Why Keynesian concepts cannot be used to explain pre-Keynesian economic thought: A reader's guide to classical economic theory

This note is built around five issues that center on the damage to economic theory caused by Keynes and his General Theory. They have been brought to mind by Machovec in his paper, "Our Classical Macro Heritage" (2014) but there are other similar papers in which classical economic thought is explained using Keynesian concepts with the actual intent of classical economists distorted if not actually lost. This article is thus a reader's guide to classical economic theory, and in this I am referring to mainstream economics from the first publication of Adam Smith's Wealth of Nations in 1776 through until the 1871 seventh edition of John Stuart Mill's Principles, the last published during his lifetime. And while there are a larger number of issues that could be covered, only five will be dealt with here. These are: the lack of an understanding of Say's Law and why it is important; the need to distinguish between the real economy and money at every stage of an economic analysis; the classical meaning of saving and investment; the inappropriateness of using Keynesian concepts to interpret pre-Keynesian economic thought; and the importance of understanding the history of economic thought if one is to understand modern economic thought. There is finally a discussion of the need to return to classical pre-Keynesian theories of the cycle, of which Austrian economics is the sole manifestation that had been able to remain intact in the wake of the Keynesian Revolution.