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Quotation of the Day…

… is from page 238 of Vol. 9 (Contra Keynes and Cambridge [1995]) of Hayek’s Collected Works – and in particular from Hayek’s contribution to a symposium entitled “Symposium on Keynes: Why?” featured in the September 11, 1959, edition of the Christian Science Monitor:

Yet it [Keynes’s General Theory] was based on assumptions even more unrealistic that those Keynes ascribed to what he called classical economics.  If it was a defect of the latter that it assumed for a first approach that there existed no reserves of unused resources, Keynes was even more unrealistic in assuming that there existed always ample reserves of all resources.

In short he assumed away that scarcity of resources which is the root of all our economic problems.  In consequence, while of doubtful application even in times of depression, his original theory is entirely inapplicable in times of prosperity.