 First edition | |
| Author | Henry Hazlitt |
|---|---|
| Country | United States |
| Language | English |
| Subject | Economics |
| Publisher | Van Nostrand |
Publication date | 1959 |
| Pages | 458 pp. |
| OCLC | 264550952 |
The Failure of the "New Economics" subtitled An Analysis of The Keynesian Fallacies, (1959) is a book by Henry Hazlitt offering a detailed critique of John Maynard Keynes' work The General Theory of Employment, Interest and Money (1936).
Hazlitt's critical analysis of The General Theory Hazlitt embarked on this project because, in his view, although general critiques of Keynes and The General Theory had been made, no critic had completed a detailed analysis of the work. [1]
The Failure of the "New Economics" sold well but did not have a large impact on the general public or academia. [2] Economic professor Louis Hacker, writing in The New York Times , called Hazlitt's efforts to debunk Keynes a "heroic and perhaps even a Sisyphean task...Mr. Hazlitt, for his part, has written a technical book which is not obscure—although it is difficult reading" and predicted that Hazlitt will be attacked for his book. Hacker ended his review by stating: "Mr. Hazlitt nails his colors to the mast...If, here and there, he exaggerates and claims too much, his polemics are all to the good. He has written a very important book." [3] In 1959, the New York Times Book Review included The Failure of the "New Economics" in its list of "250 Outstanding Books Published in the Past Year." [4]
Austrian economist Ludwig von Mises called it "a devastating criticism of the Keynesian doctrines." [5] Gene Epstein referred to it as a "fantastic read, a lucid, lively, obsessive dissection of the most influential and most overrated economics book of this century: The General Theory of Employment, Interest and Money...A must-read for economists and laymen alike." [6] A review in the New York University Law Review stated: "Henry Hazlitt has shown the work of John Maynard Keynes to be irresponsible, obscurantist, and often simply silly...No one who reads The Failure of the "New Economics" can henceforward take seriously the doctrines associated with the name of Keynes." [7]
A review in the Labor Law Journal noted that The Failure of the "New Economics" "subjects Keynes's celebrated work to a penetrating critical analysis, chapter by-chapter and theorem-by-theorem." [8] A review in Challenge stated: "It is, of course, true that Keynes' ideas have been accepted too uncritically by many economists, and Hazlitt's well-written book should go far toward dispelling such unquestioning acceptance" but that Hazlitt failed to recognize that allowing depressions to "'grind themselves out' in the 'long run' will no longer be tolerated." [9] A review in the Italian journal Giornale degli Economisti e Annali di Economia hoped new opinions like the ones expressed in The Failure of the "New Economics" will help change traditional economic theories promulgated by universities. [10] The Journal of Demographic Economics (originally named the Louvain Economic Review in English) called The Failure of the "New Economics" an "important work...The author analyzes in detail different chapters of the General Theory and highlights the major weaknesses of the ideas that are developed there. This study leads...to a condemnation of Keynesian principles of economic policy." [11]
Keynesian economist Kenneth K. Kurihara wrote that The Failure of the "New Economics" "reflected the critical and hostile attitude of American business circles toward Keynesian analysis and policy." [12]
A review in the Economic Record was critical of Hazlitt's comprehension of demand curves, elasticities, and multipliers and wrote: "[Hazlitt] flattered himself that he could turn mathematical purblindness into a virtue...It is a pity, because the author certainly writes in a vigorous, somewhat sardonic, style of his own...the author is apt to light his rockets at the wrong end. Thus the audience, instead of being treated to some really illuminating fireworks, is merely smothered by stifling clouds of acrid dust." [13]
Reviewer Joseph McKenna, writing in the American Economic Review , commented that while the General Theory is "far from perfect" Hazlitt "does little to improve matters." McKenna stated that Hazlitt failed to clear up the ambiguities in definitions from the General Theory and ignores the fact that the General Theory applies only in conditions of unemployment. Furthermore, McKenna criticizes Hazlitt's positions on mathematical formulas, aggregation, and depressions and writes: "Although Hazlitt clears up many minor points in the General Theory, his analysis of the major ones is completely unsatisfactory." [14]
Post-Keynesian economist Abba P. Lerner criticized Hazlitt for his assumption of a world with full employment where wages rates are permitted to fall during a depression. Lerner also criticized Hazlitt for "missing some of the basic elements of the Keynesian analysis" such as failing to distinguish between thrift and savings and his interpretation of Say's law. [15]
Keynesian economics are the various macroeconomic theories and models of how aggregate demand strongly influences economic output and inflation. In the Keynesian view, aggregate demand does not necessarily equal the productive capacity of the economy. Instead, it is influenced by a host of factors – sometimes behaving erratically – affecting production, employment, and inflation.
John Maynard Keynes, 1st Baron Keynes was an English economist and philosopher whose ideas fundamentally changed the theory and practice of macroeconomics and the economic policies of governments. Originally trained in mathematics, he built on and greatly refined earlier work on the causes of business cycles. One of the most influential economists of the 20th century, he produced writings that are the basis for the school of thought known as Keynesian economics, and its various offshoots. His ideas, reformulated as New Keynesianism, are fundamental to mainstream macroeconomics.
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Henry Stuart Hazlitt was an American journalist who wrote about business and economics for such publications as The Wall Street Journal, The Nation, The American Mercury, Newsweek, and The New York Times.
Paul Anthony Samuelson was an American economist who was the first American to win the Nobel Memorial Prize in Economic Sciences. When awarding the prize in 1970, the Swedish Royal Academies stated that he "has done more than any other contemporary economist to raise the level of scientific analysis in economic theory". Economic historian Randall E. Parker has called him the "Father of Modern Economics", and The New York Times considers him to be the "foremost academic economist of the 20th century".
The Stockholm School is a school of economic thought. It refers to a loosely organized group of Swedish economists that worked together, in Stockholm, Sweden primarily in the 1930s.
The General Theory of Employment, Interest and Money is a book by English economist John Maynard Keynes published in February 1936. It caused a profound shift in economic thought, giving macroeconomics a central place in economic theory and contributing much of its terminology – the "Keynesian Revolution". It had equally powerful consequences in economic policy, being interpreted as providing theoretical support for government spending in general, and for budgetary deficits, monetary intervention and counter-cyclical policies in particular. It is pervaded with an air of mistrust for the rationality of free-market decision making.
Economics in One Lesson is an introduction to economics written by Henry Hazlitt and first published in 1946. It is based on Frédéric Bastiat's essay Ce qu'on voit et ce qu'on ne voit pas.
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Abraham "Abba" Ptachya Lerner was a Russian-born American-British economist.
Alvin Harvey Hansen was an American economist who taught at the University of Minnesota and was later a chair professor of economics at Harvard University. Often referred to as "the American Keynes", he was a widely read popular author on economic issues, and an influential advisor to the government on economic policy. Hansen helped create the Council of Economic Advisors and the Social Security system. He is best remembered today for introducing Keynesian economics in the United States in the 1930s and 40s.
The permanent income hypothesis (PIH) is a model in the field of economics to explain the formation of consumption patterns. It suggests consumption patterns are formed from future expectations and consumption smoothing. The theory was developed by Milton Friedman and published in his A Theory of Consumption Function, published in 1957 and subsequently formalized by Robert Hall in a rational expectations model. Originally applied to consumption and income, the process of future expectations is thought to influence other phenomena. In its simplest form, the hypothesis states changes in permanent income, rather than changes in temporary income, are what drive changes in consumption.
The neoclassical synthesis (NCS), neoclassical–Keynesian synthesis, or just neo-Keynesianism was a neoclassical economics academic movement and paradigm in economics that worked towards reconciling the macroeconomic thought of John Maynard Keynes in his book The General Theory of Employment, Interest and Money (1936). It was formulated most notably by John Hicks (1937), Franco Modigliani (1944), and Paul Samuelson (1948), who dominated economics in the post-war period and formed the mainstream of macroeconomic thought in the 1950s, 60s, and 70s.
Paul Davidson is an American macroeconomist who has been one of the leading spokesmen of the American branch of the post-Keynesian school in economics. He is a prolific writer and has actively intervened in important debates on economic policy from a position critical of mainstream economics.
Axel Leijonhufvud was a Swedish economist and professor emeritus at the University of California, Los Angeles (UCLA), and professor at the University of Trento, Italy. Leijonhufvud focused his studies on macroeconomic monetary theory. In his defining book On Keynesian Economics and the Economics of Keynes (1968) he focuses on a critique of the interpretation of Keynesian economic theory by Keynesian economists. He goes on to call the standard neoclassical synthesis interpretation of the Keynes' General Theory as having misunderstood and misinterpreted Keynes. In one of his papers, "Life Among the Econ" (1973), he takes a comical yet critical look at the inherent clannish nature of economists; the paper was considered a devastating takedown of economics and economists.
The Keynesian Revolution was a fundamental reworking of economic theory concerning the factors determining employment levels in the overall economy. The revolution was set against the then orthodox economic framework, namely neoclassical economics.
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Where Keynes Went Wrong: And Why World Governments Keep Creating Inflation, Bubbles, and Busts is a non-fiction work by Hunter Lewis. It was first published in 2009.
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