One of the things that stands out to me in this longer version is that the defenders of Hayek were quick to argue that Hayek wanted to stabilise the money supply by 1933 (at 24.51–29.07; and 32.54–34.41), that Hayek was not a “do nothing” economist, and that (like Keynes) he did not want spending to collapse.
Selgin quotes a passage from Hayek’s essay Savings:
“Unless the banks create additional credits for investment purposes to the same extent that the holders of deposits have ceased to use them for current expenditure, the effect of such saving is essentially the same as that of hoarding and has all the undesirable deflationary consequences attaching to the latter” (See Hayek 1975 [1939] for the complete essay).Selgin also points to the comments in the second edition of Prices and Production (1935).
Skidelsky shot back that Hayek, by accepting this, just fell in line with the neoclassicals of his day, and that monetary stabilisation by open market operations is a highly ineffective way of doing this stabilisation, a very good point, to which no answer was given.
BIBLIOGRAPHY
Hayek, F. A. von. 1967 [1935]. Prices and Production (2nd edn.), Augustus M. Kelley Publishers, New York.
Hayek, F. A. von. 1975 [1939]. Profits, Interest and Investment, Augustus M. Kelley Publishers, Clifton, NJ.
Hayek's policy prescriptions are a complete non sequitur as far as his theories are concerned. On public spending, he could well have been to the left of Keynes, and he once remarked that he was 'not for laissez-faire'.
ReplyDeleteI really think he let his ideology/personal feelings get in the way of his economics. The same simply cannot be said for Keynes, who was probably the least ideological economist in history.