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Hayek and the General Theory

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  • Nicolo De Vecchi

Abstract

Hayek did not review the General Theory, but he criticized it in Profits, Interest and Investment (1939) and in part IV of The Pure Theory of Capital (1941). First, he showed that only exceptionally does greater consumption favour investment and employment. Second, he rejected Keynes's liquidity preference and maintained that only in an 'extreme case' might it be said that Keynes's theory of the rate of interest is valid. Although he correctly identified the gist of Keynes's theoretical innovation, his criticisms were already implicitly answered in the General Theory.

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  • Nicolo De Vecchi, 2006. "Hayek and the General Theory," The European Journal of the History of Economic Thought, Taylor & Francis Journals, vol. 13(2), pages 233-258.
    • Handle: RePEc:taf:eujhet:v:13:y:2006:i:2:p:233-258
    DOI: 10.1080/09672560600708284
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    References listed on IDEAS

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    1. John P. Cochran & Fred R. Glahe, 1994. "The Keynes-Hayek Debate: Lessons for Contemporary Business Cycle Theorists," History of Political Economy, Duke University Press, vol. 26(1), pages 69-94, Spring.
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    8. Kohn, Meir, 1986. "Monetary Analysis, the Equilibrium Method, and Keynes's "General Theory."," Journal of Political Economy, University of Chicago Press, vol. 94(6), pages 1191-1224, December.
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    Cited by:

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    2. Constantinos Repapis, 2014. "J.M. Keynes, F.A. Hayek and the Common Reader," Economic Thought, World Economics Association, vol. 3(2), pages 1-1, September.

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