Tuesday, 13 August 2013

Austrians and Keynes Revisited

By John P. Cochran

Peter Boettke highlights more nonsense from Paul Krugman. Krugman again demonstrates a complete lack of appreciation for and understanding of Hayek’s (and Mises’s) significant contributions to what is now called macroeconomics. Krugman writes re Hayek and Keynes, “back in the 30s nobody except Hayek would have considered his views a serious rival to those of Keynes.” This would be news to leftist journalist, Nicholas Wapshott, author of Keynes Hayek: The Clash that Defined Modern Economics (reviewed here). While Wapshott’s presentation of Hayek and his views is mostly a hatchet job, he does provide relatively strong evidence of an important competition between the ideas of Keynes and Hayek during the 1930s. This assessment is supported, at least for English economics, by the stature of the participants (Keynes, Hayek, Kaldor, Sraffa, Knight, and Robbins) and the reputation of the journals (Economica, Economic Journal, Econometrica, The Review of Economic Statistics) carrying the exchanges. Further evidence is provided in the correspondence between Hayek and Keynes. What is a shame now is how columnists like Krugman work so hard to discredit Hayek in order to keep these ideas from challenging the current revival of knee jerk Keynesian policy.

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