by Mitch Kokai
Senior Political Analyst, John Locke Foundation
During the last academic year, Duke University hosted both a lecture by Nicholas Wapshott on his book Keynes-Hayek and a debate about the causes of the Great Depression that featured George Mason University economist Lawrence H. White.
If either of those events piqued your interest, you’ll likely enjoy White’s new book, which is profiled in the latest Barron’s. It’s titled The Clash Of Economic Ideas, and one of its topics is the “epic standoff” between Keynes and Hayek.
While he clearly favors Hayek’s side of the argument, he gives adequate space to both sides. Anyone interested in how economists “have thought and argued” over the past century and how they have “influenced policy and institutional design” will enjoy this wide-ranging and ambitious work.
Keynes was considered brilliant. But he was often wrong, as White shows by covering the back-and-forth on everything from the “paradox of thrift” — in which Keynes argued that increased savings denied the economy the spending it needed to grow — to the broader Keynesian proposition that, when it comes to planning, what “we almost certainly want is more.”
Hayek believed in the spontaneous order created by free markets and prices. He warned in 1935 that there was already too much government planning. “The world of today is just interventionist chaos,” he wrote. Centralized, government planning, in his view, was “just interventionist chaos.” He also subscribed to the supply-side economics of Jean-Baptiste Say, and Say’s Law, which, as White explains, “implies that production (not demand) is the limit to prosperity.”