John Maynard Keynes knew very little economics — Friedrich Hayek drops that bomb and more in his 1978 UCLA Oral History interview with Leo Rosen:
ROSTEN: … this was the period, of course, when John Maynard Keynes was coming into international repute, and I’d love you to talk about him.
HAYEK: Well, I knew him very well. I made his acquainance even before I had come to England, in ’28, at the meeting of the Trade Cycle Research Institute. There we had our first difference on economics — on the rate of interest, characteristically — and he had a habit of going like a steamroller over a young man who opposed him. But if you stood up against him, he respected you for the rest of your life. We remained, although we differed in economics, friends till the end. In fact, I owe it to him that I spent the war years at King’s College, Cambridge. He got me rooms there. And we talked on a great many things, but we had learned to avoid economics.
ROSTEN: You avoided economics?
HAYEK: Avoided economics .
ROSTEN: But you took on General Theory, didn’t you, the moment that it appeared?
HAYEK: No, I didn’t; I had spent a great deal of time reviewing his Treatise on Money, and what prevented me from returning to the charge is that when I published the
second part of my very long examination of that book, his response was, “Oh, I no longer believe in all this.”
ROSTEN: He said so?
HAYEK: Yes. [laughter]
ROSTEN: How much later was this?
HAYEK: That was ’32, and the Treatise came out in ’30. He was already then on the lines towards The General Theory, and he still had not replied to my first part when six months later the second part came out. He just said, “Never mind, I no longer believe in this.” That’s very discouraging for a young man who has spent a year criticizing a major work. I rather expected that when he thought out The General Theory, he would again change his mind in another year or two; so I thought it wasn’t worthwhile investing as much work, and of course that became the frightfully important book. That’s one of the things for which I reproach myself, because I’m quite convinced I could have pointed out the mistakes of that book at that time.
ROSTEN: Well, did you seriously think that he would say, “Oh, I no longer believe in the tradeoff between unemployment” and so forth?
HAYEK: I am sure he would have modified.
ROSTEN: You think he did change?
HAYEK: He would have modified his ideas. And in fact, my last experience with him — I saw him last six weeks before his death; that was after the war — I asked him whether he
wasn’t alarmed about what his pupils did with his ideas in a time when inflation was already the main danger. His answer was, “Oh, never mind, my ideas were frightfully
important in the Depression of the 1930s, but you can trust me: if they ever become a danger, I’m going to turn public opinion around like this.” But six weeks later he was
dead and couldn’t do it. I am convinced Keynes would have become one of the great fighters against inflation.
ROSTEN: Do you think he could have done it?
HAYEK: Oh, yes. He wouldn’t have had the slightest hesitation. The only thing I blame him for is that what he knew was a pamphlet for the time, to counteract the deflationary tendencies in the 1930s, he called a general theory. It was not a general theory. It was really a pamphlet for the situation at a particular time. This was partly, I would say, due to the influence of some of his very doctrinaire disciples, who pushed him — There’s a recent essay by Joan Robinson, one of his disciples, in which she quite frankly says they sometimes had great difficulty in making Maynard see the implications of his theory. [laughter]
ROSTEN: I’m interested in the fact that you think it would have been that easy to have reversed opinion, coming out of a deflationary period.
HAYEK: Well, I don’t think so, but Keynes —
ROSTEN: Oh, he thought so. I see.
HAYEK: Keynes had a supreme conceit of his power of playing with public opinion. You know, he had done the trick about the peace treaty. And ever since, he believed he could play with public opinion as though it were an instrument. And for that reason, he wasn’t at all alarmed by the fact that his ideas were misinterpreted. “Oh, I can correct this anytime.” That was his feeling about it
ROSTEN: How do you think he will rank in the history of economic theory and thought?
HAYEK: As a man with a great many ideas who knew very little economics. He knew nothing but Marshallian economics; he was completely unaware of what was going on elsewhere; he even knew very little about nineteenth-century economic history. His interests were very largely guided by aesthetic appeal. And he hated the nineteenth century, and therefore knew very little about it — even about the scientific literature. But he was a really great expert on the Elizabethan age.
ROSTEN : I’m absolutely astounded that you say that John Maynard Keynes really didn’t know the economic literature. He had surely gone through it.
HAYEK: He knew very little. Even within the English tradition he knew very little of the great monetary writers of the nineteenth century. He knew nothing about Henry Thornton; he knew little about Ricardo, just the famous things. But he could have found any number of antecedents of his inflationary ideas in the 1820s and 1830s. When I told him about it, it was all new to him.
ROSTEN: How did he react? Was he sheepish? Was he–
HAYEK: Oh, no, not in the least. He was much too self-assured, convinced that what other people could have said about the subject was not frightfully important. At the end — well, not at the end — There was a period just after he had written The General Theory when he was so convinced he had redone the whole science that he was rather contemptuous of anything which had been done before.
ROSTEN: Did he maintain that confidence to the end?
HAYEK: I can’t say, because, as I said before, we had almost stopped talking economics. A great many other subjects — his general history of ideas and so on — we were interested in. 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. But economics was just a sideline for him. He had an amazing memory; he was extraordinarily widely read; but economics was not really his main interest. His own opinion was that he could re-create the subject, and he rather had contempt for most of the other economists.
ROSTEN: Does this tie in with your two kinds of minds? You wrote in Encounter some years ago a piece–
HAYEK: Curiously enough, I will say, Keynes was rather my type of mind, not the other. He certainly could not have been described as a master of his subject, as I described the other type. He was an intuitive thinker with a very wide knowledge in many fields, who had never felt that economics was weighty enough to — He just took it for granted that Marshall’s textbook contained everything one needed to know about this subject. There was a certain arrogance of Cambridge economics about — They thought they were the center of the world, and if you have learned Cambridge economics, you have nothing else worth learning.