Hayek on Keynes's Ignorance of Economics

In this video Friedrich Hayek explains to Leo Rosten that while brilliant Keynes had a parochial understanding of economics.

Types of Mind - Encounter, September 1975

Source

[sainchawlonen]

'keynes is dead and we're dealing with his long run.'
M. Rothbard 

[Aaron-trpl]

"There was one good thing about Marx, he wasn't a Keynesian"
Murray Rothbard

[grenvillephillips]

I often think that Keynes was loved by governments because he offered a painless political solution and licence to increase spending.

[ancientnpc]

I have always found Hayek's predilection for pointing out that "there is nothing new under the sun" as one of his most inspiring and endearing qualities.

[RMTP]

"Prepare to get schooled in my Austrian perspective"

[Rohme.]

Guy 1 - Did you hear about the banker who became a farmer?
Guy 2 - Yeah. He could have harvested a surplus but he had no interest.

[xit]

A fascinating interview. Hayek and Keynes were friends despite their great disagreements on economic theory. I think Hayek gives a fair account of his friend in this interview. Keynes was extremely intelligent, but dismissive of the contributions of others. Unlike Newton, he refused to stand on the shoulders of giants. 

[OrthoHoppean]

I wish that people would give Ludwig von Mises the credit he deserves. He's the one that converted Hayek from socialism and he was a believe in true laissez faire. He is perhaps the greatest economist of all time.

[Quasimoto]

Let's not forget that Keynes views on social and economic issues were colored by some interesting perspectives. First was his social class (Elitist). Second his friends were largely eugenicists, and he was their mentor. He was Director of the British Eugenicists Society. Perhaps his views entertained the notion just like good buddy Geroge Bernard Shaw, that if you could get rid of that "social trash" you could create those "sunny uplands".

[thomasd]

00:00
how do you think he [Keynes] will rank in the history of economic theory or thought ?

00:07 - As a man with a great many ideas who knew very little economics
00:11 - literally, too .
00:12 - he [Keynes] knew nothing but Marshallian economics
00:15 - He [Keynes] was completely unaware of what was going on elsewhere
00:20 -He [Keynes] even knew very little about 19th century economic history.
His interests were very largely guided by aesthetic appeal
00:29 - And he hated the 19th century
00:32 - And therefore knew very little about it
00:34 - Even about its scientific literature
He [Keynes] was a really great expert on the Elizabethan age
00:40 - I'm absolutely astounded that you say that John Maynard Keynes really did not know the economic literature
00:46 - Very little . Very little
00:50 - Even within the English tradition he [Keynes] did know very little of the great monetary writers of the 19th century
00:59 - he [Keynes] would know nothing about Henry Thornton, Banker
01:02 - He knew a little about Ricardo, of course. The famous things
But he [Keynes] could have found any number of antecedents of his inflationary ideas in the 1820's and 1830's
01:16 - And when I told him about it, it was all new to him
01:19 - How did he react ?
01:22 - Was he [Keynes] sheepish?
Oh no . Not in the least
01:27 - He [Keynes] was much too self assured
And amused?
01:31 - Convinced that what other people could have said about the subject was not frightfully important
01:42 - At the end, well, not in the end, there was a period just after he [Keynes] had written the General Theory where he [Keynes] was so convinced he [Keynes] had re-done the whole science that he [Keynes] was rather contemptuous of anything which had been done before
01:54 - And did he maintain that confidence to the end ?
01:59 - I can't say because I said before we'd almost stopped talking economics
02:04 - great many other subjects
02:06 - his general history of ideas and so on we were interested
02:11 - And you know I don't want you to get the impression that I underestimated him as a brain.
He was one of the most intelligent and most original thinkers I have known
02:24 - but economics was just a sideline for him and he had an amazing memory
02:31 - he was extraordinarily widely read
But economics was not really his main interest
Well his own economics was
He was convinced he could recreate the subject
02:42 - and he rather had a contempt for most of the other economists

02:49 - does this tie in with your two Kinds of Minds you wrote in Encounter some years ago?

02:54 - Well, curiously enough, I would say Keynes was rather my type of mind and not the other

03:01 - he is certainly could not have been described as a master of his subject
03:04 - Which describes the other type
He was an intuitive thinker with a very wide knowledge in many fields
03:15 - who'd never felt that economics was weighty enough to
03:20 - he just took it for granted that Marshall's textbook contained everything one needs to know about the subject
03:26 - There was a certain arrogance of Cambridge economics about.
They thought they were the centre of the world
And if you have learned Cambridge economics there is nothing else worth learning
03:37 - I'm interested in your earlier comment about the fact that here is a man of immense intelligence, great imagination, wide learning, and so on
03:48 - And yet was not an economist . And i'm not clear whether you mean he didn't have the kind of mind that excels in economics; just as mathematics say
You can find people who are brilliant but given mathematics are just hopeless
04:04 - but do you mean he didn't have the kind of mind that makes for first rate economists
04:08 - Oh he had -- I mean if he had given his whole mind to economics he could have become a master of economics, of the existing body
04:19 - but there were certain parts of economic theory which he had never been interested in
04:28 - he had never thought about the theory of capital
04:31 - he was very shaky even on the theory of international trade
04:36 - he was well informed on contemporary monetary theory but even there he did not know such things as Henry Thornton or Wicksell
04:46 - and of course his great defect was he did not read any foreign language except French
04:50 The whole german literature was inaccessible to him
04:53 - he did, curiously enough, review Mises book on money.
but later admitting that, in German, he could only understand what he knew already
05:03 - what he had known before he read the book in English

[isaacolivecrona]

Keynes was apparently incredibly intelligent. The famous Bertrand Russell, a close friend of Keynes, said that he always felt intellectually inferior to Keynes whenever they discussed ideas.

[willmickel]

Hayek talks about Keynes at greater length in his book "The Fatal Conceit". I think the book is a better but not the landmark book that the "Road to Serfdom" became.

[EGarrett]

Keynes never actually studied much economics? Well that makes...absolutely perfect sense and explains a whole lot.

[lowersaxon]

Keynes was a great economist and a great man. The battle between Keynes and his camp and the Hayekians was won by Keynes by technical K.O. Hayek was aware of that. His last theoretical book acknowledged that half-heartedly and by a genius move he turned to economic philosophy, a field in which the differences between Keynes and Hayek were marginal.
Later in the century Keynesianism got vulgarized and misused.

[sangEta]

"The curious task of economics is to demonstrate to men how little they really know about what they imagine they can design." - Friedrich August von Hayek.

[thepiperreport]

I came hear from the Keynes vs Hayek rap battle. Fear the Boom and Bust. It was pretty cool

[Manuel-qutc]

In case anyone thinks Hayek is being mean to Keynes, Joan Robinson (herself a radical left-wing economist later in lafe) claimed that Keynes was criticising Marx without ever taking the time to read him.

[maxdeminoff]

Economics was not his main interest. lol

[jid]

"he was completely unaware of what was going on elsewhere" bars

[pastoriusnoldeparte]

Keynes called Hayek's book Prices and Production "one of the most frightful muddles I have ever read", famously adding: "It is an extraordinary example of how, starting with a mistake, a remorseless logician can end in Bedlam"