The Failure of the New Economics

One of this country's most brilliant economists for many years, Henry Hazlitt has long suffered grievous neglect by the economics profession. Part of the reason, no doubt, is Hazlitt's uncompromising devotion to liberty and the free market. But perhaps even more important is the failure of Henry Hazlitt to play by the absurd and obscurantist rules of the social science game. He persists in writing prose of brilliant lucidity, free from the obfuscating jargon of social science pedantry. And he has dared to write works of economic theory without possessing the passport of a teaching post in academe.

Having two and one-half strikes against him, however, has not deterred Henry Hazlitt in his lonely but fruitful course. Fifteen years ago, he published The Failure of the New Economics, at a time when the jargon-studded obscurantist statism of Keynesian Economics had reached a high-water mark in the profession and in the world at large. Ignoring all the attempts of epigones to read into or make sense out of Keynes' famous General Theory, Hazlitt sat down with the General Theory itself and analyzed it, page by page, until not a shred of that work remains standing. Hazlitt makes what could be a dull exercise into an exciting adventure; for one thing, he takes the opportunity, in the course of his devastating refutation of Keynes, to set forth the correct, "Austrian" counter-position on each of the numerous issues that arise.

Unfortunately but predictably, Hazlitt's blockbuster work of demolition of Lord Keynes was totally ignored by the profession; as a result, it has taken the world of economics over a decade even to begin the task of casting doubt on the Keynesian Myth. That work is now proceeding, but often unsoundly, because deprived of the Austrian alternative that Hazlitt sets forth in The Failure of the New Economics.

The work of scuttling Keynesianism has at last begun, but not only that. The last few years have seen a spectacular revival—among younger economists and among the concerned public—of interest in the long-neglected "Austrian School." The reprinting of this classic, then, is particularly timely on two counts: because it is indispensable for a thorough demolition of the Keynesian System; and because it presents, step-by-step, the Austrian alternative to and critique of modern "macroeconomics." Anyone interested in the battle between sound economics and statists' fallacies should read this book.

Reviewed by Murray N. Rothbard / Economics (458 Pages, Indexed) / BFL Price $9.95