Rethinking the Keynesian Revolution

Keynes, Hayek, and the Wicksell Connection

Tyler Beck Goodspeed

The controversial thesis could potentially arouse indignation among Post-Keynesians, Austrians, and mainstream economists alike, grappling with some very difficult texts (particularly of Hayek's) which have not been seriously studied.
This book will appeal to economists interested in historical perspective of their discipline, as well as historians of economic thought

Rethinking the Keynesian Revolution

Keynes, Hayek, and the Wicksell Connection

Tyler Beck Goodspeed

Description

While standard accounts of the 1930s debates surrounding economic thought pit John Maynard Keynes against Friedrich von Hayek in a clash of ideology, this reflexive dichotomy is in many respects superficial. It is the argument of this book that both Keynes and Hayek developed their respective theories of the business cycle within the tradition of Swedish economist Knut Wicksell, and that this shared genealogy manifested itself in significant theoretical affinities between the two supposed antagonists. The salient features of Wicksell's work, namely the importance of money, the role of uncertainty, coordination failures, and the element of time in capital accumulation, all motivated the Keynesian and Hayekian theories of economic fluctuations. They also contributed to a fundamental convergence between the two economists during the 1930s. This shared, "Wicksellian" vision of economic problems points to a very different research agenda from that of the Walrasian-style, general equilibrium analysis that has dominated postwar macroeconomics.

This book will appeal to economists interested in historical perspective of their discipline, as well as historians of economic thought. The author not only deconstructs some of the historical misconceptions of the Keynes versus Hayek debate, but also suggests how the insights uncovered can inform and instruct modern theory. While much of the analysis is technical, it does not assume previous knowledge of 1930s economic theory, and should be accessible to academics and graduate students with general economics training.

Rethinking the Keynesian Revolution

Keynes, Hayek, and the Wicksell Connection

Tyler Beck Goodspeed

Introduction: Rethinking the Keynesian Revolution
1. The Wicksell Connection
1.1. Wicksell's Monetary Theory
1.2. Wicksell's Capital Theory
1.3. The Wicksell Connection
2. A Treatise vs. Prices and Production
2.1. A Treatise on Money
2.2. Prices and Production
2.3. The Wicksell Connection
3. The Sraffa Connection
3.1. Hayek on Keynes
3.2. Keynes on Hayek
3.3. Sraffa on Hayek
4. The General Theory
4.1. Own-Rates of Interest and the Marginal Efficiency of Capital
4.2. Liquidity Preference
4.3. The Cumulative Process
5. Pure Theory of Capital
5.1. Rates of Increase of the Product
5.2. Marginal Value Product of Investment
5.3. The Cumulative Process
6: Keynes, Hayek, and the Wicksell Connection
Bibliography

Rethinking the Keynesian Revolution

Keynes, Hayek, and the Wicksell Connection

Tyler Beck Goodspeed

Author Information

Currently a Ph.D. candidate at Harvard University, Tyler Goodspeed was previously a Gates Scholar at the University of Cambridge, earning Class I* Honours for his dissertation on Keynes and Hayek. He received an A.B. with highest honors in economics and history from Harvard.

Rethinking the Keynesian Revolution

Keynes, Hayek, and the Wicksell Connection

Tyler Beck Goodspeed

Reviews and Awards

"This is a fascinating book that will have a major impact. Goodspeed's idea of linking Keynes and Hayek (via Wicksell) is counter-intuitive at first sight, but it turns out to unlock a major and productive discussion of the theory of uncertainty, including uncertainty about financial markets, that is central to many present day discussions in the aftermath of the financial crisis. The account is original and uses a nice set of completely new archival materials on Keynes' relationship with Hayek." --Harold James, Professor of History and International Affairs, Princeton University

"Tyler Goodspeed does an excellent job in this intriguing work to explain the debate that raged in the middle of the twentieth century between two of its then most prominent economists, J.M. Keynes and the too long ignored Friedrich von Hayek. Goodspeed perceptively opens up for the reader's examination the pivotal issues surrounding their significant differences and the theoretical principles they shared, as well the behind-the-scenes role played by Piero Sraffra in fueling their debate and forcing these two interlocutors to refine their respective positions. This is highly recommended reading for scholars involved in this field of study." --Donald J. Oswald, Professor of Economics, California State University, Bakersfield

"Goodspeed has here provided a solid, technical and historical recounting of the older Cambridge Capital Controversies that will be quite useful for scholars interested in Keynes, Hayek, and the economics that issued from Cambridge." --The European Journal of the History of Economic Thought