24 Dec 2011

Don't Mess With The Keynesians, Bringing in the Gunslinger: Nicholas Wapshott on Keynes vs. Hayek

Keynes and Hayek were defining figures in 20th century economics. In this INET interview, Nicholas Wapshott talks about his book, Keynes Hayek: The Clash that Defined Modern Economics, and about the intellectual clashes between two foundational economic thinkers. He details how the "gunslinger," Hayek, was brought in to London to bring down the "panther," Keynes. Things were about to get ungentlemanly. Source
the different characters of Keynes and Hayek, which Wapshott says had a profound influence on their preferred policy programs. While Keynes was an optimist, Hayek was a pessimist who "assumed that if things could go wrong, they would go wrong."
Let us be humble, and appreciate the limits of our knowledge -- such was Hayek's credo, as Nicholas Wapshott explains
Nicholas Wapshott suggests that modern economists would do well to remember the work of Keynes now, as they have strayed too far from the lessons of Keynes in pursuit of ever more refined modeling technique. In the same vein, modern policy makers would do well to remember paying off debt during a boom, as Keynes had suggested.
How the conflict between Keynes and Hayek has carried forward into modern debates over the proper role of governance. As policy debates still wage on today over austerity vs. stimulus, the ideological clash of these two great economists seems more relevant than ever.