Video: Hayek Explains Why He Did Not Challenge Keynes After 1935 -- A Catastrophic Decision
March 9, 2010
In this interview, Hayek recounts the events leading to The General Theory. He spent a year going through Keynes' Treatise on Money. Although he did not mention this, he published a critique on the Economic Journal. Keynes replied in print. Then, just before the second volume appeared, Keynes dismissed the debate. He told Hayek that he no longer believed all that.
Hayek said he decided not to challenge The General Theory. The problem was that he was widely regarded as Keynes' #1 opponent. When he remained mute, he surrendered the field to Keynes.
Hayek also said that Keynes' theory did not receive universal acclaim until after his death in 1946. This is no doubt true, but irrelevant. The book persuaded a generation of young economists before the War ended. Then Sanuelson's 1948 textbook conquered the academic discipline in the name of Keynes.