- Adam Smith did not use the phrase "The invisible hand" to refer to the optimality properties of a static general equilibrium supposedly brought about by the workings of competitive markets.
- Thomas Carlyle did not coin the phrase "The dismal science" to refer to Thomas Malthus's anti-utopian theory of population. According to that theory, human population responds endogenously to increased prosperity, thereby making impossible any rapidly established, long-lasting general rise in per capita income beyond the custom and habits of mankind.
- John Maynard Keynes, in The General Theory of Employment, Interest, and Money, did not explain widespread and persistent unemployment by sticky, rigid, or slowly adjusting money wages and prices - a pre-Keynesian theory that, in fact, he opposed.
Saturday, November 12, 2011
Posted by dkuehn at 11:24 AM
"It seems to be a quixotic and never-ending task to oppose demonstrably false statements about economics, often made by economists." - Robert Vienneau
I feel like that summarizes a lot of my blogging career.
Specific points he calls: "well established" propositions:
I would put number 3. slightly differently. Rigid money wages were a pre-Keynesian theory, and they were not the explanation Keynes provided, but I think it's too strong to say Keynes "opposed" the theory. He makes very similar points to the wage rigidity argument in parts of ch. 19, they simply don't form a central part of the argument. Keynes criticized Pigou for leaving it at rigid wages - not for being wrong about rigid wages.
Two interesting points that I think most people don't know about the invisible hand: (1.) he uses the phrase much later - a couple hundred pages into the book - than most people realize, and (2.) he first used the term in the Theory of Moral Sentiments, years before Wealth of Nations.