From The HET Website. A typical revolution from below, led by the young who knew nothing but wished to make the presence felt. A conceptual disaster, along the lines of Aristotle’s arguments on the charging of interest.
The response to the publication of John Maynard Keynes‘s General Theory of Employment, Interest and Money (1936) was immediate and controversial – and a cleavage between young economists and their older counterparts was immediately carved.
From Cambridge, Keynes’s students rushed to publication to further explain his ideas: Joan Robinson (1937) and James E. Meade (1936, 1937), two of the members of Keynes’s “Circus”, produced particularly able “restatements” of the General Theory. The exposition of a third member of the Circus, Austin Robinson (1936, The Economist), reached a wider audience. Two of Keynes’s tutorial students also rushed to publish reviews: W.B. Reddaway (1936, Economic Record) and D.G. Champernowne (1936, RES), with the latter being slightly more critical.
However, among the Cambridge professors, the consequences were grievously divisive (for an account, see Kahn, 1984; Skidelsky, 1992). J.M. Keynes almost completely ruptured his relationships with his old Cantabrigian colleagues – Arthur C. Pigou, Hubert D. Henderson, Dennis H. Robertson and Ralph G. Hawtrey. Although the strife was confined largely to personal exchanges within the Cambridge halls, some anger found its way into the printing presses. A.C. Pigou (1936, Economica), portrayed as the “villain” by the General Theory, tried to go immediately on the counterattack but his counterblast was feeble. H.D. Henderson (1936, Spectator) fired off an even more personally vindictive fusillade. In contrast, Dennis Robertson‘s (1936, QJE) reply had a bit more of substance and engendered a short journal debate with Keynes.
The generational differences in reception were also evident outside of Cambridge. Elsewhere in Britain, the youthful Abba Lerner (1936, Int Lab Rev), John Hicks (1936, EJ) and Roy Harrod (1937, Econometrica) produced quite sympathetic reviews.
Surprisingly, neither of Keynes’s old rivals at the London School of Economics, Friedrich A. von Hayek and Lionel Robbins, reviewed or even responded to Keynes’s new book. But the damage was permanent: the enthusiasm for the General Theory by their most promising students – particularly Lerner, Hicks and, eventually, Kaldor – was the beginning of the end of the L.S.E.’s attempt to steal the crown of English economics from Cambridge.
From America, the initial response was cold: the main reviews by Jacob Viner (1936, QJE), Alvin Hansen (1936, JPE), Joseph Schumpeter (1936, JASA), Frank Taussig (1936, QJE), Wassily Leontief (1936, QJE), C.O. Hardy (1936, AER) and Frank Knight (1937, Canadian JE) were almost uniformly negative. Of all his reviewers, Keynes only deigned to respond to Viner’s in his now-famous article, “The General Theory of Employment” (Keynes, 1937, QJE).
With the unfortunate exception of Nazi Germany (where a translation was published “on paper rather better than usual and the price not much higher than usual”, as Keynes put it), Keynes’s General Theory was largely ignored on the European continent. The few reviews that emerged from there, particularly those by Gustav Cassel (1937, Int Lab Rev) from Sweden and Gottfried Haberler (1936, ZfN) from Austria, were quite hostile. In France, the professional (and personal) hostility of influential conservative economists such as Jacques Rueff guaranteed that the book would not even be translated until 1948.