For Frank Knight, John Maynard Keynes Succeeded in Carrying Economic Thinking Well Back to the Dark Age

The Keynesian avalanche soon swept away virtually all the competing approaches, ideas, or theories with which to explain the business cycle. Indeed, there was hardly a voice in the mainstream of the economics profession that was willing or able to directly question or challenge the near Keynesian monopolization of economic thinking on problems of economy-wide fluctuations in employment, output, and prices.

When Frank H. Knight declared in his 1951 presidential address before the American Economic Association that in his view “The latest ‘new economics’ and in my opinion rather the worst, for fallacious doctrine and pernicious consequences, is that launched by the late John Maynard (Lord) Keynes, who for a decade succeeded in carrying economic thinking well back to the dark age” (Knight, 1951, p. 2) it must have created shock and disbelief among many who heard these words spoken. Few besides Frank Knight could have been so blunt without permanently risking their reputation and standing in the economics profession of that time.

What was this “dark age” back to which Keynes took economic thinking? At its core, I would suggest, was its focus on macroeconomic aggregate building blocks: Aggregate Demand, Aggregate Supply, Total Output and Employment, and the average Price Level and Wage Level.

—Richard M. Ebeling, “The Misdirection of Keynesian Aggregates for Understanding Monetary and Cyclical Processes,” in What’s Wrong with Keynesian Economic Theory? ed. Steven Kates (Cheltenham, UK: Edward Elgar Publishing, 2016), 79.