The Failure of the "New Economics‪"‬

Henry Hazlitt did the seemingly impossible — something that was and is a magnificent service to all people everywhere. He wrote a line-by-line commentary and refutation of one of the most destructive, fallacious, and convoluted books of the century. The target here is John Maynard Keynes's General Theory, the book that appeared in 1936 and swept all before it.

In economic science, Keynes changed everything. He supposedly demonstrated that prices don't work, that private investment is unstable, that sound money is intolerable, and that government is needed to shore up the system and save it. It was simply astonishing how economists the world over put up with this, but it happened. He converted a whole generation in the late period of the Great Depression. By the 1950s, almost everyone was Keynesian.

But Hazlitt, the nation's economics teacher, would have none of it. And he did the hard work of actually going through the book to evaluate its logic according to Austrian-style logical reasoning. The result: a 500-page masterpiece of exposition.

Far from being a dull read, this book has all the brightness and clarity we've come to expect from Hazlitt. He is a dazzling writer, and one can't but thrill to see him in the ring with the giant Keynes. By the time he delivers the knock-out punch — taking on Keynes's suggestion that we nationalize investment — there is nothing left of his opponent.

By now, Keynesian theory is so woven into both economic theory and policy that hardly anyone notices it anymore. Hazlitt helps us stand up and take notice of the extent to which we've allowed sheer fallacy to dominate our thinking.

This new edition by the Mises Institute is a pleasure to release, after so many years of being out of print. Hazlitt lives again to give Keynes the treatment he deserves and no one else dared give him.