‘The Keynes Centenary: The Austrian Critique’, The Economist, June 11, 1983
“I am afraid this obliges me to say frankly that I still have no doubt that Maynard Keynes was neither a full master of the body of economic theory then available, nor really cared to acquaint himself with any development which lay outside the Marshallian tradition which he had learnt during the second half of his undergraduate years at Cambridge.” F.A.Hayek, ibid.
Maynard Keynes once again stalks the corridors of power both in the United Kingdom and in the United States. It is completely unsurprising, therefore, that these two countries are the very last to stagger ouf of the financial crisis and economic contraction of 2008. I predict with considerable confidence that these two countries will also be the worst affected by significant stagflation throughout the coming decade.
“Practical men, who believe themselves to be quite exempt from any intellectual influences, are usually the slaves of some defunct economist. Madmen in authority, who hear voices in the air, are distilling their frenzy from some academic scribbler of a few years back. I am sure that the power of vested interests is vastly exaggerated compared with the gradual encroachment of ideas. Not, indeed, immediately, but after a certain interval; for in the field of economic and political philosophy there are not many who are influenced by new ideas after they are twenty-five or thirty years of age, so that the ideas which civil servants and politicians and even agitators apply to current events are not likely to be the newest. But, soon or late, it is ideas, not vested interests, which are dangerous for good or evil.” J.M. Keynes, The General Theory of Employment, Interest, and Money, 1936.