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Economy

Keynes vs. Hayek, Round Two

For all of us who couldn't get enough of last year's sensation "Fear the Boom and Bust" (the "Rapper's Delight" of economic theory hip-hop), producers John Papola and Russ Roberts have released the sequel, "Fight of the Century."  This one deals explicitly with the Keynesian fallacy that World War II ended the Depression: "Creating employment's a straigtforward craft / When the nation's at war, and there's a draft / If every worker was staffed in the army and fleet / We'd be at full employment with nothing to eat."
Categories > Economy

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Funny video. But the real split between Keynes and Hayek came over legal realism. Hayek crafted the Constitution of Liberty, a more immaginary republic, while Keynes battled against the treaty of Versailles and tried to look at the world as it was. Keynes was much much more apt to consider economics a sort of cool aid(i.e. in the long run we are all dead). After all he first tried out his economic ideas trading currency, and soon realized that the so called "models" were a bit on the dangerous side. So Keynes really was much more apt to think on an issue and then discard it as impracticable. Keynes was really a speculator in all sorts of markets, and it is not necessarily the case that there was really any big split between Keynes and Hayek that was not one of approach and methodology used to understand the problem. Keynes took his principles as more or less given by the situation and crafted Bretton Woods that managed to last until 1971. Now because Hayek worked more in ideas, he is not really touched by history.

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