Book Review: Keynes/Hayek- The Clash that Defined Modern Economics
My job has an excellent incentive program to encourage reading certain literary works. The purpose of which, is to broaden our minds while also providing inspiration and professional development. One of the books on our reading list was Keynes/Hayek: The Clash that Defined Modern Economics by Nicholas Wapshott.
I’m still sorting through my thoughts and since I have zero training in economics, a lot of the concepts discussed in the book were beyond my ken. The first thing that struck me was how the two men were competitive, but also grew to became close friends, especially later in their lives. During World War 2, they taught at the same university and spent quite a bit of time in conversation together. I always find it interesting when two great figures in history leave a tradition in which their disciples argue (vehemently) about their legacies. In this case especially, it seems the Keynesians and the Hayekians generally dislike one another. But the reality was that the two men respected each other.
Beyond that mild observation, there were many points of interest. First, Hayek believed in universal healthcare and some sort of social net for society. He accepted that the government would provide this, though at other times in his life, he advocated for a complete privatization of government services. It seems he vacillated on this position quite a bit, but largely saw these functions as legitimate functions of government. I question his assumption that private corporations would be any more moral than government, but that’s neither here nor there.
On the other hand, Keynes was the guy who came up with tax cuts as a type of stimulus. Tax cuts, as we all know, is the GOP’s favorite method of stimulating the economy. That’s straight Keynesian bro.
My largest take away is that politics have mucked up our fiscal policy. From Eisenhower, to JFK, to Nixon, every president used Keynesian ideas of government spending to try and improve the economy. Some were so machivellian about it that they launched stimulus programs right before elections (Nixon) and some started applying Keynesian theory during the entire economic cycle (JFK). Keynes wouldn’t have supported this, he viewed government spending as only desirable during the bust phases of the cycle.
Really fascinting book, both of these men have been pigeonholed by our modern context, but I can confidently assert that Keynes was more conservative then his descendents and Hayek wasn’t a believer in absolute non-government either. How reasonable.