I’m only 24 pages in to Hazlitt’s book, The Failure of the “New Economics”: An Analysis of Keynesian Fallacies, and already I’ve come across some juicy quotes criticizing price levels and macro-economics.
In the same way, “the general levelof wages,” like “the general level of prices” (both of which concepts are central to Keynes’s thought), has no existence in reality. It is a statistician’s construct, a mathematical average which has a limited value in simplifying certain problems. But it simplifies away some of the chief dynamic problems in economics. –p.24
The word “level” can give rise to an additional false assumption–that prices and wagse rise or fall evenly or uniformly. It is precisely their failure to do so that creates most of the problems of inflation or deflation. It is also the failure of specific prices or wages to rise or fall as much as the average that permits the continuous structural changes in production and in the labor force necessary for contrinuous economic efficiency and progress. –p.25
Keynes is constantly falling into this fallacy of averages or aggregates. His “aggregate” or “macro-economics” is not a step in advance; it is a retrograde step which conceals real relationships and real causation and leads him to erect an elaborate structure of fictitious and relationships and fictitious causation. –p.28
Tags: basket of goods, Henry Hazlitt, inflation, Keynes, Keynesian, prices, wages
