interview: Friedrich Hayek on John Maynard Keynes – Part II

Did John Maynard Keynes know the work of Knut Wicksell, did he read Schumpeter, what economics did he know?  Friedrich Hayek answers these questions and more in an interview with Leo Rosten:

ROSTEN:  … Is it true that he said, “I am no longer a Keynesian”?

HAYEK: I haven’t heard him say so; it’s quite likely. But, after all, Keynesianism spread only just about the time of his death. You mustn’t forget that he died as early as ’46, just as the thing became generally accepted. In fact, I sometimes say that his death made him a saint whose word was not to be criticized.

If Keynes had lived, he would greatly have modified his own ideas, as he always was changing opinion. He would never have stuck to this particular set of beliefs. And you could argue with him. Since we are speaking about him, curiously enough the two persons I found most interesting to talk to for an evening were Keynes and Schumpeter, two economists who were the best conversationalists and the most widely educated people in general terms I knew — with the difference that Schumpeter knew the history of economics intimately and Keynes did not.

ROSTEN: Had Keynes read Schumpeter?

HAYEK: I would assume yes, but he wasn’t reading much contemporary economics, either. He probably had an idea [of him]. I have seen them together; so I know he knew
Schumpeter. But I doubt whether he carefully studied any of … Schumpeter ‘s book on capitalism, which I mentioned before, came out in wartime, when he was much too busy to read anything of the kind. As for Schumpeter ‘s earlier works, I would suspect Keynes had read the brochure Schumpeter wrote on money, because that was in his immediate field, but probably nothing else.

ROSTEN: I’m interested in your earlier comment about the fact that here is a man of immense intelligence, great imagination, wide learning, and so on, and yet was not an economist. I’m not clear whether you mean he didn’t have the kind of mind that excels in economics — just as in mathematics, say, you can find people who are brilliant but who, given mathematics, are just hopeless — or do you mean he didn’t have the kind of mind that makes for first-rate economists?

HAYEK: Oh, yes, he had. If he had given his whole mind to economics, he could have become a master of economics, of the existing body. But there were certain parts of economic theory which he had never been interested in. He had never thought about the theory of capital; he was very shaky even on the theory of international trade; he was well informed on contemporary monetary theory, but even there he did not know such things as Henry Thornton or Wicksell; and of course his great defect was he didn’t read any foreign language except French. The whole German literature was inaccessible to him. He did, curiously enough, review Mises’s book on money, but later admitting that in German he could only understand what he knew already. [laughter]

ROSTEN: What he had known before he read the book. How would you distinguish the streams that economics took in Austria and Sweden and England during your time?

HAYEK: Well, in England unfortunately — Sweden and Austria were moving on parallel lines — if Jevons had lived, or if his extraordinarily brilliant pupil Wicksteed had had more influence, things may have developed in a different direction; but Marshall established almost a monopoly, and by the time I came to England, with the exception of the London School of Economics, where Edwin Cannan had created a different position, and where Robbins was one of the few economists who knew the literature of the world — he drew on everything — England was dominated by Marshallian thinking. And this idea that if you knew Marshall there was nothing else worth reading was very widespread.

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