Wednesday, January 26, 2011

Hazlitt and Keynes: The Truth Seeker versus The Elitist

by Llewellyn H. Rockwell, Jr

John Maynard Keynes was born in 1883 and died in 1946. Henry Hazlitt was born in 1894, eleven years after Keynes, and lived much longer, until 1993. Their lives and loyalties are a study in contrast, and mostly of choices born of internal conviction, in Hazlitt’s case, or lack thereof, Keynes’s case.

Keynes became the most famous economist of the 20th century and the guru-crank whose work has inspired thousands of failed economic experiments and continues to inspire them today. He is the Svengali-like figure who implausibly convinced the world that saving is bad, inflation cures unemployment, investment can and should be socialized, consumers are fools whose interests should be dismissed, and capital can be made non-scarce by driving interest rates to zero – thereby turning the hard work of many hundreds of years by economists on its head.

Keynes had every privilege in life, and all the power and influence that an intellectual could have, and he used it all irresponsibly in service to the State.

Hazlitt was very nearly his foil. He did not come from privilege, did not enjoy a prestigious educational pedigree, and did not know any of the right people. He came from nowhere and worked his way up through sheer force of intellectual labor and moral determination.

Hazlitt eventually became one of the great public voices for free markets in the 20th century, writing in every popular venue he could and applying his enormous talents as a thinker and writer to defending and explaining free markets, showing how the classical economic wisdom was true and vastly improved by the Austrians, how sound money is essential for freedom, how market signaling works to achieve economic coordination, and how government policy is always and everywhere the enemy of freedom and prosperity.

Hazlitt’s great book Economics in One Lesson, written the year that Keynes died, boils down all of economics to a single principle and applies it across the board to all the policies of government. It is crystal clear in its language, designed to be read by anyone in an effort to achieve Mises’s dream of bringing economic wisdom to every citizen.

Keynes’s major work is The General Theory and it has been read by relatively few, mainly because it is so incomprehensible as to be nearly written in code. But then it wasn’t designed for everyone. It was written for the elites by a member of the most elite class of intellectuals on the planet. Even more effectively, it was written with an eye to impressing the elites in the one way they can be impressed: a book so convoluted and contradictory that it calls forth not comprehension but ascent through intimidation. Its success is a remarkable story of the bamboozlement of an entire profession, followed by the misleading of the entire world. If there are still believers in what Murray Rothbard called the Whig Theory of History – the idea that history is one long story of progress toward the truth – the success of The General Theory is the best case against it.

If I had to bet on which book will have greater longevity, however, I would go with Hazlitt. The same is true of Hazlitt’s great legacy. He died without much fame. In fact, his days of fame were far behind him, arguably reaching their height when he was an editorial writer for the New York Times. When he was told that he needed to write in defense of Keynes’s screwy plan for Bretton Woods, he balked and walked away. Thirteen years later, writing as a columnist for Newsweek, Hazlitt came out with a line-by-line refutation of Keynes’s General Theory. It is arguably his great work, the one begging to be written. He alone had seen the need. It continues to teach us today, and serves as something of a manual for the errors of government.

Both Hazlitt and Keynes began their educations with an intense interest in literature and philosophy, but eventually settled on economics. Both were in a position to make a choice of theoretical paradigms given the intellectual and political content of their times. Both were major public intellectuals. Both considered themselves to be liberals in the way that term was used before the New Deal, meaning a general disposition toward favoring human rights, free trade, and open societies.

In this spirit, Keynes wrote in opposition to the Treaty of Versailles that imposed savage terms on Germany after the war. He favored free trade and generally allied himself with that cause. Sadly, that tendency, which derived from the old world’s love of liberty, was incompatible with his life’s agenda, which he believed to be his birthright. That agenda was to rule the world through intellectual means by virtue of connections to the powerful. That essential humility that was at the core of the economics profession of the 19th century – the humility to embrace laissez-faire as a principle – was completely missing from his mind.

Keynes was born as a member of the ruling elite in Britain. His father, John Neville Keynes, and his father’s good friend Alfred Marshall were very powerful figures at Cambridge University. They shepherded him and introduced him to the right people, and the time came when he was inducted into the secret, super-elite society of top intellectuals in the English-speaking world. The group was called The Apostles, and this was the group that would come to shape his ideas and his approach to life. The group had been formed in 1820 and included top members of the British ruling class. They met every Saturday evening without fail, and spent most of the rest of their time during the week with each other. Membership was for life.

It is impossible to overestimate the extraordinary intellectual arrogance of this group. They would refer themselves as the only thing that is truly real in a Kantian sense, whereas the rest of the world was an illusion. Keynes as an undergraduate wrote to a fellow member as follows: "Is it monomania – this colossal moral superiority that we feel? I get the feeling that most of the rest [of the world outside the Apostles] never see anything at all – too stupid or too wicked."

Read the rest here.

Llewellyn H. Rockwell, Jr., former editorial assistant to Ludwig von Mises and congressional chief of staff to Ron Paul, is founder and chairman of the Mises Institute, executor for the estate of Murray N. Rothbard, and editor of See his books.


  1. This trumps Rothbard's assessment of Keynes, in "Keynes, the Man".

  2. I have wondered for just how long this country we call the USA has been a tool of British royalist or other european elites. For person with little understanding in all these matters like me, Socialism, Communism. Keynesian Economics seem like a con game whereby elites have devised a easily manageable ruse that tricks the majority into stealing and thereby handicapping any emerging class that threatens the order of their dominion. This picture of Keynes fits this narrative really well.