Keynes v. Von Hayek
The confrontation between John Maynard Keynes and his partner, Friedrich August von Hayek, are one of the most famous in the history of contemporary economic thought (Keynes Hayek). This feud started during the Great Depression of the 1930’s due to the causes and remedies of business cycle downturns in market economics (Keynes Hayek). John Maynard Keynes was a believer in the quantity theory of money (monetarism), and his writing topics were essentially built on the principles he had learned from Marshall and Pigou, his mentors. His major policy view was that the way to stabilize the economy is to stabilize the price level, but in order to that the government’s central bank must lower interest rates when the prices …show more content…
He made fundamental contributions to economics in the theory of the business cycle, capital theory, and monetary theory, as well as making intellectual contributions in political theory, psychology, and methodology (Keynes Hayek). In 1974 he was awarded the Nobel Prize for economics, “for their pioneering work in the theory of money and economic fluctuations” (Keynes Hayek). Most of his work was from the 1930’s and 1940’s it was mainly focused on the Austrian theory of business cycles, it was believed that the price system of a free market was an efficient procedure to help coordinate people’s actions, and that the markets were a result of an unplanned order that eventually evolved over time (Keynes Hayek). This resulted in economic exchanges between people and there were more theoretical and mechanistic in the people’s approach for economics. Hayek recommended ways to reduce unemployment by reducing interest rates to encourage private investments, a progressive tax system should be used to divert income from the wealthy to the lower paid, and the government should actively participate in public investment activity to supplement private investments. Some of the recent presidents that have followed his theory are not necessarily to be found. He believed that unemployment could be solved by the increase in spending and his solution was to
The confrontation between John Maynard Keynes and his partner, Friedrich August von Hayek, are one of the most famous in the history of contemporary economic thought (Keynes Hayek). This feud started during the Great Depression of the 1930’s due to the causes and remedies of business cycle downturns in market economics (Keynes Hayek). John Maynard Keynes was a believer in the quantity theory of money (monetarism), and his writing topics were essentially built on the principles he had learned from Marshall and Pigou, his mentors. His major policy view was that the way to stabilize the economy is to stabilize the price level, but in order to that the government’s central bank must lower interest rates when the prices …show more content…
He made fundamental contributions to economics in the theory of the business cycle, capital theory, and monetary theory, as well as making intellectual contributions in political theory, psychology, and methodology (Keynes Hayek). In 1974 he was awarded the Nobel Prize for economics, “for their pioneering work in the theory of money and economic fluctuations” (Keynes Hayek). Most of his work was from the 1930’s and 1940’s it was mainly focused on the Austrian theory of business cycles, it was believed that the price system of a free market was an efficient procedure to help coordinate people’s actions, and that the markets were a result of an unplanned order that eventually evolved over time (Keynes Hayek). This resulted in economic exchanges between people and there were more theoretical and mechanistic in the people’s approach for economics. Hayek recommended ways to reduce unemployment by reducing interest rates to encourage private investments, a progressive tax system should be used to divert income from the wealthy to the lower paid, and the government should actively participate in public investment activity to supplement private investments. Some of the recent presidents that have followed his theory are not necessarily to be found. He believed that unemployment could be solved by the increase in spending and his solution was to