John Maynard Keynes was the most influential economist of the twentieth century. This speaks poorly of the twentieth century.
In October 2009, I wrote an article for Lew Rockwell in which I outlined a plan to refute Keynes, line by line. Austrian economists are not found on major university campuses. I wrote it for a younger, untenured academic economist at some private college or obscure university who is willing to devote his career to the task. I still hope such a person takes up my challenge. I am not optimistic, however.
I have shifted focus here. The Keynes Project is a model for a multimedia effort. It focuses on his 1936 book, The General Theory of Employment, Interest, and Money, but it is not limited to this volume. It considers his earlier writings as a prelude to The General Theory.
The Keynes Project project will be both offensive and defensive, as any comprehensive critique should be. It will show what was wrong with Keynes’ economic theory, but it will use these critiques to provide an introduction to what is correct in economics — specifically, Austrian School economics.
The project must be guided by a single principle, a single theme: to refute Keynes’ single theme. The project must ask two questions.
1. If the problem is insufficient demand, where does the state confiscate the resources necessary to increase demand?
2. What would the original resource owners have done with these resources?
Keynes made the mistake that Bastiat warned against: the fallacy of the thing not seen. It is the broken window fallacy.
It goes back to one source: Bernard Mandeville’s poem, The Grumbling Hive (1705). This is why Keynes in The General Theoryquotes from it. Refute it. Start here: //www.garynorth.com/public/13333.cfm.
Then go to J. B. Say. Defend him. Show that Keynes misrepresented Say’s law.
Then go to the classic refutation of Keynes: Henry Hazlitt’s The Failure of the “New Economics” (1959).
Always return to these two questions. Never let the reader forget these two questions.
This project is governed by this presupposition: You can’t beat something with nothing. It is not just that Keynes was wrong. It is that he was wrong in specific ways, violating specific insights of generations of previous economists, but especially those of Ludwig von Mises and F. A. Hayek, Keynes’ chief rival in 1935.