Keynes, Hayek. full employment equilibrium

I’ve been reading the book Keynes Hayek: The clash that defined modern economics by Nicholas Wapshott and published in 2011

The following quote is from page 44.

Keynes believed that man had been placed in charge of his own destiny, while Hayek, with some reluctance, believed that man was destined by the natural  laws of economics as he was obliged to live by all other natural laws..  Thus the two men came to represent two alternative views of life and government, Keynes adopting an optimistic view  that life need not be as hard as it was if only those in positions of power made the right decisions, and Hayek subscribing to the pessimistic notion that there were strict limits placed on human endeavor and that attempts to alter the laws of nature, however, well intended, were bound to lead at best to unintended consequences.

My problem with Keynes view is that people in positions of power make decisions first according to what will get them reelected or help them to stay in power and then to repay their debts to those who helped them get into power.  These are not necessarily the “right decisions.”

On the other side, there are some economic activities which are best done collectively and I think we have a collective responsibility to see that everyone has the opportunity to live at the general standard of everyone else.

Another concept which concerned these guys was full employment equilibrium.

I’m not sure equilibrium is compatible with the dynamic  economy we have been experiencing with its mostly ups and sometimes down.  Nor am I convinced that full employment is possible or desirable with the high levels of technology we apply to our production of goods and services.

I’ve now got to page 110 and I have been having some difficulty getting caught up in some of the details of the debate between these two men.  For one thing, the world is quite a different place to what it was in the 1930s.

Probably the book will be going back to the library soon.


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