Sunday, August 11, 2013

Hayek did matter

Some interesting points have been raised, particularly in the area of citation counts (which is probably the clearest way to make the case). Ryan Murphy recalled that he was the third most cited economist in the 1930s after Keynes and Robertson.

Kevin Donoghue has the evidence on that one:
"That's Snowdon & Vane, referring to the years 1931-35. Original source they cite is Deutscher, "RG Hawtrey & the Development of Macroeconomics."  
But 1931-35 was Hayek's peak as a macro man. In 1920-30 he failed to make the top 10 (Keynes squeaked in at 10th). In 1936-39 Hayek was joint 7th, trailing Keynes, Robertson, Hicks, Pigou, Harrod and Hawtrey. In 1940-44 he again dropped out of the top 10."
Tyler Cowen also notes Alvin Hansen's assessment of Hayek's importance in real time - which I consider to be much more valuable an indicator than Hicks's statements decades later. Hansen of course was not predisposed to attribute much value to Hayek's work since he is generally associated with secular stagnation and long-wave type ideas about the business cycle.


  1. No, in this case, Alex Tabarrok notes Hansen's assessment, not Tyler Cowen.

  2. So Daniel, did Krugman make an honest mistake? Or did he just confidently rip his opponents without knowing what he was talking about? Or did he knowingly say something false, knowing there would be zero consequences for it?

    1. Bob, you're assuming a fact not in evidence. Did Krugman actually make a mistake, honest or otherwise? He wrote "back in the 30s nobody except Hayek would have considered his views a serious rival to those of Keynes" which is close to the truth, I think. It's not literally true, of course; quite likely Hayek's mother thought he was sweeping the field. But among prominent economists? There's Robbins I guess. But even he crumbled pretty quickly.

      I had another look at Skidelsky's biography of Keynes to see who featured promininently in the debate. Hayek gets plenty of mentions, but the really effective criticism came from Robertson. He thought Keynes went much too far in criticising the loanable funds approach. He convinced Hicks. That's the criticism that stuck.

    2. Kevin,

      A few posts ago, Daniel asked if maybe Krugman was right, even though Daniel was inclined to think not. Now in this post, Daniel is agreeing that Krugman was wrong. There have been several pieces of evidence offered, besides Robbins and Mrs. Hayek.

    3. I could still probably quibble on phrasing. I'd imagine if you asked "what are the top two macro approaches to this depression" the answer would be (much like today) Keynes and the monetarists. And also like today there's a decent amount of agreement between those two. Hayek, though, I think would be in the top five (along with the secular stagnation/technological unemployment/long waves crowd - the old RBCers). But that seems to essentially answer the question.

      This wasn't some random guy from Austria with an interesting but not a truly serious idea. This was a contender. He did not last long, of course.

    4. Proposals that indicate government should not intervene don't tend to last long in economics. I mean, Bastiat wrote his stuff on protectionism over 150 years ago, and we STILL have tons of that floating around. If we can't even get the obvious advantages of truly free trade across, then there's no way a business cycle theory that doesn't conclude "government can fix it" will ever lead to any real success (by which I mean $$$ from government grants, as that is the root of academic success nowadays, thanks to state schooling).

  3. I don't think that Hayek didn't matter, but I did see where Krugman was coming from when he said that Hayek made a "fool of himself" back then.

    Wasn't Hayek's formulation of ABCT controversial even before The General Theory finally came out for publication in early 1936?

    Although I haven't traced the publications from that period very closely, what little I've done gives me the sense that the English-speaking part of academic economics regarded ABCT as "controversial, but still respectable". I'm not denying that Hayek went up the citations list thanks to the arguments he made in Prices and Production and other publications. Samuelson even remembers that book by Hayek enjoying a "short-lived Byronic success".

    However, I'm not sure whether one could make the argument that Hayek's formulation of ABCT was close achieving total and utter intellectual domination over the minds of academic economists in the English-speaking world...

  4. Matt Tanous is right. The more your research looks like something governments can do, the more prestigious it will be. He who pays the piper, after all. It's not a conspiracy, it's just that power ain't power unless it's doing something!


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