I'm thinking of a recent attempt by Bob Murphy to explain why Keynesianism took off in the 30s-rather than Hayek's Austrianism. There's some truth here:
"Think about it: In the 1930s you had a catastrophe, and if you were a public official or even just a layman looking for guidance and understanding, what did you get from institutionalists? Caricaturing, but only slightly, you got long, elliptical explanations that it all had deep historical roots and clearly there was no quick fix. Meanwhile, along came the Keynesians, who were model-oriented, and who basically said “Push this button”– increase G, and all will be well. And the experience of the wartime boom seemed to demonstrate that demand-side expansion did indeed work the way the Keynesians said it did."
http://diaryofarepublicanhater.blogspot.com/2013/11/bob-murphy-again-shows-theres-nothing.html
A corollary is why Hayek didn't come after Keynes the minute GT hit the shelves? I'm reflecting on this as I read "Keynes Hayek: the Clash that Defined a Generation."
http://www.amazon.com/Keynes-Hayek-Defined-Modern-Economics-ebook/dp/B005LW5K6G/ref=sr_1_1?s=books&ie=UTF8&qid=1384403178&sr=1-1&keywords=keynes+hayek
I think Hayek is probably very lucky that he didn't. Why? Well for the last 56 years of his life he had to deal with unhappy conservatives demanding to know why when he had his chance he demurred to fight. I think this was actually a preferable outcome. The question assumes that had he fought he'd have been successful or at least given Keynesianism more trouble. The reality is that it probably wouldn't have left a scratch on it and Hayek realized this and that's why he didn't.
As he didn't try his followers can always think he would have laid heavy leather on Keynes if only he had. There is no reason whatsoever, however, to think that this is so. For one thing he did try to rebut Keynes previous book and this was hardly inspiring, the fught degraded into quibbling about definitions and terminlolgy.
Pigou-with whom Keynes was unfriendly with-did write an immediate rejoinder to GT and it had not the slighted ripple of effect on the run away tidal wave of Keynesianism.
Hayek had planned to publish a book called 'The Pure Theory of Capital' in 1936 which would largely have been an answer to GT and he postponed it the next 4 years. When it finally came out nobody was too impressed-even Hayek.
Even a friend like Milton Friedman found it unreadable. Indeed, Friedman said this:
"I am an enormous admirer of Hayek, but not for his economics. I think Prices of Production was a very flawed book. I think his theory of capital is unreadable.'
Hayek himself admitted; 'The whole thing's become so complicated, it's become almost impossible to follow it.'
As I'm reading it via Amazon's Internet Kindle I'm not able to offer page numbers.
What really happened I think is that with the successful gestation of GT the jig was up for Hayekian economics-as all Hayek's economics amounted was an extreme version of pre-Keynesian economics. With the birth of GT pre-Keynesian econ-microeconomics, methodological individualism-was over.
Even Hayek got this-no one wanted drawings of his triangles that somehow showed that the economy is hurt by somebody buying a new coat.
However, while the publishing of GT was literally the end of Hayek's career as an economist. he discovered another road that has turned out much more successful than the old one ever was-he became a kind of political philosophy guru perpetually invoking discussions of knowledge and information in the market. He's turned out the be much better as a PP guru than an economist.
An interesting question is why is the book Keynes Hayek rather than Keynes Friedman? Part of it is the historical convenience in the fact that Hayek and Keynes were contemporaries in their respective lifetimes. What's more they largely acted like Friend's outside of the economic and political circumstances. Monetarism was more just the economic branch of Hayekian strategy.
"Think about it: In the 1930s you had a catastrophe, and if you were a public official or even just a layman looking for guidance and understanding, what did you get from institutionalists? Caricaturing, but only slightly, you got long, elliptical explanations that it all had deep historical roots and clearly there was no quick fix. Meanwhile, along came the Keynesians, who were model-oriented, and who basically said “Push this button”– increase G, and all will be well. And the experience of the wartime boom seemed to demonstrate that demand-side expansion did indeed work the way the Keynesians said it did."
http://diaryofarepublicanhater.blogspot.com/2013/11/bob-murphy-again-shows-theres-nothing.html
A corollary is why Hayek didn't come after Keynes the minute GT hit the shelves? I'm reflecting on this as I read "Keynes Hayek: the Clash that Defined a Generation."
http://www.amazon.com/Keynes-Hayek-Defined-Modern-Economics-ebook/dp/B005LW5K6G/ref=sr_1_1?s=books&ie=UTF8&qid=1384403178&sr=1-1&keywords=keynes+hayek
I think Hayek is probably very lucky that he didn't. Why? Well for the last 56 years of his life he had to deal with unhappy conservatives demanding to know why when he had his chance he demurred to fight. I think this was actually a preferable outcome. The question assumes that had he fought he'd have been successful or at least given Keynesianism more trouble. The reality is that it probably wouldn't have left a scratch on it and Hayek realized this and that's why he didn't.
As he didn't try his followers can always think he would have laid heavy leather on Keynes if only he had. There is no reason whatsoever, however, to think that this is so. For one thing he did try to rebut Keynes previous book and this was hardly inspiring, the fught degraded into quibbling about definitions and terminlolgy.
Pigou-with whom Keynes was unfriendly with-did write an immediate rejoinder to GT and it had not the slighted ripple of effect on the run away tidal wave of Keynesianism.
Hayek had planned to publish a book called 'The Pure Theory of Capital' in 1936 which would largely have been an answer to GT and he postponed it the next 4 years. When it finally came out nobody was too impressed-even Hayek.
Even a friend like Milton Friedman found it unreadable. Indeed, Friedman said this:
"I am an enormous admirer of Hayek, but not for his economics. I think Prices of Production was a very flawed book. I think his theory of capital is unreadable.'
Hayek himself admitted; 'The whole thing's become so complicated, it's become almost impossible to follow it.'
As I'm reading it via Amazon's Internet Kindle I'm not able to offer page numbers.
What really happened I think is that with the successful gestation of GT the jig was up for Hayekian economics-as all Hayek's economics amounted was an extreme version of pre-Keynesian economics. With the birth of GT pre-Keynesian econ-microeconomics, methodological individualism-was over.
Even Hayek got this-no one wanted drawings of his triangles that somehow showed that the economy is hurt by somebody buying a new coat.
However, while the publishing of GT was literally the end of Hayek's career as an economist. he discovered another road that has turned out much more successful than the old one ever was-he became a kind of political philosophy guru perpetually invoking discussions of knowledge and information in the market. He's turned out the be much better as a PP guru than an economist.
An interesting question is why is the book Keynes Hayek rather than Keynes Friedman? Part of it is the historical convenience in the fact that Hayek and Keynes were contemporaries in their respective lifetimes. What's more they largely acted like Friend's outside of the economic and political circumstances. Monetarism was more just the economic branch of Hayekian strategy.
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