‘…the Keynesian revolution was insignificant from the point of view of the history of ideas.’ - Jörg Guido Hülsmann

Posted by ProjectC 
‘…the Keynesian revolution was insignificant from the point of view of the history of ideas.’

<blockquote>'Mises did not comment on Keynes’s General Theory when it appeared in 1936. He reacted only when the Keynesian movement came into full swing and elevated the British economist to the status of a guru of the profession. In Mises’s eyes, the Keynesian revolution was insignificant from the point of view of the history of ideas. Keynes had not brought forth a single new doctrine. Even his major fallacies were old and had been refuted hundreds of times. The proper way to deal with Keynesianism, therefore, was to consider it from a sociological point of view. In 1948, Mises wrote:

For a correct appraisal of the success which Keynes’ General Theory found in academic circles, one must consider the conditions prevailing in university economics during the period between the two world wars. Among the men who occupied the chairs of economics in the last few decades, there have been only a few genuine economists, i.e., men fully conversant with the theories developed by modern subjective economics. The ideas of the old classical economists, as well as those of the modern economists, were caricatured in the textbooks and in the classrooms; they were called such names as old-fashioned, orthodox, reactionary, bourgeois, or Wall Street economics. The teachers prided themselves on having refuted for all times the abstract doctrines of Manchesterism and laissez-faire.

Two years later, he added:

The great [classical] economists were harbingers of new ideas. The economic policies they recommend were at variance with the policies practiced by contemporary governments and political parties. As a rule many years, even decades, passed before public opinion accepted the new ideas as propagated by the economists, and before the required corresponding changes in policies were effected. It was different with the “new economics” of Lord Keynes. The policies he advocated were precisely those which almost all governments, including the British, had already adopted many years before his “General Theory” was published. Keynes was not an innovator and champion of new methods of managing economic affairs. His contribution consisted rather in providing an apparent justification for the policies which were popular with those in power in spite of the fact that all economists viewed them as disastrous. His achievement was a rationalization of the policies already practiced.'

- Jörg Guido Hülsmann, The Last Knight (pdf), page 717 & 718 (context)