Here’s a letter to the Washington Post:
Even if everything Lord Keynes wrote about a capitalist economy is right, Nicholas Wapshott is wrong to write about Keynes that “we owe our understanding of how an economy works to him” (“Was Keynes a Keynesian? In theory.” Sept. 4).
Keynes contributed nothing to that most fundamental analytical tool used by economists still today: supply and demand. (That analysis was fully formed a generation before Keynes wrote.) Not surprisingly, then, Keynes added nothing to our understanding of the vital role of prices in allocating resources. Likewise, he added nothing to our understanding of competition, of the determinants of industrial concentration, or of the function of the entrepreneur. His contribution to international-trade analysis was minimal, as were his additions to our knowledge of economic history and of economic development.
The claim that “we owe our understanding of how an economy works” to Keynes is like saying that we owe our understanding of the way an automobile works to someone who famously explained only why automobiles sometimes run out of gas and what are the consequences of such a misfortune. Even if unassailable in every detail, such an explanation isn’t remotely close to being a “general theory” of how the mechanism in question operates.
Donald J. Boudreaux
Hayek wrote in 1937 that “before we can explain why people commit mistakes, we must first explain why they should ever be right.” Reasonable people might credit Keynes with better explaining why people commit mistakes, but it is simply absurd to credit Keynes with playing a key role in explaining why and how economies work well enough in the first place ever to break down.