Understanding Hayek vs Keynes

The philosophical battle between Keynes and Hayek is at once a profession defining conflict and the story of the 20th century. Economists and policymakers have been arguing about the ideas of these two protagonists for decades. Each time a consensus is formed, it changes. Following World War II, Keynesianism won but, after the stagflation of the 1970’s, Hayek regained the upper hand. That should give us a clue about the nature of the contest; neither is absolutely right or wrong. Circumstances and preferences will determine which response is best. Intelligent Investor published an article on the two giants this week but,...

The philosophical battle between Keynes and Hayek is at once a profession defining conflict and the story of the 20th century. Economists and policymakers have been arguing about the ideas of these two protagonists for decades. Each time a consensus is formed, it changes. Following World War II, Keynesianism won but, after the stagflation of the 1970’s, Hayek regained the upper hand. That should give us a clue about the nature of the contest; neither is absolutely right or wrong. Circumstances and preferences will determine which response is best.

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