The “Answer” To Keynes?

Press, Volume XCVII, Issue 28530, 8 March 1958, Page 3

The “Answer” To Keynes?

Common Sense Economics. By L. Albert Hahn. 244 pp. “What is new in Keynes’s work is not good, and what is good is not new.” The man who made this criticism nearly 10 years ago. Dr. Hahn, had, in 1920, anticipated much of . the “General Theory of Employment, Interest and Money,” but has since renounced his earlier views. Dr. Hahn says his “Common Sense Economics” was written in answer to requests for a positive exposition of an economic theory “which offered a more correct explanation and description of economic reality” than did Lord Keynes’s theory. “Inflationary credit expansion” is the special target for Dr. Hahn’s criticism. Governments encourage an expansion of credit to counteract unemployment; production and profits rise; and whether prices rise (through increased costs) or remain stable (through a lag m costs), the result is the same: crisis and depression. This depressing conclusion follows, reasonably enough, from. Dr. Hahn’s assumptions, which are, in the main, a denial of the Keynesian assumptions. For instance: “employment should be guaranteed only to those who are willing to work at wages fixed by the government. Those not willing to work at these wages should be considered as voluntary unemployed, and excluded from any unemployment benefits. . . . There must always be a wage level that is sufficiently low to guarantee the absorption of supply by demand.” The reader may well ask whether such assumptions are any less unreal than some of the assumptions of Lord Keynes which Dr. Hahn—rightly and usefully—criticised in 1949. The inclusion of a list of eight errata gives the impression that the English edition of the book was prepared in some haste.