“Keynes was an applied economist who turned to inventing theory because the theory he had inherited could not properly explain what was happening.”

—  Robert Skidelsky

Source: John Maynard Keynes: 1883-1946: Economist, Philosopher, Statesman (2003), Ch. 27. Portraits of an Unusual Economist

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Robert Skidelsky 12
Economist and author 1939

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“I have concentrated thus far on one aspect of achievement: the creation of a theory or theories, which in some form pass into the standard usage of economists. But with Keynes, and with other economists, theories were not the whole story. Keynes was also an applied economist using the existing body of theory in conjunction with the available facts of the world to try to shape certain outcomes, be they the international monetary system in 1931–2 or 1941–6, or the financial policy of the British Government in 1915, 1929–33 or 1940–6. And shape them he did with some success through various forms of private and public persuasion. How he did so and why he did so are also subjects for historians of economics, not to mention biographers, who may in the process of writing a biography have acquired additional perspectives.”

Donald Moggridge (1943) American economic historian

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“In the years after 1936, whilst Hayek was working on The Pure Theory of Capital, most economists were convinced by Keynes, whose theory had an elegance and simplicity that Hayek’s did not. Keynes’ theory lacked Hayek’s theoretical rigor in that it was not based on equilibrium (on individual rationality), and there were places in the argument where Keynes relied on loose, informal arguments, preferring to put his trust in intuition rather than formal theory. Keynesians did not solve the problems with capital theory that Hayek had identified: they just bypassed or ignored them. According to Hayek’s methodological criteria, Keynes’ theory was decidedly inferior. Against this, Keynes’ theory provided opportunities for mathematical and statistical analysis that Hayek’s did not. Indeed, though Hayek paid some attention to data, he did so only minimally: he certainly made no attempt to test his theory against statistical data. The choice of Keynesian theory was, at least in part, a methodological one.”

Roger Backhouse (economist) (1951) British economist

"Hayek on money and the business cycle", 2006

“As the title of his 1941 book indicates, the theory of capital lay at the heart of his theory of the cycle. The reason is that he attributes the cycle not to changes in aggregate demand, or even to changes in the quantity of capital, but to changes in the structure of production and hence the structure of the capital stock. In this, his theory was highly unusual: one of the reasons for his failure to engage more effectively with Keynes was the latter’s inability to see how the theory of capital could be of any importance for the cycle. Because the theory of capital is so central, and because it is so complex, it needs to be explained carefully. After that, the rest of his theory falls into place comparatively easily.”

Roger Backhouse (economist) (1951) British economist

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“Keynes was a great economist. In every discipline, progress comes from people who make hypotheses, most of which turn out to be wrong, but all of which ultimately point to the right answer. Now Keynes, in The General Theory of Employment, Interest and Money, set forth a hypothesis which was a beautiful one, and it really altered the shape of economics. But it turned out that it was a wrong hypothesis. That doesn't mean that he wasn't a great man!”

Milton Friedman (1912–2006) American economist, statistician, and writer

As quoted in Opinion Journal (22 July 2006) http://www.opinionjournal.com/editorial/feature.html?id=110008690

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“What theory can we use to get us out of the impending slump quickly and reliably? To use the 'new classical' theory of fluctuations begun at Chicago in the 1970s – the theory in which the "risk management" models are embedded – is unthinkable, since it is precisely the theory falsified by the asset price collapse. The thoughts of some have turned to John Maynard Keynes. His insights into uncertainty and speculation were deep. Yet his employment theory was problematic and the 'Keynesian' policy solutions are questionable at best…. At the end of his life Keynes wrote of 'modernist stuff, gone wrong and turned sour and silly'. He told his friend Friedrich Hayek he intended to re-examine his theory in his next book. He would have moved on. The admiration we all have for Keynes's fabulous contributions should not sway us from moving on.”

Edmund Phelps (1933) American economist

Edmund Phelps "Keynes had no sure cure for slumps."in: The Financial Times. Columbia University, November 4, 2008.

“When Keynes’s General Theory was published in February 1936, it obliterated all else on the scene in academic economics. Hayek was known to be working on a treatise on capital as Keynes’s work was published (the work that became The Pure Theory of Capital). While there was some anticipation in academia for this forthcoming major work, interest even by economists in Hayek’s work waned.”

Alan O. Ebenstein (1959) American political scientist, educator and author

Hayek's Journey: The Mind of Friedrich Hayek (2003)

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“If a 19th century capitalist Machiavelli had wished to cripple the socialist intelligentsia of the 20th century, he could have invented no more cogent weapon than the labour theory of value. Yet this theory was the invention, not of a defender of capitalism, but of its greatest critic: Karl Marx.”

Steve Keen (1953) Australian economist

Source: Debunking Economics - The Naked Emperor Of The Social Sciences (2001), Chapter 13, Nothing To Lose But Their Minds, p. 270–271 (See also: Adam Smith, Wealth of Nations, Book I, Chapter VI, p. 58)

“Because intersectionality is a concept (a description of the experience of multiple oppressions, without explaining their causes) rather than a theory (which does attempt to explain the root causes of oppressions), it can be applied alongside different theories of oppression--theories informed by Marxism or postmodernism, but also separatism, etc. Because Marxism and postmodernism are often antithetical, their specific uses of the concept of intersectionality can be very different and in very different and contrary ways.”

Sharon Smith (writer) (1956) American historian

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“John Maynard Keynes may have had more influence on policy makers, Milton Friedman on citizens, Kenneth Arrow on economic theory, but Samuelson had more influence on the way economics is done today, and the purposes to which it is put, than any other economist of the twentieth century.”

David Warsh (1944) American journalist

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“Since the 1960s, particle theory had been split into two groups: those following the atomism of the quark theory and those who had followed the anti-atomism of that had led from the bootstrap program to the string theory. What happened in 1984 was that it was realised that string theory could combine and satisfy the aspirations of both approaches to fundamental physics. Thus, the community of gauge theorists, driven by the failure of the proton decay experiments to search for new ideas that could unify physics, all of a sudden encountered their old friends, the string theorists, in the middle of what might be called a desert of disappointed expectations.”

Lee Smolin book The Life of the Cosmos

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