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Backmatter
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Failure of the “New Economics”
Title Page
An Analysis of the Keynesian Fallacies
by
HENRY HAZLITT
D. VAN NOSTRAND COMPANY, INC.
PRINCETON, NEW JERSEY
TORONTO LONDON
NEW YORK
Copyright
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Acknowledgments
I am indebted to Harcourt, Brace & Co., the American publishers of Keynes’s General Theory, for their generous permission to reprint so many passages from that book. This extensive quotation rather than mere paraphrase seemed to me almost unavoidable in the present critical work because of the many existing and possible interpretations and disputes concerning what Keynes actually said.
I. Introduction
1. Canonization
The most famous economist of the twentieth century is John Maynard Keynes; and the most influential economic book of the present era, both on theory and on economic policy, is his General Theory of Employment, Interest, and Money, published in 1936.
II. Postulates of Keynesian Economics
1. What Is the Classical Theory of Employment?
Chapter 2 of the General Theory is called “The Postulates of the Classical Economics.”
Most treatises on the theory of Value and Production [Keynes begins] are primarily concerned with the distribution of a given volume of employed resources between different uses and with the conditions which... determine their relative rewards.... But the pure theory of what determines the actual employment of the available resources has seldom been examined in great detail (p. 4).
III. Keynes vs. Say’s Law
1. Keynes’s “Greatest Achievement”
IV. Overture
1. “Effective Demand”
Chapter 3 of the General Theory bears the impressive title, “The Principle of Effective Demand,” but the title gives a wrong impression of its contents. Its function in Keynes’s book is rather like that of an overture to a light opera, in which the composer weaves together and writes variations on the principal themes that are to follow.
