Keynes Hayek

August 29, 2011
In his latest, Wapshott (Ronald Reagan and Margaret Thatcher: A Political Marriage) masterfully recounts the strange clash between economists Freidrich Hayek and John Maynard Keynes, including their different approaches to life and work, and their changing fortunes. After he shared a Nobel Prize with leftist Gunnar Miyrdal in 1974, right-winger Hayek's brand of Austrian economics was in decline until 1978, when it was revived by Margaret Thatcher. His putative opponent, the liberal economist John Maynard Keynes, had sought practical solutions to the depression and war, and was influential in setting up the 1944 Bretton Woods agreement. Hayek suffered isolation, even ostracism, following the publication of his Road to Serfdom in 1944. Wapshott links Winston Churchill's stunning electoral defeat in June 1945 to his espousal of Hayek's view of the relationship between socialist planning and tyranny. Even though he had been attacked on its pages, Hayek failed to publicly address Keynes's magisterial General Theory. The two had, however, viciously argued over Keynes' 1930 book, A Treatise on Money. Wapshott offers a colorful look at a bygone period and the theories that epitomize the economic divide still shaping Anglo-American politics today.