Money, Bank Credit, and Economic Cycles - The Ludwig von Mises ...

544 Money, Bank Credit, and Economic CyclesKeynes was not a highly trained or a very sophisticatedeconomic theorist. He started from a rather elementaryMarshallian economics and what had been achieved byWalras and Pareto, the Austrians and the Swedes was verymuch a closed book to him. I have reason to doubt whetherhe ever fully mastered the theory of international trade; Idon’t think he had ever thought systematically on the theoryof capital, and even in the theory of the value of moneyhis starting point—and later the object of his criticism—appears to have been a very simple, equation-of-exchangetypeof the quantity theory rather than the much moresophisticated cash-balances approach of Alfred Marshall. 51Keynes himself admitted there were gaps in his training,especially with respect to his inferior ability to read German.When referring to Mises’s works in his book, A Treatise onMoney, Keynes had no choice but to confess that his poorknowledge of German had prevented him from grasping theircontent as fully as he would have liked. He went on to say:In German I can only clearly understand what I knowalready!—so that new ideas are apt to be veiled from me bythe difficulties of language. 52SAY’S LAW OF MARKETSJohn Maynard Keynes begins his book, The General Theory,by condemning Say’s law as one of the fundamental principles51 F.A. Hayek, A Tiger by the Tail: A 40-Years’ Running Commentary on Keynesianismby Hayek, compiled and edited by Sudha R. Shenoy (London:Institute of Economic Affairs, 1972), p. 101.52 John Maynard Keynes, A Treatise on Money, vol. 1: The Pure Theory ofMoney, in The Collected Writings of John Maynard Keynes (London:Macmillan, 1971), vol. 5, p. 178, footnote 2. In the last piece of writing hepublished before his death, Haberler commented ironically on theweakness of the critical remarks Keynes directs at Mises in his review ofthe book, Theorie des Geldes und der Umlaufsmittel, printed in The EconomicJournal (September 1914) and republished on pp. 400–03 of volume11 of The Collected Writings. See Gottfried Haberler, “Reviewing aBook Without Reading It,” Austrian Economics Newsletter 8 (Winter,1995); also Journal of Economic Perspectives 10, no. 3 (Summer, 1996): 188.