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Keynes Hayek: The Clash that Defined Modern Economics
“I defy anybody―Keynesian, Hayekian, or uncommitted―to read [Wapshott’s] work and not learn something new.”―John Cassidy, The New Yorker As the stock market crash of 1929 plunged the world into turmoil, two men emerged with competing claims on how to restore balance to economies gone awry. John Maynard Keynes, the mercurial Cambridge economist, believed that government had a duty to spend when others would not. He met his opposite in a little-known Austrian economics professor, Freidrich Hayek, who considered attempts to intervene both pointless and potentially dangerous. The battle lines thus drawn, Keynesian economics would dominate for decades and coincide with an era of unprecedented prosperity, but conservative economists and political leaders would eventually embrace and execute Hayek's contrary vision.
From their first face-to-face encounter to the heated arguments between their ardent disciples, Nicholas Wapshott here unearths the contemporary relevance of Keynes and Hayek, as present-day arguments over the virtues of the free market and government intervention rage with the same ferocity as they did in the 1930s.
From their first face-to-face encounter to the heated arguments between their ardent disciples, Nicholas Wapshott here unearths the contemporary relevance of Keynes and Hayek, as present-day arguments over the virtues of the free market and government intervention rage with the same ferocity as they did in the 1930s.
400 pages, Paperback
First published January 1, 2011
440 people are currently reading
5021 people want to read
About the author
Nicholas Wapshott
16 books38 followersNicholas Wapshott is a journalist and the author of Ronald Reagan and Margaret Thatcher: A Political Marriage. A former senior editor at The Times of London and the New York Sun, he lives in New York.
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Displaying 1 - 30 of 285 reviews
June 9, 2022
This is a great book to get brief biographies of Hayek (the free marketer) and Keynes (the interventionist), an understanding of their philosophical differences, and a historical overview of who “won” both in the intellectual and political arenas. The economics stuff does get a bit technical at times, but I think Wapshott does an excellent job at making it understandable to a broad audience.
It was the historical overview of who “won” that was my favorite part of the book. Wapshott explains who was more relevant across different time periods. In the beginning, Keynes took a commanding lead. He had a lot of advantages in selling his ideas. He was more charismatic and persuasive, which enabled him to spread his ideas to influential politicians and economists. He was a better writer than Hayek. Keynes being an Englishman put him closer to the center of the study of Economics, and conversely Hayek being Austrian and a non-native English speaker put him at a disadvantage.
Keynes also had an intellectual product that was a lot more exciting to sell than Hayek’s. With Keynesian economics, there is the promise of eliminating economic downturns. Economists would be more powerful in a Keynesian world than a Hayekian one. And politicians are told that they can spend money, giving people what they want, without needing to worry about deficits.
But Hayek held his own. He did have something of a “status quo” advantage, as at the time Hayek’s free market approach was closer to the standard view. It is interesting to think how things might have turned out differently if Hayek was a more dynamic personality.
Around 1980, Hayekian ideas had a resurgence. Reagan and Thatcher were elected. Persistent struggles with inflation damaged the credibility of Keynesian ideas to eliminate economic downturns. Even with the election of Clinton, historically speaking it was a time where “big government” was out of fashion.
But this turned around again with the Great Recession events starting in about 2007. Suddenly, the economic intellectual community moved back toward Keynes. The recession did end after massive stimulus amounts were poured into the economy, though of course we can't prove whether there was a causal link or just a correlation. Regardless, it is a challenge for Hayekians. The book was written in 2011 so that’s about where it ends.
I became interested in the Keynes / Hayek debates from listening to the excellent Econtalk podcast. Wapshott was on the podcast once and I think this interview is great, whether you use it as a supplement or a substitute for reading the book.
https://www.econtalk.org/wapshott-on-...
It was the historical overview of who “won” that was my favorite part of the book. Wapshott explains who was more relevant across different time periods. In the beginning, Keynes took a commanding lead. He had a lot of advantages in selling his ideas. He was more charismatic and persuasive, which enabled him to spread his ideas to influential politicians and economists. He was a better writer than Hayek. Keynes being an Englishman put him closer to the center of the study of Economics, and conversely Hayek being Austrian and a non-native English speaker put him at a disadvantage.
Keynes also had an intellectual product that was a lot more exciting to sell than Hayek’s. With Keynesian economics, there is the promise of eliminating economic downturns. Economists would be more powerful in a Keynesian world than a Hayekian one. And politicians are told that they can spend money, giving people what they want, without needing to worry about deficits.
But Hayek held his own. He did have something of a “status quo” advantage, as at the time Hayek’s free market approach was closer to the standard view. It is interesting to think how things might have turned out differently if Hayek was a more dynamic personality.
Around 1980, Hayekian ideas had a resurgence. Reagan and Thatcher were elected. Persistent struggles with inflation damaged the credibility of Keynesian ideas to eliminate economic downturns. Even with the election of Clinton, historically speaking it was a time where “big government” was out of fashion.
But this turned around again with the Great Recession events starting in about 2007. Suddenly, the economic intellectual community moved back toward Keynes. The recession did end after massive stimulus amounts were poured into the economy, though of course we can't prove whether there was a causal link or just a correlation. Regardless, it is a challenge for Hayekians. The book was written in 2011 so that’s about where it ends.
I became interested in the Keynes / Hayek debates from listening to the excellent Econtalk podcast. Wapshott was on the podcast once and I think this interview is great, whether you use it as a supplement or a substitute for reading the book.
https://www.econtalk.org/wapshott-on-...
December 25, 2017
Ho deciso di affrontare questa lettura per ampliare le mie conoscenze in una materia, l’economia politica, che ho studiato con poco impegno all’università e che insegno oggi a scuola cercando di farla amare agli studenti più di quanto lo abbia fatto io. Per me l’economia è una scienze fatta di chiacchiere, non ha nulla di preciso, ogni tesi economica, appena la senti, pare fondata e sensata, eppure sempre ha il suo risvolto negativo: se si combatte l’inflazione, aumenta la disoccupazione; se si combatte la disoccupazione, aumenta l’inflazione… Non esiste un economista che abbia teorizzato la ricetta completa per realizzare la crescita economica, l’occupazione e la stabilità dei prezzi. Ciò vuol dire, secondo me, che questa ricetta non esiste. E allora perché interessarsi ai duelli accademici tra Keynesiani e monetaristi, tra progressisti e conservatori? Per comprendere meglio le diverse posizioni e le conseguenze delle scelte di politica economica fatte nel corso degli anni fino ad oggi da tutti i governi . Alla fine posso dire di essere d’accordo con chi afferma che lo stato dell’economia all’inizio del ventunesimo secolo può essere sinteticamente definito in questo modo: “In un certo senso oggi siamo tutti keynesiani; in un altro nessuno è più keynesiano”.
Io comunque mi sento keynesiana dentro :-)
Io comunque mi sento keynesiana dentro :-)
April 1, 2013
The enemy of this engrossing and lucid economic history is binary thinking. We have a war of ideas: between the disciples of John Maynard Keynes and government intervention in the economy vs Friedrich Hayek and classical economics where government has no role to play, and , in fact intervention makes crises worse. This war would play out through much of the Twentieth Century and to our time, as we experienced the Great Recession like a previous generation experienced the Great Depression. In both case, Keynesian economics was used to get back on track, but in between Hayekian free market economics was ascendant and worshiped like a religion. This is what Nicholas Wapshott's villain is--one solution or the other, down the line, expecting it to solve everything.
In fact, since economics is a science, pure black or white thinking doesn't compute. The men themselves were not one way or another. Keynes, unlike what the ignorant talk radio and network mob will tell you, was not a socialist. He rejected socialism. He played the market, becoming very rich. His goal was to save capitalism from itself so that it could continue as the best form of economic life. In addition to growing the economy by stimulus spending, he also advocated --shocking surprise!--tax cuts. Hayek, was not a hater of government and he was not a conservative. He wanted universal health care, limited welfare programs, and basic housing. So if the men were more nuanced and complicated then history remembers them, why did the Western World lurch back and forth from one one-size-fits-all policy to another? Why did very smart people in government and academia come to think of economic prescriptions, again, a science, as a sports team vs. another team? Wapshott doesn't really answer the question--because there is no answer, or there is a very simple one he is too tactful to point out but which runs throughout the text--no need to hammer it home. It's simply this: no matter the advances of any discipline, no matter the knowledge they find out, human beings are fundamentally irrational. And so the debate between these two schools of economic thought will continue, on and on. That is unless, people read entertaining histories like this one, and read the bios and words of these titans found within, and maybe learn from them what to do about the future next recession. Fat chance.
In fact, since economics is a science, pure black or white thinking doesn't compute. The men themselves were not one way or another. Keynes, unlike what the ignorant talk radio and network mob will tell you, was not a socialist. He rejected socialism. He played the market, becoming very rich. His goal was to save capitalism from itself so that it could continue as the best form of economic life. In addition to growing the economy by stimulus spending, he also advocated --shocking surprise!--tax cuts. Hayek, was not a hater of government and he was not a conservative. He wanted universal health care, limited welfare programs, and basic housing. So if the men were more nuanced and complicated then history remembers them, why did the Western World lurch back and forth from one one-size-fits-all policy to another? Why did very smart people in government and academia come to think of economic prescriptions, again, a science, as a sports team vs. another team? Wapshott doesn't really answer the question--because there is no answer, or there is a very simple one he is too tactful to point out but which runs throughout the text--no need to hammer it home. It's simply this: no matter the advances of any discipline, no matter the knowledge they find out, human beings are fundamentally irrational. And so the debate between these two schools of economic thought will continue, on and on. That is unless, people read entertaining histories like this one, and read the bios and words of these titans found within, and maybe learn from them what to do about the future next recession. Fat chance.
January 28, 2012
This book is at once biography, covering the lives of J.M. Keynes and F. Hayek, and an exposition for popular consumption of their respective economic theories. On the latter score it makes for an entertaining, often informative, read. On the former there are some flaws.
Wapshott is a journalist, not an economist, not even a financial journalist. Consequently, some of his exposition of theory is inadequate. I am not an economist myself, but I've been able to read Keynes, Galbraith, Friedman, Marx, Smith, Hume and others with little difficulty. I should therefore be able to follow everything in a book intended for the general public. I did not, however, follow Wapshott's exposition of Austrian School theory in the first parts of the text, particularly as regards the debates about interest and savings. Here I suspect that Wapshott didn't ken the material either. The later material on macroeconomics was, constrastively, clear enough and the exposition of fiscal and monetary policies in Britain the the USA from the war up until the first Obama term was well handled.
Wapshott is a journalist, not an economist, not even a financial journalist. Consequently, some of his exposition of theory is inadequate. I am not an economist myself, but I've been able to read Keynes, Galbraith, Friedman, Marx, Smith, Hume and others with little difficulty. I should therefore be able to follow everything in a book intended for the general public. I did not, however, follow Wapshott's exposition of Austrian School theory in the first parts of the text, particularly as regards the debates about interest and savings. Here I suspect that Wapshott didn't ken the material either. The later material on macroeconomics was, constrastively, clear enough and the exposition of fiscal and monetary policies in Britain the the USA from the war up until the first Obama term was well handled.
March 8, 2024
Nicholas Wapschott wrote this book more than a decade ago when he saw American politicians, in dealing with the 2008 recession, having the same arguments that Keynes and Hayek were engaged in during the Great Depression. These 21st century exchanges were decidedly less academic in nature than the originals and were conducted, as Wapschott notes, "as if the last 80 years had not happened".
To put their differences simplistically, Keynes thought that governments could impact the economy in ways that would benefit their citizens at times when the economy was having problems. Hayek responded Reaganesquesly that whatever problems the economy was having were the result of government interference, and that if left to its own devices, the economy would be just fine in the long run. Keynes famously responded that in the long run we are all dead.
Wapschott tries to make some of the more esoteric points of their disputes intelligible to the layperson, not always successfully, but in fairness, it appears that Keynes and Hayek may not have fully understood what the other was trying to say, either. I found his descriptions of their personal lives the most entertaining portion of the book (more than a little soap-operaish; maybe Wapschott was looking for a docu-drama deal), but there is also a lot of insight into the attacks of current politicians concerning the way their opponents are handling the economy.
To put their differences simplistically, Keynes thought that governments could impact the economy in ways that would benefit their citizens at times when the economy was having problems. Hayek responded Reaganesquesly that whatever problems the economy was having were the result of government interference, and that if left to its own devices, the economy would be just fine in the long run. Keynes famously responded that in the long run we are all dead.
Wapschott tries to make some of the more esoteric points of their disputes intelligible to the layperson, not always successfully, but in fairness, it appears that Keynes and Hayek may not have fully understood what the other was trying to say, either. I found his descriptions of their personal lives the most entertaining portion of the book (more than a little soap-operaish; maybe Wapschott was looking for a docu-drama deal), but there is also a lot of insight into the attacks of current politicians concerning the way their opponents are handling the economy.
November 21, 2011
Very balanced, refusing to take sides until the last paragraph (Wapshott gives J.K. Galbraith the last word).
An interesting chronology of the back-and-forth between the two economists and their proteges.
It falls short in two primary ways: it's a very superficial treatment of the actual economics, and it stays in a very binary mode, never really considering hybrids or other schools of economic thought.
So I enjoyed the first half of the book (covering the era before Keynes' death), and didn't learn much from the second.
An interesting chronology of the back-and-forth between the two economists and their proteges.
It falls short in two primary ways: it's a very superficial treatment of the actual economics, and it stays in a very binary mode, never really considering hybrids or other schools of economic thought.
So I enjoyed the first half of the book (covering the era before Keynes' death), and didn't learn much from the second.
February 23, 2012
This is a dual intellectual biography that discusses the lives and work of Keynes and Hayek and the influence that their work has had (and continues to have) on economic policy and general policy discussions. The discussion is interesting and well informed and does not attempt to oversimplify the differences between these individuals or the nuances in each of their body of work as it developed over the course of their long lives.
For those interested in economic history, this is good stuff -- on target, filled with interesting details, and geared to engage even knowledgeable readers. The book does a good job at taking fairly detailed and abstract discussions and presenting them so that nonspecialists can follow and know what issues were at play. For example, there is a famous exchange of comments between Keynes and a young Hayek over Keynes' tract on monetary theory. If you read the originals, which are presented nicely in a separate volume of Hayek's collected papers, be prepared to invest some time to work through the jungle - and even if you do so, the detail and context will be lost to many. The coverage here is very well done and interesting in how it shows the interplay of ideas, writing styles, and academic and institutional politics enters into these exchanges.
The book is also a good examination of the difference between how economic ideas develop on their own through discussions among economists (and their camp followers) and how these ideas affect economic policy of large nations. This is the distinction between the "ivory tower" and its practical applications into the world of domestic politics.
The motivation for the book is clearly looking backwards from the current policy debates between liberals and conservatives, socialists versus free market people, socialists versus tea partiers, etc. -- and all the other labels used to paper over some very complex ideas and activities. The author clearly makes the case that this debate is still current and the exposition helps to clarify some of the ideas behind the rhetoric.
I especially enjoyed how the author broke out the various dimensions on which a comparison of Keynes versus Hayek can/should occur. It can be on the base of theoretical arguments. It can also be on the basic terms of economic discussion - whether one is pursuing a "macro economic" or a "micro economic" approach. It can also be on a comparison of the economic versus the political aspects of the theory. For example, the books shows how Milton Friedman was supportive of Hayek's approach to the role of government, but was closer to Keynes in his actual economics.
In tone and coverage, this is akin to Justin Fox's "Myth of the Free Market" -- it is a serious treatment for an informed general reader. It flows very well, however, and is well organized so that the reader knows how to move around if that is desired.
Overall, a very good book.
For those interested in economic history, this is good stuff -- on target, filled with interesting details, and geared to engage even knowledgeable readers. The book does a good job at taking fairly detailed and abstract discussions and presenting them so that nonspecialists can follow and know what issues were at play. For example, there is a famous exchange of comments between Keynes and a young Hayek over Keynes' tract on monetary theory. If you read the originals, which are presented nicely in a separate volume of Hayek's collected papers, be prepared to invest some time to work through the jungle - and even if you do so, the detail and context will be lost to many. The coverage here is very well done and interesting in how it shows the interplay of ideas, writing styles, and academic and institutional politics enters into these exchanges.
The book is also a good examination of the difference between how economic ideas develop on their own through discussions among economists (and their camp followers) and how these ideas affect economic policy of large nations. This is the distinction between the "ivory tower" and its practical applications into the world of domestic politics.
The motivation for the book is clearly looking backwards from the current policy debates between liberals and conservatives, socialists versus free market people, socialists versus tea partiers, etc. -- and all the other labels used to paper over some very complex ideas and activities. The author clearly makes the case that this debate is still current and the exposition helps to clarify some of the ideas behind the rhetoric.
I especially enjoyed how the author broke out the various dimensions on which a comparison of Keynes versus Hayek can/should occur. It can be on the base of theoretical arguments. It can also be on the basic terms of economic discussion - whether one is pursuing a "macro economic" or a "micro economic" approach. It can also be on a comparison of the economic versus the political aspects of the theory. For example, the books shows how Milton Friedman was supportive of Hayek's approach to the role of government, but was closer to Keynes in his actual economics.
In tone and coverage, this is akin to Justin Fox's "Myth of the Free Market" -- it is a serious treatment for an informed general reader. It flows very well, however, and is well organized so that the reader knows how to move around if that is desired.
Overall, a very good book.
January 2, 2017
Keynes: meglio intervenire oggi, spendere, andare in deficit, e chi se ne frega di domani, tanto domani saremo tutti morti.
Hayek: oggi no, oggi non si interviene, non si spende, lasciamo fare al mercato che se va male oggi pazienza, domani tutto si sistemerà.
Bene. Noi ora stiamo riuscendo nell'impresa di vivere al contempo l'oggi di Hayek e il domani di Keynes.
Adesso va male, e dopo sarà peggio.
Hayek: oggi no, oggi non si interviene, non si spende, lasciamo fare al mercato che se va male oggi pazienza, domani tutto si sistemerà.
Bene. Noi ora stiamo riuscendo nell'impresa di vivere al contempo l'oggi di Hayek e il domani di Keynes.
Adesso va male, e dopo sarà peggio.
January 6, 2019
Avessi potuto leggerlo a vent'anni, ci avrei messo la metà del tempo a preparare Economia 1; qui, il moltiplicatore si capisce in trenta secondi, il mio prof riuscì a spiegarlo in due lezioni!
Pensavo: con il tempo risparmiato avrei pure potuto scoprire Karl Popper o Virginia Woolf, tanto per citare due amici a caso dei nostri antagonisti.
E' proprio una bella rivalità, di quelle che mi piacciono.
Hanno ottimi rapporti nella vita privata, sono uniti contro le barbarie totalitarie, ma le loro idee si scontreranno in una strenua battaglia che, sino ai giorni nostri, ha impegnato le migliori menti in campo economico.
E se Keynes è stato subito riconosciuto come il capitano nella lotta contro povertà e disoccupazione, questo saggio contribuisce a rivalutare la figura di Von Hayek, fervente antinazista per anni scioccamente accusato di fomentare idee ultra conservatrici.
Un elogio particolare a Wapshott, che riesce a mantenersi equidistante.
Pensavo: con il tempo risparmiato avrei pure potuto scoprire Karl Popper o Virginia Woolf, tanto per citare due amici a caso dei nostri antagonisti.
E' proprio una bella rivalità, di quelle che mi piacciono.
Hanno ottimi rapporti nella vita privata, sono uniti contro le barbarie totalitarie, ma le loro idee si scontreranno in una strenua battaglia che, sino ai giorni nostri, ha impegnato le migliori menti in campo economico.
E se Keynes è stato subito riconosciuto come il capitano nella lotta contro povertà e disoccupazione, questo saggio contribuisce a rivalutare la figura di Von Hayek, fervente antinazista per anni scioccamente accusato di fomentare idee ultra conservatrici.
Un elogio particolare a Wapshott, che riesce a mantenersi equidistante.
August 5, 2021
Un'occasione persa di proporre un vero libro di alta divulgazione. Lo "scontro" epico tra due delle menti piu' brillanti del XX secolo viene descritto, a mio modo di vedere, in maniera interessante per quanto riguarda l'aspetto umano dei rapporti Keynes - Hayek, ma in maniera insoddisfacente per quanto riguarda il cuore della questione, la trattazione piu' prettamente economica. Si rimane palesemente in mezzo al guado: troppo superficiale per un competente, troppo ostico per un profano seppur benintenzionato. Una maggiore inquadramento tecnico scientifico avrebbe senza dubbio giovato alla riuscita finale.
June 19, 2012
I don't feel I learned much economics from this. Wapshott gave the "what" but not the "why" or "how." If "a" leads to "b," tell me why. That is what would help me understand the economics. If "a" sometimes leads to "b" but sometimes to "b-" there must be at least one different variable--what is it or can it be. I also would have liked to have more of the personalities of the men--my own bias towards intellectual biographies.
August 15, 2013
Very readable introduction to Keynes and Hayek. I think it is actually more a book of the effects of the two than an economics 101 view on their actual thoughts. so I'm sure that economic geeks bemoan the simplifications of both economists. You get enough to get a feel of the economics and I'm cool with that, especially since I think I end up with more knowledge of what is involved than most people who throw their names around.
My condensation of this condensed fare is that there is more to Keynes's economics than portrayed by conservatives and while Hayeks Road to Serfdom may fit in nicely with Glenn Beck's paranoid world view, Hayek was not really at ease with what grew into the conservative movement, although he definitely wanted to privatize most every public service. Strangely the only exception was public health care which is the one area I wish the author of this book would have explained a bit more.
The last few chapters seem a little episodic with tidbits about Kennedy acting as a supply-sider and aside from his conservative talk Reagen is revealed to be quite a Keynesian when you factor in the huge unfunded defense spending spree.
All in all Keynes comes across as more complex (apparently he was often drastic refining and redefining his ideas) while Hayek was pretty well set in his views from the start. Of course as he aged he became more intense with things like when he laments the tyranny of the majority and states the the free market is the only true participatory democracy
“The main lesson which the true liberal (libertarian) must learn from the success of the socialist is that it was their courage to be Utopian which gained them the support of the intellectuals and thereby an influence on public opinion” then “...(of his views) you can say it almost a religious belief ...that the market is almost God ordained”.
My condensation of this condensed fare is that there is more to Keynes's economics than portrayed by conservatives and while Hayeks Road to Serfdom may fit in nicely with Glenn Beck's paranoid world view, Hayek was not really at ease with what grew into the conservative movement, although he definitely wanted to privatize most every public service. Strangely the only exception was public health care which is the one area I wish the author of this book would have explained a bit more.
The last few chapters seem a little episodic with tidbits about Kennedy acting as a supply-sider and aside from his conservative talk Reagen is revealed to be quite a Keynesian when you factor in the huge unfunded defense spending spree.
All in all Keynes comes across as more complex (apparently he was often drastic refining and redefining his ideas) while Hayek was pretty well set in his views from the start. Of course as he aged he became more intense with things like when he laments the tyranny of the majority and states the the free market is the only true participatory democracy
“The main lesson which the true liberal (libertarian) must learn from the success of the socialist is that it was their courage to be Utopian which gained them the support of the intellectuals and thereby an influence on public opinion” then “...(of his views) you can say it almost a religious belief ...that the market is almost God ordained”.
July 28, 2020
An impartial and informative account on the intelectual rivalry between giant economists John Maynard Keynes and Friederich Hayek. The author tells this story by pointing out the main differences between each of them and the importance both have had in the economic debate from the early 20th century on. Good analysis of the economic measures taken by both US and UK governments throughout the years from the perspective of each of them. The book goes through the essential arguments exposed in the controversy without being too technical as it targets the general public with interest in the theme, even those lacking of background in economics. One may get the feeling that the author excessively narrowed or restrained the focus on the story after having heard modern economists cite many others who carried on the original discussion over time. The book shall serve as a good introduction for those who wish to deepen their knowledge about the famous clash between both intellectuals, or would just like to know where all the main jargon routinely heard in the economics section of the news comes from.
July 15, 2012
After reading this book I have a completely new appreciation for the body of work of both Keynes and Hayek. I have read their work before but never realized how interconnected they really were. It is fascinating to me to see the intertwining of personal life and academic work of two of the best minds of the 20th Century. The book mixes economics with history to portray the ideas of Keynes and Hayek and how they influenced each other and modern economics. I think there was just enough economic terminology (you may want to have a little background before reading the book, but then again I am not sure why you would want to read this book if you do not know the academic work of Keynes and Hayek) in the book, and a perfect combination of such terminology with historical and biographical information. All in all, a great read for those interested in economics and its impact in policy-making. The Keynes-Hayek debate is far from over, and learning a little more about them helps me understand more about economic policy-making today.
April 21, 2023
Molto interessante e, nello stesso tempo, scorrevole anche anche per chi, come me, non ha studiato economia.
Ha colmato un piccolo-grande buco nella mia ignoranza su Keynes sempre molto citato , motivo per il quale desideravo da tempo conoscerlo.
Ignoranza che rimane , comunque, abissale in economia, non essendo una materia che avrei amato, neanche a suo tempo - sono limitata e preferisco studi umanistici-
Fortunatamente ho iniziato con un libro adatto anche ai non-addetti così da riuscire a terminarlo.
Ne ho ancora uno da leggere, su di lui, e verrà il suo momento ( se solo il tempo non scorresse così veloce e i libri che vorrei leggere non continuassero ad aumentare….😉 )
Ha colmato un piccolo-grande buco nella mia ignoranza su Keynes sempre molto citato , motivo per il quale desideravo da tempo conoscerlo.
Ignoranza che rimane , comunque, abissale in economia, non essendo una materia che avrei amato, neanche a suo tempo - sono limitata e preferisco studi umanistici-
Fortunatamente ho iniziato con un libro adatto anche ai non-addetti così da riuscire a terminarlo.
Ne ho ancora uno da leggere, su di lui, e verrà il suo momento ( se solo il tempo non scorresse così veloce e i libri che vorrei leggere non continuassero ad aumentare….😉 )
May 7, 2024
Indeed, very well written, interesting and informative
March 24, 2021
Surpreendentemente acessível a leigos, chegando mesmo a ser empolgante.
Uma excelente leitura.
Uma excelente leitura.
December 26, 2021
Xerrar de Keynes i de Hayek és xerrar de dos dels economistes més dotats a nivell intel·lectual de la història, i també de dos dels més influents. Amb tot, qui, sense ser economista (o, fins i tot, essent-ho) s'hagi atrevit a escometre les teories generals de qualsevol dels dos autors no ignorarà l'elevadíssima dificultat que suposa entendre els conceptes econòmics que s'hi desenvolupen. Pens que aquí és on rau el principal mèrit de l'assaig de Whapshott: és capaç d'apropar els dos economistes a tothom amb un mínim de nocions econòmiques i el suficient interès per voler entendre el xoc que mantingueren entre el primer terç i la meitat del segle passat. Sí, Whapshott no escatima en detalls quan aborda les idees de Keynes i Hayek, però ho fa de manera esclaridora i una terminologia precisa i que quasi mai deriva en confusió. Clar que s'ha de llegir el text amb atenció i, si no es compta amb coneixements en temes econòmics, també amb la paciència suficient per cercar o ampliar conceptes que puguin presentar dubtes.
Pel que fa al contingut del llibre, qui ja hagi tingut contacte amb Keynes i Hayek sabrà que el primer defensa que els governs han d'intervenir en èpoques de recessió econòmica, sobretot estimulant la demanda agregada (el laissez faire pot equilibrar les economies, però no fer baixar l'atur en la mesura socialment desitjable) a través d'obres públiques o baixades d'impostos, mentre que el segon argumenta el contrari: tot i que s'hagin de fer sacrificis, les forces del mercat (els compradors i els venedors privats, organitzats de forma espontània pel sistema de preus) són les que han de retornar elles soles a l'equilibri econòmic, sense intervencions del sector públic que poden funcionar a mitges a curt termini, però que a la llarga sols ocasionaran inflació, dèficit públic i pobresa generalitzada. Si el lector es queda amb aquest missatge, crec que l'autor haurà assolit la seua intenció de sobres, que no és altra que la d'explicar de manera diàfana la complexa batalla intel·lectual d'aquests dos gegants de l'economia. I per als qui cerquen més completesa, també n'hi trobaran, no només en les justificacions més o menys detallades d'una i altra postura, sinó també en la seua contextualització històrica, que abraça des del període d'entreguerres (amb la predicció de Keynes de la II Guerra Mundial o la influència exercida en els governs occidentals per a sortir de la Gran Depressió) fins a la crisi econòmica del 2008, passant per les aventures polítiques de Hayek o Friedman amb els governs de Thatcher i de Reagan.
A més de la prosa precisa i acurada de Wapshott, i de la seua extensíssima bibliografia, a mi m'ha convençut un aspecte que he vist presentat com a negatiu en altres ressenyes: els apunts sobre la vida privada de Keynes i de Hayek. Personalment, em semblen d'interès gairebé sempre (la història del Bloomsbury Group és fascinant), i quan no (el matrimoni fallit de Hayek, per exemple), resulten prou breus com per no despistar-me de la finalitat de l'assaig.
Potser cinc estrelles són excessives, però el mèrit de tractar amb senzillesa dos autors d'intel·lecte tan excessiu ben les mereixen. Excel·lent.
Pel que fa al contingut del llibre, qui ja hagi tingut contacte amb Keynes i Hayek sabrà que el primer defensa que els governs han d'intervenir en èpoques de recessió econòmica, sobretot estimulant la demanda agregada (el laissez faire pot equilibrar les economies, però no fer baixar l'atur en la mesura socialment desitjable) a través d'obres públiques o baixades d'impostos, mentre que el segon argumenta el contrari: tot i que s'hagin de fer sacrificis, les forces del mercat (els compradors i els venedors privats, organitzats de forma espontània pel sistema de preus) són les que han de retornar elles soles a l'equilibri econòmic, sense intervencions del sector públic que poden funcionar a mitges a curt termini, però que a la llarga sols ocasionaran inflació, dèficit públic i pobresa generalitzada. Si el lector es queda amb aquest missatge, crec que l'autor haurà assolit la seua intenció de sobres, que no és altra que la d'explicar de manera diàfana la complexa batalla intel·lectual d'aquests dos gegants de l'economia. I per als qui cerquen més completesa, també n'hi trobaran, no només en les justificacions més o menys detallades d'una i altra postura, sinó també en la seua contextualització històrica, que abraça des del període d'entreguerres (amb la predicció de Keynes de la II Guerra Mundial o la influència exercida en els governs occidentals per a sortir de la Gran Depressió) fins a la crisi econòmica del 2008, passant per les aventures polítiques de Hayek o Friedman amb els governs de Thatcher i de Reagan.
A més de la prosa precisa i acurada de Wapshott, i de la seua extensíssima bibliografia, a mi m'ha convençut un aspecte que he vist presentat com a negatiu en altres ressenyes: els apunts sobre la vida privada de Keynes i de Hayek. Personalment, em semblen d'interès gairebé sempre (la història del Bloomsbury Group és fascinant), i quan no (el matrimoni fallit de Hayek, per exemple), resulten prou breus com per no despistar-me de la finalitat de l'assaig.
Potser cinc estrelles són excessives, però el mèrit de tractar amb senzillesa dos autors d'intel·lecte tan excessiu ben les mereixen. Excel·lent.
February 27, 2017
Great exploration of two of the twentieth century's most influential economists. Keynes himself sounds like a fascinating and charismatic guy. Wapshott makes the case that Keynes, and not radical free marketeers like Hayek, are the real saviours of capitalism. The final quote, from John Kenneth Galbraith, is a cracker: "When capitalism finally succumbs, it will be to the thunderous cheers of those who are celebrating their final victory over people like Keynes".
October 17, 2013
I usually don't judge books by covers, but I did judge this book by its title. This is a very disappointing read because its coverage of the issues is all surface. One might expect when comparing two economic thinkers' ideas that there would be a detailed look into the theory, ideas, and specific papers and books that highlight the great divide between these thinkers. This book paid only scant attention to any substantive economic ideas. It was also terribly frustrating when the author presented examples of the bad writing contained in each of the economists' works. Was it not bad enough that these men wrote such incomprehensible sentences? Did the reader really require exposure to such garbled sentences to understand the message? Also, the author spends the last 40 or so pages terribly summarizing post-WWII economic history. Seems like he was trying to hit the "this is a smart book and so it's at least 300 pages" criterion.
I think the General Theory and the Road to Serfdom are both fairly digestible on their own and one would gain much more from reading those texts. Skip this.
I think the General Theory and the Road to Serfdom are both fairly digestible on their own and one would gain much more from reading those texts. Skip this.
January 6, 2018
This was a difficult book as I had only one course in economics and have delved no deeper than NPR since. Some of the ideas presented were not explained to the point that I was able to grasp them but some were well presented for my level of understanding. The most amazing thing to me was watching the evolution of the two economists interpretations of why things were happening over a wide range of times and countries. I find it astonishing that any one of these transient ideas is now regarded as sacred by current politicians and thought leaders. There have been many changes in the world since any of the ideas were originally conceived and the economists, especially Keynes, were not married to their own ideas. They were continually looking for a new theory that would describe and forecast current and future economic events. Is there a book that applies a measure of what actually happened to the forecasts (like measuring the success of meteorology)? How long should any idea (especially in economics) be regarded as an inviolable rule?
July 18, 2012
The author obviously struggled to give Hayek equal billing in this book, despite the vacancy of application, thought and proof in the Austrian's theories. There wasn't actually a clash between the two - there was some letter exchanges and a bit of reaching out by Keynes to help a newcomer to the field. But Hayek was obviously deferential to the founder of modern economic theory. It was only later in Hayek's career, after Keynes was gone that the Austrian pretended to take Keynes to task by mischaracterizing his economic theories and tilting at strawmen like a knight practicing for a joust which would only happen in his own mind.
November 23, 2017
Hubiera querida ponerle una estrella más (pese a que soy nadie para calificar un libro) pero los temas extremadamente locales a la economía de USA de la segunda parte del libro, me desanimaron completamente. Sin embargo, la primera mitad es brillante, altamente recomendable.
June 26, 2018
Il libro mantiene ciò che il titolo offre, parla della storia economica dell' ultimo secolo e di come l' influenza che questi due giganti l' abbia indirizzata da una parte o dall'altra.
September 30, 2015
John Maynard Keynes was the heavyweight economist of the twentieth century – a Cambridge professor, Paris Peace Conference negotiator, architect of the post-war Bretton Woods system of fixed currencies, one of the brains behind the World Bank, best-selling author, and the inventor of Macro-Economics. As a member of the Bloomsbury group of ‘progressive’ intellectuals, he also made a fortune speculating on the commodity markets, and in 1936 produced the most influential economic study of the last 150 years. It is no exaggeration to say Keynes was Britain’s seminal intellectual, perhaps the last great thinker to emerge from these shores with a truly global reach.
Friedrich Von Hayek, an Austrian who secured a Professorship at the London School of Economics (LSE) in the 1930s, is better known as the most articulate critic of socialism and its inability to plan an economy, not to mention its unwitting tendencies to erode individual freedoms as the state takes over most aspects of our lives. Hayek remained an outsider throughout his life and Prices and Production (1931) and The Pure Theory of Capital (1941), his two main contributions to pure economics, remain unread by most. Even those who admire his philosophical works, such as Milton Friedman, remain unconvinced by his writings on the dismal science, yet eulogise about his influence on Neo-Liberalism (especially his epic study, The Constitution of Liberty, said to be Margaret Thatcher’s secular Bible).
Nicholas Wapshott presents us here with an impressive study of how a Micro-Economic debate between Cambridge University and the LSE in the late 1920s concerning the equilibrium between savings and investment eventually cascaded into the wider world until, by 1976, the future of capitalism seemed dependent on which side of the Keynes-Hayek camp you belonged to. And if it wasn’t for the stagflation of the 1970s, we would still be voting for parties that support aggregate demand policies and promote state investment in the economy in times of impending deflation. Keynes would be King and Hayek unread.
Summarising the difference of opinion between these two great intellectual behemoths is no easy task, and Wapshott does a marvellous job of framing both sides of the debate in a concise, intelligible language that often eludes economists. Having read this book in one go and then revisited selected chapters, the core message is that Keynes had one lifelong obsession: how do you counter high unemployment at the bottom end of the business cycle? Hayek’s message was even more succinct: government investment in public works would eventually lead to inflation and distortion of the economy if you tried to avoid recession by boosting demand through taxation, borrowing or tax cuts (or a combination of any two from three).
There is no doubt that some of Keynes innovations in thinking have now been discredited, yet plenty of his theories are still correct. Outside the socialist and Fabian camps, nobody did more to challenge Classical Economics than Keynes, and some of his most iconoclastic theories are still intriguing. An economy will never reach full employment when savings and investment are in balance; self-interest does not promote the general interest; governments should lower interest rates at the bottom end of the business cycle and raise them to cool the boom times – these were radical ideas at the time when Alfred Marshall, Adam Smith and David Ricardo dominated economic thinking. But his most influential policy recommendations are to be seen in The General Theory of Employment, Interest and Money (1936), including his most innovative interpretation of interest rates. According to Keynes, the notion that the natural rate of interest is produced by an equilibrium between savings and investment is absurd. Why? Because banks base their lending criteria on the ratio of their cash reserves against their money liabilities and have no consideration for the classical equilibrium. Furthermore, people often keep their savings as a ‘liquidity preference’ e.g. Banks have to offer them unnaturally high rates of interest to get them to part with their money. This divergence makes the equilibrium theory even more unattainable.
The most famous term associated with Keynes is ‘deficit financing,’ again an innovation that sent shockwaves around the world. For the first time Governments re-building after the Second World War, with the prolonged depression and high unemployment of the 1930s still haunting them, knew one thing – they could not go back to Laissez Faire. No wonder the idea you can lower taxes without a corresponding public expenditure cut had wide appeal in the late 1940s. As Keynes pointed out, offsetting tax cuts with reductions in expenditure would simply redistribute rather than produce a net increase in national spending power. And every industrialised nation lapped it up from 1950 to 1975, while Hayek looked like a hopeless relic preaching a nineteenth-century creed.
Perhaps the one criticism of this excellent book, is that not enough time is devoted to conveying how the stagflation of the 1970s shattered the Keynesian consensus. All Governments had assumed that unemployment would go down when interest rates rise; instead they got the worst of all worlds in 1974 – more joblessness, higher inflation, and a slump in demand. Economists had no explanation, and politicians had nothing else to fall back on in Macro-Economic theory.
Most of us know Hayek’s remedies through his supply side economic recommendations of later years (when he was no longer writing as an economist). In other words, the market could produce a recovery if most levers of government control were dismantled and competition was restored to the system. Today, Conservatives in all developed liberal democracies base their entire economic policy on ensuring Hayek and Milton Friedman’s small-government, market-orientated solutions remain undisturbed – in effect they remain gatekeepers against the Keynesian social democrats that want a return to aggregate demand.
However, it is pure Schadenfreude to say Hayek has won the duel with Keynes in the aftermath of the 2008/09 world recession. When confronted with deflation and a deep recession, western governments everywhere opted for ultra-low interest rates, quantitative easing, and government spending cuts – they had no time for Hayek’s recommendation to ride out the recession until the natural rate of interest is restored and savings and investment are in equilibrium. Barak Obama even returned to a Keynesian policy with a bungled attempt to restore aggregate demand via public works programmes. One look at the new economic language emanating from Jeremy Corbyn’s hard-left Labour Party in 2015 shows how his epithets on growing the economy are pure Keynesian in their attempt to boost demand using the great man’s ‘multiplier effect’ theory.
Ironically, some of the most interesting (and obscure) arguments between the two camps are to be found in Micro-Economics, although these will not be settled or understood in the public arena of politics. Will anyone outside academia really care if Hayek believes there is no correlation between consumer demand and the level of employment? Or if Keynes’ attack on the idea that saving is better than spending is a dagger at the heart of Classical Economics?
But this isn’t just a rehearsal of both sides of a debate by an introverted economics scholar. Wapshott’s research is meticulous and revealing – just as important it delves into the personalities between the two antagonists. Lionel Robbins, the LSE Professor who brought Hayek to England, would later desert him over the way he treated his Austrian wife; even worse, like Nicholas Kaldor (Hayek’s English translator and former pupil) he defected to the Keynes camp in 1960. This was one of the reason why Hayek fell into a deep depression in the early 60s, especially after the commercial disappointment of his 1959 masterpiece, The Constitution of Liberty (now, of course, a bestseller).
Keynes meanwhile was Britain’s foremost intellectual celebrity. Which other economist could get a personal invite from Roosevelt to see him at the White House or have just about every one of his articles from The Daily Mail and The Times published in serial form and later collected into best-selling works? Yet for a man who often didn’t rise until noon (spending most of the morning in bed placing trades with his broker), Keynes output and work schedule was impressive. Indeed, Wapshott believes one of the reason Keynes ended the duel with Hayek in the academic journals was because he had bigger fish to fry and was dealing with the burden of saving the world from mass unemployment – a task he assigned to himself and truly believed in accomplishing. And as the superstar economist responsible for more inferiority complexes than anyone from his generation, Keynes looks like somebody straight from centre stage. Wapshott notes how he would bludgeon his opponent with a mixture of playful sarcasm and theoretical onslaught, sometimes even changing his beliefs along the way when the facts changed; Hayek was more rigid and stuck to his core beliefs, leading the charge with a systemic attack on the smaller details of his opponent’s theories. Arthur Pigou (the distinguished Cambridge Professor) was not alone in calling for a more gentlemanly argument between the two, with Keynes, especially, venturing into more personal territory in his first response to Hayek’s harsh review of A Treatise on Money (1930).
The greatest tragedy is that the Keynes vs Hayek battle presented the western world with a terrible dilemma in the 1970s and early 80s – more inflation or unemployment. In Britain, the Conservatives took control under Margaret Thatcher and opted to defeat the first by allowing the latter to rise above 3 million. For this reason Hayek is a figure of loathing in leftish circles, whereas Keynes still retains admirers from all sides of the political spectrum, excluding the neo-Liberals (remember the Right in the Anglo-Saxon world is far different to the Centre-Right in France, where Keynes still has headway). As Hayek, himself acknowledged, his policy prescriptions are not exactly appealing compared with Keynes ambitious and monumental attempts to provide intellectual justification for government intervention in the economy. This may be why he would later become disillusioned with his 1944 classic anti-Socialist polemic, The Road to Serfdom, still a big-seller in America to this day.
But perhaps the best referee in the Keynes-Hayek clash is Milton Friedman, the Nobel Laurette who is most associated with the free-market resurgence of the 1980s. A committed follower of Hayek’s philosophical works on the need for small government and free market competition, he had no time for Hayek’s economics and lauded Keynes as the greatest economist of the twentieth century. As Friedman admits, most of Keynes’ insights into Macro-Economics remain valid today, even if his ‘multiplier effect’ and ‘aggregate demand’ policies have proven to be a failure in sustaining growth and smoothing out the business cycle.
We might well call the contest a draw, although I suspect the author is more sympathetic to Hayek than the great Keynes. And who knows what the next big debate will be in the world of economics. With climate change, ageing populations and finance sectors too big to fail (but prone to future meltdowns), the question of state intervention and bigger or smaller government might be superseded by something even more important in the future.
Friedrich Von Hayek, an Austrian who secured a Professorship at the London School of Economics (LSE) in the 1930s, is better known as the most articulate critic of socialism and its inability to plan an economy, not to mention its unwitting tendencies to erode individual freedoms as the state takes over most aspects of our lives. Hayek remained an outsider throughout his life and Prices and Production (1931) and The Pure Theory of Capital (1941), his two main contributions to pure economics, remain unread by most. Even those who admire his philosophical works, such as Milton Friedman, remain unconvinced by his writings on the dismal science, yet eulogise about his influence on Neo-Liberalism (especially his epic study, The Constitution of Liberty, said to be Margaret Thatcher’s secular Bible).
Nicholas Wapshott presents us here with an impressive study of how a Micro-Economic debate between Cambridge University and the LSE in the late 1920s concerning the equilibrium between savings and investment eventually cascaded into the wider world until, by 1976, the future of capitalism seemed dependent on which side of the Keynes-Hayek camp you belonged to. And if it wasn’t for the stagflation of the 1970s, we would still be voting for parties that support aggregate demand policies and promote state investment in the economy in times of impending deflation. Keynes would be King and Hayek unread.
Summarising the difference of opinion between these two great intellectual behemoths is no easy task, and Wapshott does a marvellous job of framing both sides of the debate in a concise, intelligible language that often eludes economists. Having read this book in one go and then revisited selected chapters, the core message is that Keynes had one lifelong obsession: how do you counter high unemployment at the bottom end of the business cycle? Hayek’s message was even more succinct: government investment in public works would eventually lead to inflation and distortion of the economy if you tried to avoid recession by boosting demand through taxation, borrowing or tax cuts (or a combination of any two from three).
There is no doubt that some of Keynes innovations in thinking have now been discredited, yet plenty of his theories are still correct. Outside the socialist and Fabian camps, nobody did more to challenge Classical Economics than Keynes, and some of his most iconoclastic theories are still intriguing. An economy will never reach full employment when savings and investment are in balance; self-interest does not promote the general interest; governments should lower interest rates at the bottom end of the business cycle and raise them to cool the boom times – these were radical ideas at the time when Alfred Marshall, Adam Smith and David Ricardo dominated economic thinking. But his most influential policy recommendations are to be seen in The General Theory of Employment, Interest and Money (1936), including his most innovative interpretation of interest rates. According to Keynes, the notion that the natural rate of interest is produced by an equilibrium between savings and investment is absurd. Why? Because banks base their lending criteria on the ratio of their cash reserves against their money liabilities and have no consideration for the classical equilibrium. Furthermore, people often keep their savings as a ‘liquidity preference’ e.g. Banks have to offer them unnaturally high rates of interest to get them to part with their money. This divergence makes the equilibrium theory even more unattainable.
The most famous term associated with Keynes is ‘deficit financing,’ again an innovation that sent shockwaves around the world. For the first time Governments re-building after the Second World War, with the prolonged depression and high unemployment of the 1930s still haunting them, knew one thing – they could not go back to Laissez Faire. No wonder the idea you can lower taxes without a corresponding public expenditure cut had wide appeal in the late 1940s. As Keynes pointed out, offsetting tax cuts with reductions in expenditure would simply redistribute rather than produce a net increase in national spending power. And every industrialised nation lapped it up from 1950 to 1975, while Hayek looked like a hopeless relic preaching a nineteenth-century creed.
Perhaps the one criticism of this excellent book, is that not enough time is devoted to conveying how the stagflation of the 1970s shattered the Keynesian consensus. All Governments had assumed that unemployment would go down when interest rates rise; instead they got the worst of all worlds in 1974 – more joblessness, higher inflation, and a slump in demand. Economists had no explanation, and politicians had nothing else to fall back on in Macro-Economic theory.
Most of us know Hayek’s remedies through his supply side economic recommendations of later years (when he was no longer writing as an economist). In other words, the market could produce a recovery if most levers of government control were dismantled and competition was restored to the system. Today, Conservatives in all developed liberal democracies base their entire economic policy on ensuring Hayek and Milton Friedman’s small-government, market-orientated solutions remain undisturbed – in effect they remain gatekeepers against the Keynesian social democrats that want a return to aggregate demand.
However, it is pure Schadenfreude to say Hayek has won the duel with Keynes in the aftermath of the 2008/09 world recession. When confronted with deflation and a deep recession, western governments everywhere opted for ultra-low interest rates, quantitative easing, and government spending cuts – they had no time for Hayek’s recommendation to ride out the recession until the natural rate of interest is restored and savings and investment are in equilibrium. Barak Obama even returned to a Keynesian policy with a bungled attempt to restore aggregate demand via public works programmes. One look at the new economic language emanating from Jeremy Corbyn’s hard-left Labour Party in 2015 shows how his epithets on growing the economy are pure Keynesian in their attempt to boost demand using the great man’s ‘multiplier effect’ theory.
Ironically, some of the most interesting (and obscure) arguments between the two camps are to be found in Micro-Economics, although these will not be settled or understood in the public arena of politics. Will anyone outside academia really care if Hayek believes there is no correlation between consumer demand and the level of employment? Or if Keynes’ attack on the idea that saving is better than spending is a dagger at the heart of Classical Economics?
But this isn’t just a rehearsal of both sides of a debate by an introverted economics scholar. Wapshott’s research is meticulous and revealing – just as important it delves into the personalities between the two antagonists. Lionel Robbins, the LSE Professor who brought Hayek to England, would later desert him over the way he treated his Austrian wife; even worse, like Nicholas Kaldor (Hayek’s English translator and former pupil) he defected to the Keynes camp in 1960. This was one of the reason why Hayek fell into a deep depression in the early 60s, especially after the commercial disappointment of his 1959 masterpiece, The Constitution of Liberty (now, of course, a bestseller).
Keynes meanwhile was Britain’s foremost intellectual celebrity. Which other economist could get a personal invite from Roosevelt to see him at the White House or have just about every one of his articles from The Daily Mail and The Times published in serial form and later collected into best-selling works? Yet for a man who often didn’t rise until noon (spending most of the morning in bed placing trades with his broker), Keynes output and work schedule was impressive. Indeed, Wapshott believes one of the reason Keynes ended the duel with Hayek in the academic journals was because he had bigger fish to fry and was dealing with the burden of saving the world from mass unemployment – a task he assigned to himself and truly believed in accomplishing. And as the superstar economist responsible for more inferiority complexes than anyone from his generation, Keynes looks like somebody straight from centre stage. Wapshott notes how he would bludgeon his opponent with a mixture of playful sarcasm and theoretical onslaught, sometimes even changing his beliefs along the way when the facts changed; Hayek was more rigid and stuck to his core beliefs, leading the charge with a systemic attack on the smaller details of his opponent’s theories. Arthur Pigou (the distinguished Cambridge Professor) was not alone in calling for a more gentlemanly argument between the two, with Keynes, especially, venturing into more personal territory in his first response to Hayek’s harsh review of A Treatise on Money (1930).
The greatest tragedy is that the Keynes vs Hayek battle presented the western world with a terrible dilemma in the 1970s and early 80s – more inflation or unemployment. In Britain, the Conservatives took control under Margaret Thatcher and opted to defeat the first by allowing the latter to rise above 3 million. For this reason Hayek is a figure of loathing in leftish circles, whereas Keynes still retains admirers from all sides of the political spectrum, excluding the neo-Liberals (remember the Right in the Anglo-Saxon world is far different to the Centre-Right in France, where Keynes still has headway). As Hayek, himself acknowledged, his policy prescriptions are not exactly appealing compared with Keynes ambitious and monumental attempts to provide intellectual justification for government intervention in the economy. This may be why he would later become disillusioned with his 1944 classic anti-Socialist polemic, The Road to Serfdom, still a big-seller in America to this day.
But perhaps the best referee in the Keynes-Hayek clash is Milton Friedman, the Nobel Laurette who is most associated with the free-market resurgence of the 1980s. A committed follower of Hayek’s philosophical works on the need for small government and free market competition, he had no time for Hayek’s economics and lauded Keynes as the greatest economist of the twentieth century. As Friedman admits, most of Keynes’ insights into Macro-Economics remain valid today, even if his ‘multiplier effect’ and ‘aggregate demand’ policies have proven to be a failure in sustaining growth and smoothing out the business cycle.
We might well call the contest a draw, although I suspect the author is more sympathetic to Hayek than the great Keynes. And who knows what the next big debate will be in the world of economics. With climate change, ageing populations and finance sectors too big to fail (but prone to future meltdowns), the question of state intervention and bigger or smaller government might be superseded by something even more important in the future.
December 19, 2022
Possibly a perfect book. I couldnt' stop reading it. It wonderfully and perfectly outlines the lives and countering economic philosophies of the two arch-rivals J M Keynes and F Hayek. The book shows how each of their economic ideas and famous books moved their philosophies into everyday, real-world economics in America and elsewhere. In the second half of the book, we leave the two economists to follow their economic philosophies through the presidents who embraced them. The author somehow keeps a completely even hand throughout.
Several interesting takeaways for me personally:
The laffer curve, which is often seen as a conservative talking point in order to defend tax cuts to increase tax revenue, was first presented by Keynes and only refined and named after Laffer in the 80's. Laffer admitted that he got the idea from Keynes, but was happy to have it named after him.
Keynes, who I believe had the incorrect economic position, had better rhetoric that resonated more with people. One of his rhetorical tricks was whenever he would be challenged that his economic policies would cause short-term success but long-term turmoil, he would say, "in the long run, we will all be dead." Then similarly, when Hayekian economists would insist that "In the long run, the free market would find equilibrium," Keynes again would respond with, "In the long run, we will all be dead." It was a great rhetorical trick that focused attention on the moment and not on the consequence of economic policy in the long run. Again, it is wrong, but it is what Hayekian economists had to deal with. I feel the pain of that.
I had no clue that Hayek and Keynes knew each other personally. It's very cool that at one point, after years of rivalry, they spent a cordial night on a roof of a college building during the Blitz. Can't make that stuff up!
I was pleasantly surprised to find that Keynes had a fervent dislike of Socialism and Communism, something that his followers quickly and sadly abandoned after his death. There are few Keynesians today who wouldn't be tempted by socialism given the chance. Gone are the days of people on the left standing up to people on the farther left. Sad.
Having just read "The Deficit Myth" I can very clearly see that MMT is nothing more than repackaged Keynes. Though, of course, Modern Monetary Theorists know and rely on the fact that the US dollar is valued by fiat to make their claims, whereas Keynes - as far as I know (plan on reading two of his books next) - never suggested that printing money out of nothing was a good thing.
I enjoyed reading and making the connections between Mesis (I just finished The Theory of Money and Credit), who inspired Hayek, who inspired Milton Friedman, who, of course, famously mentored my hero, Thomas Sowell, who inspired me to care about economics in the first place. A fun loop of inspiration and history there.
In conclusion, if you're interested in macroeconomics - particularly the two lively debates that still rage on between Keynes and Hayek, inflationism and laissez faire, Government intervention and Free Markets, then this book is for you.
Several interesting takeaways for me personally:
The laffer curve, which is often seen as a conservative talking point in order to defend tax cuts to increase tax revenue, was first presented by Keynes and only refined and named after Laffer in the 80's. Laffer admitted that he got the idea from Keynes, but was happy to have it named after him.
Keynes, who I believe had the incorrect economic position, had better rhetoric that resonated more with people. One of his rhetorical tricks was whenever he would be challenged that his economic policies would cause short-term success but long-term turmoil, he would say, "in the long run, we will all be dead." Then similarly, when Hayekian economists would insist that "In the long run, the free market would find equilibrium," Keynes again would respond with, "In the long run, we will all be dead." It was a great rhetorical trick that focused attention on the moment and not on the consequence of economic policy in the long run. Again, it is wrong, but it is what Hayekian economists had to deal with. I feel the pain of that.
I had no clue that Hayek and Keynes knew each other personally. It's very cool that at one point, after years of rivalry, they spent a cordial night on a roof of a college building during the Blitz. Can't make that stuff up!
I was pleasantly surprised to find that Keynes had a fervent dislike of Socialism and Communism, something that his followers quickly and sadly abandoned after his death. There are few Keynesians today who wouldn't be tempted by socialism given the chance. Gone are the days of people on the left standing up to people on the farther left. Sad.
Having just read "The Deficit Myth" I can very clearly see that MMT is nothing more than repackaged Keynes. Though, of course, Modern Monetary Theorists know and rely on the fact that the US dollar is valued by fiat to make their claims, whereas Keynes - as far as I know (plan on reading two of his books next) - never suggested that printing money out of nothing was a good thing.
I enjoyed reading and making the connections between Mesis (I just finished The Theory of Money and Credit), who inspired Hayek, who inspired Milton Friedman, who, of course, famously mentored my hero, Thomas Sowell, who inspired me to care about economics in the first place. A fun loop of inspiration and history there.
In conclusion, if you're interested in macroeconomics - particularly the two lively debates that still rage on between Keynes and Hayek, inflationism and laissez faire, Government intervention and Free Markets, then this book is for you.
February 6, 2023
Although I have a huge appreciation for the research and content of this book, the presentation is confusing. It toes the line between dramatic biography and academic analysis and therefore does both mediocrely. It both expects prior economic knowledge but also doesn’t go very deep into the actual arguments? It spends pages and pages talking about how they were in conflict but doesn’t go into detail on what specifically they were arguing about. A lot of the explanations are over complicated yet didn’t explain much past my very limited prior knowledge. I’m not exactly sure what this book is trying to do or who it’s for. This book tries to be something like At The Existentialist Café but fails.
Don’t get me wrong, I’ve learned a lot in this book at least in regard to the personal lives of Hayek and Keynes. It was exciting to read about LSE and Cambridge in the 30s and trace different writings to the author’s environment at the time. I was so happy to hear about how many incredible people went to Cambridge. Pigou, (this man saves me in every single policy debate I ever do), Wittgenstein, Keynes, the list goes on. As I learn more about philosophy and economics I’m awed by how closely people worked together even across disciplines. I’m not really certified to critique the information in this book, but I’m still a little disappointed that Wapshott focused biographically rather than on their writings. I’ll definitely have to revisit this review after reading the original texts of the two
Don’t get me wrong, I’ve learned a lot in this book at least in regard to the personal lives of Hayek and Keynes. It was exciting to read about LSE and Cambridge in the 30s and trace different writings to the author’s environment at the time. I was so happy to hear about how many incredible people went to Cambridge. Pigou, (this man saves me in every single policy debate I ever do), Wittgenstein, Keynes, the list goes on. As I learn more about philosophy and economics I’m awed by how closely people worked together even across disciplines. I’m not really certified to critique the information in this book, but I’m still a little disappointed that Wapshott focused biographically rather than on their writings. I’ll definitely have to revisit this review after reading the original texts of the two
May 29, 2022
This book tells the stories of two of the greatest economists: Freidrick Hayek and John Maynard Keynes. The book reviews how the theories advanced by Hayek and Keynes emerged, matured, and got accepted by the public. Both economists started in Europe, got initial acceptance in Britain, and became popular in the United States.
For Keynes, the first social experiment was President Roosevelt’s New Deal. But the book traces the fate of Keynes’s theory in the United States up to the 70s and 80s. Hayek came to fame a little later. The book also covered his successors, such as Friedman.
This book is not a comprehensive economics history. The book provided some discussion on economic theories. However, such a discussion uses too much jargon for laypeople. On the other hand, experts may want more contrasts in ideas and reasonings used by the two sides in their debates. This book is not a good economics textbook.
On the other hand, the book provides fascinating background information about the great debate in the twentieth century. It talks about personal and political interactions that shape our practices in the name of “Keynesians” and “Hayekians.”
Overall, this book addresses a fascinating event in twentieth-century economics and politics. However, it does not provide the whole picture but only one puzzle piece.
For Keynes, the first social experiment was President Roosevelt’s New Deal. But the book traces the fate of Keynes’s theory in the United States up to the 70s and 80s. Hayek came to fame a little later. The book also covered his successors, such as Friedman.
This book is not a comprehensive economics history. The book provided some discussion on economic theories. However, such a discussion uses too much jargon for laypeople. On the other hand, experts may want more contrasts in ideas and reasonings used by the two sides in their debates. This book is not a good economics textbook.
On the other hand, the book provides fascinating background information about the great debate in the twentieth century. It talks about personal and political interactions that shape our practices in the name of “Keynesians” and “Hayekians.”
Overall, this book addresses a fascinating event in twentieth-century economics and politics. However, it does not provide the whole picture but only one puzzle piece.
September 11, 2019
A lehető legjobb választás ez a könyv annak, aki szeretne valami általános tudást magába szívni közgazdaság témakörben, de az olyan szavak, mint a fiskális és monetáris pénzpolitika, kamatláb, infláció és stagfláció gyakorlatilag az ordenáré trágárságokkal vannak egy szemantikai halmazban nála. Wapshott jó értelemben vett publicisztikai stílussal bír, ami azt jelenti, hogy képes befogadható formában előadni olyan problémaköröket, amik önmagukban érthetetlenek a mezei laikus számára. Könyvét úgy építi föl, hogy a két közgazdasági óriás, Keynes* és Hayek** (illetve követőik) vitája*** adja a szöveg gerincét, így az olvasó fokozatosan ismeri meg elméleteik tartalmát, ahogy azok egyre összetettebbek és kiforrottabbak lesznek – így mire eljutunk a kötet finisébe, már meg se kottyannak a bonyolult fejtegetések, mint például az, miként szolgálhatja az adócsökkentés az állami adóbevételek növekedését.
De mindamellett, hogy ez a könyv olvasmányos közgazdaságtan, még rendkívül inspiráló disputatörténeti munka is. Adott két zseni, aki elképesztő részletességgel érti meg azt a végtelenül zavarba ejtő univerzumot, amit gazdaságnak nevezünk. És ez a két zseni tökéletesen ellentétes következtetésre jut – és olyan, személyeskedéstől sem mentes vitába bonyolódik, amiből lehetetlen kikeveredni. Felszabadító volt látni nekem, aki alkalmasint szintén vitába szoktam bonyolódni más nézetekkel, hogy ezek az elmeóriások időnként mennyire elbeszéltek egymás mellett, nem a megfelelő érvekre reagáltak és nem a megfelelő érvekkel, hibás adatokkal dolgoztak, mellébeszéltek, vagy képtelenek voltak homályosság nélkül megfogalmazni elképzeléseiket – és mégis! A végeredmény egy olyan termékeny szövegfolyam lett, amiből egy egész tudományág építkezik. Ez egyszerre jelzi az ún. „objektív igazságok” esetlegességét, és a vita káprázatos hatalmát is.
Az pedig, hogy kinek volt igaza – hát tudja fene, annál is inkább, mert a közgazdasági döntések eredményessége vagy eredménytelensége gyakran csak évtizedek múltán válik nyilvánvalóvá. Én azt hiszem, Hayek jobban rátapintott a gazdasági folyamatok megérthetetlenségére és az állami beavatkozás veszélyeire, azonban túlságosan az ideák síkján maradt, így kevesebb gyakorlati megoldást lehet kiszemelgetni belőle. Ráadásul gazdasági válság idején egy demokrácia egész egyszerűen nem teheti meg, hogy figyelmen kívül hagyja a keynes-i javaslatokat, feltéve, ha nem akarja elveszíteni a választásokat. (És – talán – éhen halatni a választóit.) Másrészről a keynes-i alkalmazások az esetek zömében deficithez és inflációhoz vezetnek, vagyis miután megszüntettek egy égető problémát, másikat hagynak helyette, amit aztán a hayek-i módon kell orvosolni (vagyis egy hitelből finanszírozott közmunkaprogram után általában az államadósság csökkentését célzó megszorító intézkedések következnek). Ilyen értelemben Keynes és Hayek vitájában nem is lehet győztest hirdetni, mert egymást kiegészítő elméletek. Szóval jó az iksz.
* John Maynard Keynes (1883-1946), angol közgazdász, a makroökonómia megteremtője – bár maga az elnevezés csak halála után került forgalomba. Forradalmi elmélete szerint az államnak kötelessége a gazdaság befolyásolása válságok esetén, elsősorban azzal, hogy közpénzt pumpál bele, például közmunkaprogramok révén. A New Deal nagyjából az ő elveire épült.
** Friedrich (von) Hayek (1889-1992), osztrák születésű, de angol állampolgárságú Nobel-díjas közgazdász, a szabad piacok védelmezője. Tagadja, hogy az állam eredményesen beavatkozhat a gazdaságba, feladata csupán annyi, hogy megfelelő körülményeket teremtsen annak. Szerinte a válságok törvényszerűek, nincs mit tenni ellenük. Hagyni kell, hogy a gazdaság regenerálja magát, az állam ezeket a bajokat hosszabb távon csak súlyosbíthatja. Elméletének társadalomfilozófiai oldala, hogy a beavatkozó állam gyakorlata óhatatlanul totalitarizmushoz vezet.
*** Kettejük összeütközése pedig valószínűleg a XX. század legfontosabb elméleti vitája, a nyugati féltekének valamennyi állampolgárára ilyen vagy olyan módon hatással volt, van, lesz. Mivel a demokráciák pluralizmusa lehetetlenné teszi, hogy egyetlen ideológia kizárólagos legyen, ezért megnő a jelentősége a jólét fogalmának, mert végső soron és általános szinten ez legitimálja a rendszert. Az pedig, hogy egy bizonyos állam hogyan képes elérni, hogy a választók a lehetőségekhez mérten maximális jólétben éljenek**** (ergo: rájuk szavazzanak ismét), az nem kis részben annak függvénye, hogy ebből a vitából milyen következtetéseket szűrtek le.
**** Vagy legalábbis elhiggyék, hogy jólétben élnek, vagy hogy más kormányzat alatt még rosszabbul menne nekik. De ez már a politikai marketing tárgykörébe tartozik, így nem foglalkoznék vele – bár tagadhatatlan, elképzelhető olyan ország, ahol a választók között felülreprezentáltak az idióták, akik elhiszik, hogy jólétben élnek, még akkor is, ha nem. (Sokak szerint csak ilyen demokrácia elképzelhető.) Egy ilyen országban a politikai marketing (tehát tulajdonképpen Machiavelli) nagyobb súllyal esik latba, mint a gazdaság. Viszont ezek általában véve szopóágon vannak. Vagy mi is a vonatkozó szakkifejezés…
De mindamellett, hogy ez a könyv olvasmányos közgazdaságtan, még rendkívül inspiráló disputatörténeti munka is. Adott két zseni, aki elképesztő részletességgel érti meg azt a végtelenül zavarba ejtő univerzumot, amit gazdaságnak nevezünk. És ez a két zseni tökéletesen ellentétes következtetésre jut – és olyan, személyeskedéstől sem mentes vitába bonyolódik, amiből lehetetlen kikeveredni. Felszabadító volt látni nekem, aki alkalmasint szintén vitába szoktam bonyolódni más nézetekkel, hogy ezek az elmeóriások időnként mennyire elbeszéltek egymás mellett, nem a megfelelő érvekre reagáltak és nem a megfelelő érvekkel, hibás adatokkal dolgoztak, mellébeszéltek, vagy képtelenek voltak homályosság nélkül megfogalmazni elképzeléseiket – és mégis! A végeredmény egy olyan termékeny szövegfolyam lett, amiből egy egész tudományág építkezik. Ez egyszerre jelzi az ún. „objektív igazságok” esetlegességét, és a vita káprázatos hatalmát is.
Az pedig, hogy kinek volt igaza – hát tudja fene, annál is inkább, mert a közgazdasági döntések eredményessége vagy eredménytelensége gyakran csak évtizedek múltán válik nyilvánvalóvá. Én azt hiszem, Hayek jobban rátapintott a gazdasági folyamatok megérthetetlenségére és az állami beavatkozás veszélyeire, azonban túlságosan az ideák síkján maradt, így kevesebb gyakorlati megoldást lehet kiszemelgetni belőle. Ráadásul gazdasági válság idején egy demokrácia egész egyszerűen nem teheti meg, hogy figyelmen kívül hagyja a keynes-i javaslatokat, feltéve, ha nem akarja elveszíteni a választásokat. (És – talán – éhen halatni a választóit.) Másrészről a keynes-i alkalmazások az esetek zömében deficithez és inflációhoz vezetnek, vagyis miután megszüntettek egy égető problémát, másikat hagynak helyette, amit aztán a hayek-i módon kell orvosolni (vagyis egy hitelből finanszírozott közmunkaprogram után általában az államadósság csökkentését célzó megszorító intézkedések következnek). Ilyen értelemben Keynes és Hayek vitájában nem is lehet győztest hirdetni, mert egymást kiegészítő elméletek. Szóval jó az iksz.
* John Maynard Keynes (1883-1946), angol közgazdász, a makroökonómia megteremtője – bár maga az elnevezés csak halála után került forgalomba. Forradalmi elmélete szerint az államnak kötelessége a gazdaság befolyásolása válságok esetén, elsősorban azzal, hogy közpénzt pumpál bele, például közmunkaprogramok révén. A New Deal nagyjából az ő elveire épült.
** Friedrich (von) Hayek (1889-1992), osztrák születésű, de angol állampolgárságú Nobel-díjas közgazdász, a szabad piacok védelmezője. Tagadja, hogy az állam eredményesen beavatkozhat a gazdaságba, feladata csupán annyi, hogy megfelelő körülményeket teremtsen annak. Szerinte a válságok törvényszerűek, nincs mit tenni ellenük. Hagyni kell, hogy a gazdaság regenerálja magát, az állam ezeket a bajokat hosszabb távon csak súlyosbíthatja. Elméletének társadalomfilozófiai oldala, hogy a beavatkozó állam gyakorlata óhatatlanul totalitarizmushoz vezet.
*** Kettejük összeütközése pedig valószínűleg a XX. század legfontosabb elméleti vitája, a nyugati féltekének valamennyi állampolgárára ilyen vagy olyan módon hatással volt, van, lesz. Mivel a demokráciák pluralizmusa lehetetlenné teszi, hogy egyetlen ideológia kizárólagos legyen, ezért megnő a jelentősége a jólét fogalmának, mert végső soron és általános szinten ez legitimálja a rendszert. Az pedig, hogy egy bizonyos állam hogyan képes elérni, hogy a választók a lehetőségekhez mérten maximális jólétben éljenek**** (ergo: rájuk szavazzanak ismét), az nem kis részben annak függvénye, hogy ebből a vitából milyen következtetéseket szűrtek le.
**** Vagy legalábbis elhiggyék, hogy jólétben élnek, vagy hogy más kormányzat alatt még rosszabbul menne nekik. De ez már a politikai marketing tárgykörébe tartozik, így nem foglalkoznék vele – bár tagadhatatlan, elképzelhető olyan ország, ahol a választók között felülreprezentáltak az idióták, akik elhiszik, hogy jólétben élnek, még akkor is, ha nem. (Sokak szerint csak ilyen demokrácia elképzelhető.) Egy ilyen országban a politikai marketing (tehát tulajdonképpen Machiavelli) nagyobb súllyal esik latba, mint a gazdaság. Viszont ezek általában véve szopóágon vannak. Vagy mi is a vonatkozó szakkifejezés…
August 28, 2021
Modern Economics
This is very much an introductory book for me on Keynes and Hayek. It’s very interesting but I definitely need to learn more about economics.
This is very much an introductory book for me on Keynes and Hayek. It’s very interesting but I definitely need to learn more about economics.
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