Wednesday, August 29, 2012

Book review: Keynes vs Hayek

Book Review of Nicholas Wapshott’s “Keynes Hayek: The Clash that Defined Modern Economics” by Owen MBA, Duke Useni.

Nicholas Wapshott tells the story of an economic debate that persists until today: to what extent should government have a role in the economy.  It tells the personal and professional stories of economists John Maynard Keynes and Friedrich Hayek with engaging and lucid depth. Last year’s debt ceiling debate in Washington DC is an indicator of this debate’s relevance today.

Keynes essentially invented modern macroeconomics in his “The General Theory of Employment, Interest and Money”.  He argues that government intervention is necessary to solve the problem of unemployment caused by inadequate demand. 

Hayek gained fame in his “Road to Serfdom,” in which he argues that central planning will lead to totalitarianism, and that government spending in a recession will delay the inevitable economic reckoning and will prolong the misery.

Keynes Hayek: The Clash that Defined Modern Economics is a terrific book that has the detail and references to help you find a position in this debate.

NOTE:  Russ Roberts has produced a great pair of MTV-style videos (first, second) that tell the story of Keynes vs. Hayek.  

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