WEBVTT NOTE 1. Introduction 1 00:00:00.000 --> 00:00:10.000 Chapter 1. Introduction. 2 00:00:10.000 --> 00:00:13.000 Canonization. 3 00:00:13.000 --> 00:00:19.000 The most famous economist of the 20th century is John Maynard Keynes, 4 00:00:19.000 --> 00:00:27.000 and the most influential economic book of the present era both on theory and on economic policy 5 00:00:27.000 --> 00:00:34.500 is his general theory of employment, interest and money, published in 1936. 6 00:00:34.500 --> 00:00:42.500 The fact is recognized not only by his admirers and disciples, but even by his sharpest critics. 7 00:00:42.500 --> 00:00:47.500 Open any issue of almost any of the scholarly economic journals, 8 00:00:47.500 --> 00:00:56.500 and you will find his name and the phrases that he coined or popularized sprinkled generously through its pages. 9 00:00:56.500 --> 00:01:12.500 Open the newspaper and you will find interpretations of current economic events or proposals for economic and monetary policies that owe at least their ubiquity, if not their origin, to his writings. 10 00:01:12.500 --> 00:01:22.500 To illustrate the unique place that Keynes's reputation occupies, I select a few quotations almost at random. 11 00:01:22.500 --> 00:01:39.500 On his death, the London Times called him a very great Englishman, a man of genius who, as a political economist, had a worldwide influence on the thinking both of specialists and of the general public. 12 00:01:39.500 --> 00:01:47.500 To find an economist of comparable influence, one would have to go back to Adam Smith. 13 00:01:47.500 --> 00:01:59.500 G. D. H. Cole, the socialist economist, calls the general theory the most important theoretical economic writing since Marx's Capital, 14 00:01:59.500 --> 00:02:07.500 or, if only classical economics is to be considered as comparable, since Ricardo's Principles. 15 00:02:07.500 --> 00:02:36.500 What he has done triumphantly and conclusively is to demonstrate the falsity, even from a capitalist standpoint, of the most cherished practical morals of the orthodox economists and to construct an alternative theory of the working of capitalist enterprise so clearly nearer to the facts that it will be impossible for it to be ignored or set aside. 16 00:02:37.500 --> 00:02:47.460 Professor Alvin H. Hansen of Harvard, usually regarded as Keynes's leading American disciple, 17 00:02:47.460 --> 00:02:49.500 writes of the general theory, 18 00:02:49.500 --> 00:03:06.500 There are few who would deny, as of now, 17 years later, that the book has had a greater impact on economic analysis and policy, even in this short time than any book since Ricardo's Political Economy. 19 00:03:06.500 --> 00:03:13.940 It may be a little too early to claim that, along with Darwin's Origin of Species and 20 00:03:13.940 --> 00:03:21.100 Karl Marx's Das Kapital, the general theory is one of the most significant books which 21 00:03:21.100 --> 00:03:29.160 have appeared in the last hundred years, but it continues to gain in importance. 22 00:03:29.160 --> 00:03:35.500 In the starry eyes of some admirers, even the book's faults seem somehow to add to 23 00:03:35.500 --> 00:03:44.940 Professor Paul A. Samuelson, of the Massachusetts Institute of Technology, author of the most 24 00:03:44.940 --> 00:03:51.220 widely used college textbook in economics at the present time, writes of the general 25 00:03:51.220 --> 00:03:52.220 theory, 26 00:03:52.220 --> 00:03:57.100 It is a badly written book, poorly organized. 27 00:03:57.100 --> 00:04:02.820 Any layman who, beguiled by the author's previous reputation, bought the book, was 28 00:04:02.820 --> 00:04:10.380 was cheated of his five shillings. It is not well suited for classroom use. It is arrogant, 29 00:04:10.380 --> 00:04:18.100 bad-tempered, polemical, and not overly generous in its acknowledgments. It abounds in mares' 30 00:04:18.100 --> 00:04:25.060 nests and confusions. In short, it is a work of genius. 31 00:04:25.060 --> 00:04:32.120 Even stranger in Samuelson's implication that the very obscurity of the book is an embarrassment, 32 00:04:32.120 --> 00:04:37.480 Not to the disciples of Keynes, but chiefly to his critics. 33 00:04:37.480 --> 00:04:44.320 It bears repeating that the general theory is an obscure book, so that would-be anti-Keynesians 34 00:04:44.320 --> 00:04:49.440 must assume their position largely on credit. 35 00:04:49.440 --> 00:04:55.820 It is of course not surprising to find an extravagant judgment by R. F. Herrod, Keynes's 36 00:04:55.820 --> 00:04:58.320 biographer. 37 00:04:58.320 --> 00:05:04.160 To put the matter quite bluntly, I believe that the future historian of economic thought 38 00:05:04.160 --> 00:05:10.960 will regard the assistance rendered by Keynes on the road of progress as far more important 39 00:05:10.960 --> 00:05:15.460 than that of his revered master Alfred Marshall. 40 00:05:15.460 --> 00:05:23.040 He seems, to my judgment, to stand rather in the same class as Adam Smith and Ricardo. 41 00:05:23.040 --> 00:05:32.800 In logical penetration, he was much superior to Adam Smith, in lucidity of writing to Ricardo. 42 00:05:32.800 --> 00:05:38.760 Professor Dudley Dillard of the University of Maryland, in his book, The Economics of 43 00:05:38.760 --> 00:05:42.040 John Maynard Keynes, writes, 44 00:05:42.040 --> 00:05:49.760 By any test, Keynes ranks as one of the great economists of all time, and as the most influential 45 00:05:49.760 --> 00:05:55.040 Economic Thinker the 20th Century has so far produced. 46 00:05:55.040 --> 00:06:01.300 Within the first dozen years following its publication, John Maynard Keynes's The General 47 00:06:01.300 --> 00:06:09.180 Theory of Employment, Interest and Money, 1936, has had more influence upon the thinking 48 00:06:09.180 --> 00:06:16.240 of professional economists and public policy makers than any other book in the whole history 49 00:06:16.240 --> 00:06:21.600 of Economic Thought, in a comparable number of years. 50 00:06:21.600 --> 00:06:28.360 Like Adam Smith's Wealth of Nations in the 18th century and Karl Marx's Capital in the 51 00:06:28.360 --> 00:06:34.880 19th century, Keynes's general theory has been the center of controversy among both 52 00:06:34.880 --> 00:06:39.280 professional and non-professional writers. 53 00:06:39.280 --> 00:06:43.560 Smith's book is a ringing challenge to mercantilism. 54 00:06:43.560 --> 00:06:48.160 Keynes' book is a searching criticism of capitalism. 55 00:06:48.160 --> 00:06:54.080 Keynes' book is a repudiation of the foundations of laissez-faire. 56 00:06:54.080 --> 00:07:00.320 Many economists acknowledge a heavy debt to the stimulating thought of Lord Keynes. 57 00:07:00.320 --> 00:07:06.480 If the influence of Lord Keynes were limited to the field of technical economic doctrine, 58 00:07:06.480 --> 00:07:10.400 it would be of little interest to the world at large. 59 00:07:10.400 --> 00:07:20.800 However, practical economic policy bears even more deeply than economic theory the imprint of Keynes's thought. 60 00:07:20.800 --> 00:07:27.440 Quotations like this could be continued indefinitely, but they already grow repetitive. 61 00:07:27.440 --> 00:07:35.160 Even the most hostile critics of Keynes's theories do not question the extent of his influence. 62 00:07:35.160 --> 00:07:37.680 I cite but one. 63 00:07:37.680 --> 00:07:42.680 Keynes's influence in the Roosevelt administration was very great. 64 00:07:42.680 --> 00:07:49.680 His influence upon most of the economists in the employ of the government is incredibly great. 65 00:07:49.680 --> 00:07:59.680 There has arisen a volume of theoretical literature regarding Keynes almost equal to that which has arisen around Karl Marx. 66 00:07:59.680 --> 00:08:03.680 Uses of Refutation 67 00:08:03.680 --> 00:08:08.480 Yet, about the general theory, there is a strange paradox. 68 00:08:08.480 --> 00:08:15.280 The Keynesian literature has perhaps grown to hundreds of books and thousands of articles. 69 00:08:15.280 --> 00:08:23.280 There are books wholly devoted to expounding the general theory in simpler and more intelligible terms. 70 00:08:23.280 --> 00:08:27.180 But on the critical side, there is a great dearth. 71 00:08:27.180 --> 00:08:45.180 The non-Cainsians and anti-Cainsians have contented themselves either with short articles, a few parenthetic pages, or a curt dismissal on the theory that his work will crumble from its own contradictions and will soon be forgotten. 72 00:08:45.180 --> 00:08:55.180 I know of no single work that devotes itself to a critical chapter-by-chapter or theorem-by-theorem analysis of the book. 73 00:08:55.180 --> 00:08:59.180 It is this task that I am undertaking here. 74 00:08:59.180 --> 00:09:06.180 In view of the quotations I have just made, such an undertaking should require no apology. 75 00:09:06.180 --> 00:09:12.180 But, there are two possible objections that I should like to consider. 76 00:09:12.180 --> 00:09:19.180 The first is the claim that Keynes' theories have been rapidly losing their influence in recent years, 77 00:09:19.180 --> 00:09:25.940 theories, that they have been refuted by the actual course of events and require no further 78 00:09:25.940 --> 00:09:27.580 answer. 79 00:09:27.580 --> 00:09:35.180 The second is the contention that we need only present true theories in a positive form, 80 00:09:35.180 --> 00:09:42.300 that it is of little value to analyze error because the possibilities of error are infinite 81 00:09:42.300 --> 00:09:49.300 and the mere statement of the truth is itself a refutation of error. 82 00:09:49.300 --> 00:09:55.740 Concerning the first of these possible objections, I may reply that, though there has been some 83 00:09:55.740 --> 00:10:01.900 diminution of Keynes's influence, and though several of his theories have been given a 84 00:10:01.900 --> 00:10:12.020 decent burial, his influence both on academic thought and on practical policy is still tremendous. 85 00:10:12.020 --> 00:10:18.380 It would in any case be a poor service to clear thinking simply to allow his theories 86 00:10:18.380 --> 00:10:25.500 to be forgotten, even if we assume that this is what may occur. 87 00:10:25.500 --> 00:10:33.180 One of the peculiarities of recent speculation, especially in America, once wrote Santayana, 88 00:10:33.180 --> 00:10:40.300 is that ideas are abandoned in virtue of a mere change of feeling, without any new evidence 89 00:10:40.300 --> 00:10:46.460 We do not nowadays refute our predecessors. 90 00:10:46.460 --> 00:10:50.420 We pleasantly bid them goodbye. 91 00:10:50.420 --> 00:10:57.460 Simply to bid our predecessors goodbye does not further clarity or progress of thought. 92 00:10:57.460 --> 00:11:04.960 Unless we know not only that some past doctrine was wrong, but precisely why it was wrong, 93 00:11:04.960 --> 00:11:09.600 we have not learned all the lessons that the error has to teach us. 94 00:11:09.600 --> 00:11:15.760 And there is real danger that it may make its appearance in another form. 95 00:11:15.760 --> 00:11:22.460 In the history of thought, great new contributions have often been made as a sort of byproduct 96 00:11:22.460 --> 00:11:27.560 of what were originally intended to be merely refutations. 97 00:11:27.560 --> 00:11:33.280 Adam Smith's Wealth of Nations grew in large part out of a refutation of the errors of 98 00:11:33.280 --> 00:11:34.880 the mercantilists. 99 00:11:34.880 --> 00:11:44.880 Malthus' famous Essay on Population grew out of an attempt to refute the optimistic doctrines of Godwin. 100 00:11:44.880 --> 00:11:52.880 Kant's critique of pure reason began as an effort to refute the theories of Hume. 101 00:11:52.880 --> 00:12:03.880 John Stuart Mill's examination of Sir William Hamilton's philosophy became more famous than any of the writings of the philosopher he attacked. 102 00:12:03.880 --> 00:12:14.880 I hope I shall not be regarded as presumptuous enough to be comparing the present modest work with any of the great books just mentioned. 103 00:12:14.880 --> 00:12:22.880 I cite them merely to show that refutation of error is far from a futile occupation. 104 00:12:22.880 --> 00:12:34.880 It is an important method not only of defending, expounding and clarifying known truths, but of advancing to new truths and greater insight. 105 00:12:34.880 --> 00:12:46.880 As logic and mathematics sufficiently prove, the more we understand the implications of any theorem, the better we understand the theorem itself. 106 00:12:46.880 --> 00:12:57.880 Nor, in examining the views put forward by a single man or his disciples, do we necessarily confine ourselves to those views. 107 00:12:57.880 --> 00:13:07.880 Their analysis becomes a way of gaining a clearer and wider grasp of the problems with which that writer dealt. 108 00:13:07.880 --> 00:13:17.880 In the first chapter of his examination of Sir William Hamilton's philosophy, 1865, Mill wrote, 109 00:13:17.880 --> 00:13:27.880 My subject, therefore, is not Sir W. Hamilton, but the questions which Sir W. Hamilton discussed. 110 00:13:27.880 --> 00:13:42.880 It is, however, impossible to write on these questions in our own country and in our own time without incessant reference, express or tacit, to his treatment of them. 111 00:13:42.880 --> 00:13:50.880 The subject of this book, likewise, is not John Maynard Keynes, but the problems he discussed. 112 00:13:50.880 --> 00:13:58.880 And we cannot discuss these problems at the present day without discussing his treatment of them. 113 00:13:59.880 --> 00:14:03.880 A Pathbreaking Pioneer 114 00:14:04.880 --> 00:14:16.880 Now though I have analyzed Keynes's general theory in the following pages, theorem by theorem, chapter by chapter and sometimes even sentence by sentence, 115 00:14:16.880 --> 00:14:24.420 To what to some readers may appear a tedious length, I have been unable to find in it a 116 00:14:24.420 --> 00:14:30.640 single important doctrine that is both true and original. 117 00:14:30.640 --> 00:14:37.760 What is original in the book is not true, and what is true is not original. 118 00:14:37.760 --> 00:14:44.840 In fact, as we shall find, even much that is fallacious in the book is not original, 119 00:14:44.840 --> 00:14:49.080 but can be found in a score of previous writers. 120 00:14:49.080 --> 00:14:58.240 Frankly, when I began this task, I did not think I would arrive at so sweeping a conclusion. 121 00:14:58.240 --> 00:15:05.080 My first thought was that I might do a short work, analyzing Keynes's chief doctrines, 122 00:15:05.080 --> 00:15:11.600 so that the reader who wished a critical analysis would be able to find one in a brief and readable 123 00:15:11.600 --> 00:15:21.240 But when I actually embarked upon a line-by-line analysis, my experience was strangely like 124 00:15:21.240 --> 00:15:28.600 the one John Stuart Mill describes in his Autobiography regarding his analysis of Sir 125 00:15:28.600 --> 00:15:31.680 William Hamilton. 126 00:15:31.680 --> 00:15:37.640 As I advanced in my task, the damage to Sir W. Hamilton's reputation became greater than 127 00:15:37.640 --> 00:16:05.640 So I have found, in Keynes's general theory, an incredible number of fallacies, inconsistencies, vaguenesses, shifting definitions and usages of words, and plain errors of fact. 128 00:16:05.640 --> 00:16:11.820 My desire for thoroughness in pointing these out has carried the length of this book much 129 00:16:11.820 --> 00:16:16.320 beyond what I originally intended. 130 00:16:16.320 --> 00:16:22.100 There has, however, I venture to think, been a certain compensation for the length of this 131 00:16:22.100 --> 00:16:23.900 analysis. 132 00:16:23.900 --> 00:16:26.940 The results are not merely negative. 133 00:16:26.940 --> 00:16:31.940 They do not merely prove that Keynes's main contentions were wrong. 134 00:16:31.940 --> 00:16:40.940 For, in dealing with the Keynesian fallacies, we are obliged not only to scrutinize very closely his own arguments, 135 00:16:40.940 --> 00:16:46.940 but the classical or orthodox doctrines that he was denying. 136 00:16:46.940 --> 00:16:58.940 And in doing so, we shall often find that some of these orthodox doctrines have been only dimly understood, even by many of their proponents. 137 00:16:58.940 --> 00:17:09.940 In other cases, we shall find errors or gaps in the usual statement of some of the orthodox doctrines themselves. 138 00:17:09.940 --> 00:17:15.940 One other possible objection to the present volume remains to be considered. 139 00:17:15.940 --> 00:17:22.940 This is that it is directed against an author no longer in a position to reply. 140 00:17:22.940 --> 00:17:34.940 But any advantage that I might gain from this will certainly be more than outbalanced by the number and controversial ardor of Keynes's disciples. 141 00:17:34.940 --> 00:17:50.940 For the same reason, I make no apology for the outspokenness of my criticism, or the fact that I write of Keynes in the present tense and often discuss his work as if the author were still living. 142 00:17:50.940 --> 00:17:52.940 and Living. 143 00:17:52.940 --> 00:17:59.740 This is, after all, only a way of confessing that Keynes's doctrines are still very much 144 00:17:59.740 --> 00:18:04.300 alive in the influence they exert. 145 00:18:04.300 --> 00:18:11.840 In one respect, the range of the present book is narrower than I had originally intended. 146 00:18:11.840 --> 00:18:19.060 There is no effort to cope with all the errors in the immense body of Keynesian literature. 147 00:18:19.060 --> 00:18:24.940 Such an effort would have been hopeless, as I realized when I was once well-launched on 148 00:18:24.940 --> 00:18:27.220 my task. 149 00:18:27.220 --> 00:18:36.300 The reader will find only a few passing references to works of the Keynesians or post-Keynesians. 150 00:18:36.300 --> 00:18:43.460 Even my references to Keynes himself are confined almost entirely to the general theory, other 151 00:18:43.460 --> 00:18:49.580 Another of his works being cited only when I am calling attention to some inconsistency 152 00:18:49.580 --> 00:18:55.340 or to some statement of the same doctrine in another form. 153 00:18:55.340 --> 00:19:02.060 The examination of the fallacies of Keynes himself in the general theory alone has carried 154 00:19:02.060 --> 00:19:08.500 me to as great a length as I felt my task could justify. 155 00:19:08.500 --> 00:19:15.220 Once we have thoroughly examined the fallacies in the Master, we can economize time by not 156 00:19:15.220 --> 00:19:23.900 troubling to dissect them again, usually in an even more vulnerable form in the disciples. 157 00:19:23.900 --> 00:19:31.800 In the preface to the general theory, Keynes tries to anticipate some general criticisms. 158 00:19:31.800 --> 00:19:58.400 He apologizes for the highly abstract argument that is to follow, by declaring that his book is chiefly addressed to my fellow economists, page Roman numeral 5, and that, at this stage of the argument, the general public, though welcome at the debate, are only eavesdroppers, page Roman numeral 6. 159 00:19:58.400 --> 00:20:05.320 I do not think we can excuse the bad writing in most of the general theory on this ground. 160 00:20:05.320 --> 00:20:14.620 For Keynes succeeds, as we shall see, in being involved and technical without being precise. 161 00:20:14.620 --> 00:20:20.320 One of the most striking characteristics of the book is the looseness of many of the leading 162 00:20:20.320 --> 00:20:27.400 terms and the constantly shifting senses in which they are used. 163 00:20:27.400 --> 00:20:31.800 Cain to anticipate another criticism, Cain's remarks, 164 00:20:31.800 --> 00:20:38.320 Those who are strongly wedded to what I shall call the classical theory will fluctuate, 165 00:20:38.320 --> 00:20:44.260 I expect, between a belief that I am quite wrong and a belief that I am saying nothing 166 00:20:44.260 --> 00:20:45.740 new. 167 00:20:45.740 --> 00:20:48.800 Page Roman numeral 5. 168 00:20:48.800 --> 00:20:53.160 This insinuates an argumentum ad hominem. 169 00:20:53.160 --> 00:20:59.920 It attempts to discredit critics in advance for not being converted to the New Revelation. 170 00:20:59.920 --> 00:21:08.160 Actually, as we shall find, it is not necessary to fluctuate between these two beliefs. 171 00:21:08.160 --> 00:21:16.120 Keynes's main contributions are demonstrably wrong, and in those cases in which he is saying 172 00:21:16.120 --> 00:21:21.320 something that is true, he is indeed saying nothing new. 173 00:21:21.320 --> 00:21:29.400 Finally, Keynes presents himself to the reader, not very modestly, as a great intellectual 174 00:21:29.400 --> 00:21:33.880 pioneer, treading along unfamiliar paths. 175 00:21:33.880 --> 00:21:36.960 Page Romanumeral 7 176 00:21:36.960 --> 00:21:43.640 What is strange about this, however, is that toward the end of the book, in Chapter 23, 177 00:21:43.640 --> 00:21:50.040 he cites as confirmation of the truth of these new path-breaking ideas, the fact that most 178 00:21:50.040 --> 00:21:56.720 Most of them were held by the mercantilists of the 17th century. 179 00:21:56.720 --> 00:22:01.560 THE GENERAL THEORY 180 00:22:01.560 --> 00:22:07.440 After some hesitation, I have decided that the best way to analyze the general theory 181 00:22:07.440 --> 00:22:11.760 is to do so chapter by chapter. 182 00:22:11.760 --> 00:22:14.800 Keynes's book is not well organized. 183 00:22:14.800 --> 00:22:24.800 Therefore, my criticism, like the book itself, will not follow the most logical order, and will be sometimes repetitive. 184 00:22:24.800 --> 00:22:37.800 To compensate for these shortcomings, I have given my own chapters, for the most part, the same numbers as the corresponding chapters that they discuss in the general theory. 185 00:22:37.800 --> 00:22:54.800 This will make it easier for readers who may wish to confirm or amplify any quotation I have made from The General Theory, or to follow Keynes's argument in its original form, if they should question my own interpretation. 186 00:22:54.800 --> 00:23:02.800 Fortunately, Keynes's Chapter 1, The General Theory, is only a single paragraph long. 187 00:23:02.800 --> 00:23:09.800 But that paragraph raises three points that call for my comment. 188 00:23:09.800 --> 00:23:19.800 I have called this book The General Theory of Employment, Interest and Money, placing the emphasis on the prefix general. 189 00:23:19.800 --> 00:23:26.300 The object of such a title is to contrast the character of my arguments and conclusions 190 00:23:26.300 --> 00:23:32.800 with those of the classical theory of the subject, upon which I was brought up and which 191 00:23:32.800 --> 00:23:39.860 dominates the economic thought, both practical and theoretical, of the governing and academic 192 00:23:39.860 --> 00:23:45.400 classes of this generation, as it has for a hundred years past. 193 00:23:45.400 --> 00:23:47.400 Page 3 194 00:23:47.400 --> 00:23:54.520 I shall argue, Keynes continues, that the postulates of the classical theory are applicable 195 00:23:54.520 --> 00:24:01.560 to a special case only and not to the general case, the situation which it assumes being 196 00:24:01.560 --> 00:24:06.240 a limiting point of the possible positions of equilibrium. 197 00:24:06.240 --> 00:24:09.160 Page 3 198 00:24:09.160 --> 00:24:17.440 Good economists prior to 1936, however, like good economists since then, do not depend on 199 00:24:17.440 --> 00:24:22.120 postulates that fitted special cases only. 200 00:24:22.120 --> 00:24:28.400 It dealt with the business cycle, with periods of prosperity and depression, as well as with 201 00:24:28.400 --> 00:24:30.800 simplified static theory. 202 00:24:30.800 --> 00:24:39.360 It is Keynes's economics, as we shall find, that applies to a special case only, and it 203 00:24:39.360 --> 00:24:46.160 does not give a correct analysis of that special case. 204 00:24:46.160 --> 00:24:52.760 The characteristics of the special case assumed by the classical theory, Keynes goes on, happen 205 00:24:52.760 --> 00:24:59.240 not to be those of the economic society in which we actually live, with the result that 206 00:24:59.240 --> 00:25:04.920 that its teaching is misleading and disastrous if we attempt to apply it to the facts of 207 00:25:04.920 --> 00:25:09.160 experience, page 3. 208 00:25:09.160 --> 00:25:13.340 This is not an argument but mere assertion. 209 00:25:13.340 --> 00:25:19.580 For the present I shall content myself with the counter-assertion that sound, orthodox 210 00:25:19.580 --> 00:25:27.460 economics was always flexible enough to analyze actual conditions, and that it is Keynes's 211 00:25:27.460 --> 00:25:42.140 My criticisms of Chapter One must apply to every sentence in it. 212 00:25:42.140 --> 00:25:48.740 They must apply also to his curious use of the term Classical, which he defends in a 213 00:25:48.740 --> 00:25:50.860 footnote. 214 00:25:50.860 --> 00:25:58.620 where he points out that the classical economist was a name invented by Marx to cover Ricardo 215 00:25:58.620 --> 00:26:01.860 and James Mill and their predecessors. 216 00:26:01.860 --> 00:26:10.340 I have become accustomed, he writes, perhaps perpetrating a solicism to include in the 217 00:26:10.340 --> 00:26:17.840 classical school the followers of Ricardo, those, that is to say, who adopted and perfected 218 00:26:17.840 --> 00:26:27.020 The Theory of the Ricardian Economics, including, for example, J.S. Mill, Marshall, Edgeworth, 219 00:26:27.020 --> 00:26:31.720 and Professor Pigot, page 3. 220 00:26:31.720 --> 00:26:37.140 This extended use of the term classical is merely confusing. 221 00:26:37.140 --> 00:26:40.620 It gives the reader a quite false picture. 222 00:26:40.620 --> 00:26:47.460 He is being asked, in effect, to consider practically all economics prior to the appearance 223 00:26:47.460 --> 00:26:55.360 of the General Theory in 1936, no matter by whom written, as both a uniform theory and 224 00:26:55.360 --> 00:26:58.400 an agreed-upon theory. 225 00:26:58.400 --> 00:27:04.880 But there was enormous diversity in the views of particular writers, and many controversies 226 00:27:04.880 --> 00:27:08.960 between the so-called classical economists. 227 00:27:08.960 --> 00:27:14.800 There were also points which some of them did not pretend to have settled. 228 00:27:14.800 --> 00:27:20.960 Mises writes as if all the economists before him had dozed off into a sort of dogmatic 229 00:27:20.960 --> 00:27:29.680 slumber, thoughtlessly incanting after each other some unexamined clichés of thought. 230 00:27:29.680 --> 00:27:36.160 His references to the classical school are misleading in more than one respect. 231 00:27:36.160 --> 00:27:42.240 He includes among the classical economists the pioneers and continuers of the subjective 232 00:27:42.240 --> 00:27:50.880 value or marginal utility theories that represent a break with the classical economics. 233 00:27:50.880 --> 00:27:57.000 And when he writes about orthodox economics, he seems to confine himself most of the time 234 00:27:57.000 --> 00:28:00.040 to Marshall and Pigot. 235 00:28:00.040 --> 00:28:06.960 He writes as if he were unaware of the great advances beyond these writers that were made, 236 00:28:06.960 --> 00:28:21.960 particularly in Capital and Interest Theory by Boehm-Bawerk, John Bates Clark, Newt Wicksell, Irving Fischer, Ludwig von Mises and F. A. Hayek. 237 00:28:21.960 --> 00:28:26.960 Keynes's frame of reference is strangely provincial. 238 00:28:26.960 --> 00:28:33.960 He seems to assume that whatever was not discovered by either Marshall or Pigot, or discussed 239 00:28:33.960 --> 00:28:38.320 in his little circle at Cambridge, was never thought of at all.