Hayek as Opponent of Keynesian Economics
In early 1931, Hayek traveled to Great Britain to deliver a series of lectures at the London School of Economics. The lectures created such a sensation that he was invited to permanently join the faculty of the LSE. In the early fall of 1931 these lectures appeared in book form under the title Prices and Production. So widely influential did this book and his other writings become at the time that through a good part of the 1930s, Hayek was the third-most frequently cited economist in the English-language economics journals. John Maynard Keynes and his Cambridge University colleague Dennis Robertson came in first and second.This began his decade-long challenge to Keynes’ emerging “new economics” of macroeconomics and its rationale for activist government manipulation through monetary and fiscal policy.In 1931–1932, Hayek wrote a lengthy two-part review of Keynes’s Treatise on Money for the British journal Economica. It was considered a devastating critique of Keynes’ work, one that forced Keynes to rethink his ideas and go back to the drawing board.At the same time, the Great Depression of the early 1930s served as the backdrop against which Hayek explained his own theory and criticized Keynes.