Keynes Hayek: The Clash that Defined Modern Economics [NOOK Book]

Overview

“I defy anybody—Keynesian, Hayekian, or uncommitted—to read [Wapshott’s] work and not learn something new.”—John Cassidy, The New Yorker


As the stock market crash of 1929 plunged the world into turmoil, two men emerged with competing claims on how to restore balance to economies gone awry. John Maynard Keynes, the mercurial Cambridge economist, believed that government had a duty to spend when others would not. He met his opposite in a little-known Austrian economics professor,...
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Keynes Hayek: The Clash that Defined Modern Economics

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Overview

“I defy anybody—Keynesian, Hayekian, or uncommitted—to read [Wapshott’s] work and not learn something new.”—John Cassidy, The New Yorker


As the stock market crash of 1929 plunged the world into turmoil, two men emerged with competing claims on how to restore balance to economies gone awry. John Maynard Keynes, the mercurial Cambridge economist, believed that government had a duty to spend when others would not. He met his opposite in a little-known Austrian economics professor, Freidrich Hayek, who considered attempts to intervene both pointless and potentially dangerous. The battle lines thus drawn, Keynesian economics would dominate for decades and coincide with an era of unprecedented prosperity, but conservative economists and political leaders would eventually embrace and execute Hayek's contrary vision.



From their first face-to-face encounter to the heated arguments between their ardent disciples, Nicholas Wapshott here unearths the contemporary relevance of Keynes and Hayek, as present-day arguments over the virtues of the free market and government intervention rage with the same ferocity as they did in the 1930s.
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Editorial Reviews

Publishers Weekly
In his latest, Wapshott (Ronald Reagan and Margaret Thatcher: A Political Marriage) masterfully recounts the strange clash between economists Freidrich Hayek and John Maynard Keynes, including their different approaches to life and work, and their changing fortunes. After he shared a Nobel Prize with leftist Gunnar Miyrdal in 1974, right-winger Hayek's brand of Austrian economics was in decline until 1978, when it was revived by Margaret Thatcher. His putative opponent, the liberal economist John Maynard Keynes, had sought practical solutions to the depression and war, and was influential in setting up the 1944 Bretton Woods agreement. Hayek suffered isolation, even ostracism, following the publication of his Road to Serfdom in 1944. Wapshott links Winston Churchill's stunning electoral defeat in June 1945 to his espousal of Hayek's view of the relationship between socialist planning and tyranny. Even though he had been attacked on its pages, Hayek failed to publicly address Keynes's magisterial General Theory. The two had, however, viciously argued over Keynes' 1930 book, A Treatise on Money. Wapshott offers a colorful look at a bygone period and the theories that epitomize the economic divide still shaping Anglo-American politics today. (Oct.)
Newsweek
“As we face off against the Great Recession, the only book you need to understand the debate raging in the streets today: economic freedom versus government intervention. An essential primer on the two men who shaped modern finance.”
John Cassidy - The New Yorker
“I heartily recommend Nicholas Wapshott’s new book, Keynes Hayek: The Clash that Defined Modern Economics.... Many books have been written about Keynes, but nobody else has told the story properly of his relationship with Hayek. Nick has filled the gap in splendid fashion, and I defy anybody—Keynesian, Hayekian, or uncommitted—to read his work and not learn something new.”
Tyler Cowen - National Review
“Nicholas Wapshott’s new book, Keynes Hayek, does an excellent job of setting out the broader history behind this revival of the old debates. Wapshott brings the personalities to life, provides more useful information on the debates than any other source, and miraculously manages to write for both the lay reader and the expert at the same time. Virtually every page is gripping, and yet even the professional economist will glean some insight...”
Nancy F. Koehn - The New York Times
“Mr. Wapshott has written an important book. It is compelling not only as a history of two distinctive thinkers and their influence, but also as a narrative of political decision-making and its underlying priorities. Underlying Mr. Wapshott’s analysis are vital questions for this moment in American history: What kind of society do we want? And what do we owe to our fellow citizens and our collective future?”
The New Yorker
“I heartily recommend Nicholas Wapshott’s new book, Keynes Hayek: The Clash that Defined Modern Economics.... Many books have been written about Keynes, but nobody else has told the story properly of his relationship with Hayek. Nick has filled the gap in splendid fashion, and I defy anybody—Keynesian, Hayekian, or uncommitted—to read his work and not learn something new.”— John Cassidy
National Review
“Nicholas Wapshott’s new book, Keynes Hayek, does an excellent job of setting out the broader history behind this revival of the old debates. Wapshott brings the personalities to life, provides more useful information on the debates than any other source, and miraculously manages to write for both the lay reader and the expert at the same time. Virtually every page is gripping, and yet even the professional economist will glean some insight...”— Tyler Cowen
The New York Times
“Mr. Wapshott has written an important book. It is compelling not only as a history of two distinctive thinkers and their influence, but also as a narrative of political decision-making and its underlying priorities. Underlying Mr. Wapshott’s analysis are vital questions for this moment in American history: What kind of society do we want? And what do we owe to our fellow citizens and our collective future?”— Nancy F. Koehn
The New Yorker - John Cassidy
“I heartily recommend Nicholas Wapshott’s new book, Keynes Hayek: The Clash that Defined Modern Economics.... Many books have been written about Keynes, but nobody else has told the story properly of his relationship with Hayek. Nick has filled the gap in splendid fashion, and I defy anybody—Keynesian, Hayekian, or uncommitted—to read his work and not learn something new.”
National Review - Tyler Cowen
“Nicholas Wapshott’s new book, Keynes Hayek, does an excellent job of setting out the broader history behind this revival of the old debates. Wapshott brings the personalities to life, provides more useful information on the debates than any other source, and miraculously manages to write for both the lay reader and the expert at the same time. Virtually every page is gripping, and yet even the professional economist will glean some insight...”
The New York Times - Nancy F. Koehn
“Mr. Wapshott has written an important book. It is compelling not only as a history of two distinctive thinkers and their influence, but also as a narrative of political decision-making and its underlying priorities. Underlying Mr. Wapshott’s analysis are vital questions for this moment in American history: What kind of society do we want? And what do we owe to our fellow citizens and our collective future?”
Sean Wilentz
“Nicholas Wapshott’s Keynes Hayek is a smart and absorbing account of one of the most fateful encounters in modern history, remarkably rendered as a taut intellectual drama. Wapshott brilliantly brings to life the human history of ideas that continue to mold our world.”
John B. Taylor
“Nicholas Wapshott brings the Keynes-Hayek fight of the twentieth century back to life, making the clash both entertaining and highly relevant for understanding economic crises of the twenty-first century.”
Andrew Roberts
“In the fluency of his writing and his ability to make complex financial questions easily comprehensible, Nicholas Wapshott has done economics itself a great service, by opening the subject up to the general reader, as seen through the prism of one of the most important intellectual gladiatorial contests of modern times.”
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Product Details

  • ISBN-13: 9780393083118
  • Publisher: Norton, W. W. & Company, Inc.
  • Publication date: 9/10/2012
  • Sold by: Barnes & Noble
  • Format: eBook
  • Pages: 400
  • Sales rank: 224,461
  • File size: 557 KB

Meet the Author

Nicholas Wapshott is the author of Keynes Hayek: The Clash That Defined Modern Economics and Ronald Reagan and Margaret Thatcher: A Political Marriage. A former senior editor at the London Times and the New York Sun, he is now international editor at Newsweek. He lives in New York City.
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Table of Contents

Preface xi

1 The Glamorous Hero 1

How Keynes Became Hayek's Idol, 1919-27

2 End of Empire 15

Hayek Experiences Hyperinflation Firsthand, 1919-24

3 The Battle Lines Are Drawn 29

Keynes Denies the "Natural" Order of Economics, 1923-29

4 Stanley and Livingstone 46

Keynes and Hayek Meet for the First Time, 1928-30

5 The Man Who Shot Liberty Valance 65

Hayek Arrives from Vienna, 1931

6 Pistols at Dawn 81

7 Return Fire 95

Keynes and Hayek Lock Horns, 1931

8 The Italian Job 110

Keynes Asks Piero Sraffa to Continue the Debate, 1932

9 Toward The General Theory 123

The Cost-Free Cure for Unemployment, 1932-33

10 Hayek Blinks 138

The General Theory Invites a Response, 1932-36

11 Keynes Takes America 154

Roosevelt and the Young New Deal Economists, 1936

12 Hopelessly Stuck in Chapter 6 171

Hayek Writes His Own "General Theory," 1936-41

13 The Road to Nowhere 188

Hayek Links Keynes's Remedies to Tyranny, 1937-46

14 The Wilderness Years 207

Mont-Pèlerin and Hayek's Move to Chicago, 1944-69

15 The Age of Keynes 226

Three Decades of Unrivalled American Prosperity, 1946-80

16 Hayek's Counterrevolution 247

Friedman, Goldwater, Thatcher, and Reagan, 1963-88

17 The Battle Resumed 266

Freshwater and Saltwater Economists, 1989-2008

18 And the Winner Is… 285

Avoiding the Great Recession, 2008 Onward

Acknowledgments 297

Notes 299

Selected Bibliography 347

Index 357

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Customer Reviews

Average Rating 4
( 8 )
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(3)

4 Star

(4)

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Sort by: Showing all of 8 Customer Reviews
  • Posted November 30, 2011

    Outstanding in describing their views, their history, and what they were like as men.

    Everyone has an opinion about economics but few know what they're talking about. This book helps sort out the great controversy that still rages to this day between an active, interventionist government intending to "fix" the economy and low unemployment (Keynes, Galbraith) and the more somber view that government almost always makes things worse, and the free market left alone returns an economy to health with more assurance and without unintended destructive consequences (Hayak, von Mises, Milton Friedman. It's the intellectuals in Cambridge vs. the Austrian School. Great reading; very informative.

    9 out of 11 people found this review helpful.

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  • Posted September 4, 2012

    I Also Recommend:

    This fine book is easy to read and very well-written. It tells t

    This fine book is easy to read and very well-written. It tells the gripping story of the conflict between Friedrich Hayek and John Maynard Keynes.

    Hayek, who never worked in the private sector he idolised, started from the idealist assumption that “to explain any economic phenomenon it was convenient to assume that over time an economy would reach a state of equilibrium in which all resources would be fully employed.” He did not have to prove it, since it was an assumption, but he then treated it as true of the real world.

    By contrast, Keynes started from the real world, where “It is a complete mistake to believe that there is a dilemma between schemes for increasing employment and schemes for balancing the Budget – that we must go slowly and cautiously with the former for fear of injuring the latter. Quite the contrary. There is no possibility of balancing the Budget except by increasing the national income, which is much the same thing as increasing employment.”

    In their debate in the 1940s, Hayek admitted in The road to serfdom that “the case for the state’s helping to organize a comprehensive system of social insurance is very strong.” Keynes pounced, “as soon as you admit that the extreme is not possible, and that a line has to be drawn, you are, on your own argument, done for, since you are trying to persuade us that so soon as one moves an inch in the planned direction you are necessarily launched on the slippery path which will lead you in due course over the precipice.” Wapshott comments, “Hayek did not attempt to answer the points raised in Keynes’ letter …”

    Further, it is not undemocratic to plan if democratically-elected governments follow a people’s desire for planning, as we do with our NHS.

    Wapshott notes, “Another strand of Hayekian thinking, that the free market, left to its own devices, would correct its own mistakes and ensure prosperity for all, suffered a near mortal blow in the summer of 2007.” Robert Lucas, the Nobel Prize winner whose life’s work was to attack Keynes, admitted in 2008, “I guess everyone is a Keynesian in a foxhole.”

    Class interests and affiliation decide what happens to ideas. Finance capitalists love Hayek. At a 1970s Tory meeting, Margaret Thatcher waved a copy of his The Constitution of Liberty, slammed it down on a table and shouted, “This is what we believe!”

    4 out of 5 people found this review helpful.

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  • Anonymous

    Posted March 26, 2012

    Falls far short of its potential.

    I wanted this book to succeed, but it doesn't. Several inaccurrate quotes exemplify shoddy composition. The quotes aren't out of context so their significance is intact, but the mistakes are mildly annoying to a student of economics. Most disappointing is Wapshott's failure to highlight the considerable link between the Fed's manipulation of interest rates and the Great Recession - when others such as former Fed chair Volcker have stated that the link has "vindicated" this central tenet of Hayek's Austrian School philosophy.

    4 out of 6 people found this review helpful.

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  • Anonymous

    Posted March 13, 2012

    Finally, some context

    I really appreciated what this author finally introduced to the ongoing debate over economic principles... context. By providing us with a more complete timeline and better description of the full cast (and caste) of characters, you are given a whole new level of understanding regarding how the arguments were formed and the battles fought.

    I was also very appreciative that the author did a good job of staying relatively neutral in his presentation.

    4 out of 4 people found this review helpful.

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  • Anonymous

    Posted May 26, 2012

    Wonderful

    The discussion of the relative merits of Hayek's and Keynes' contributions is balanced and insightful. The juxtaposition of Keynes' focus on macroeconomic answers to unemployment with Hayek's belief in the necessity of free markets and free societies make for edifying reading. An added bonus is the brief reviews of their major works coupled with an overview of economic history of the past 95 years. I highly recommend the book to anyone who wants to understand better Hayek and Keynes.

    3 out of 3 people found this review helpful.

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  • Posted March 14, 2013

    more from this reviewer

    Very interesting from an historical perspective, although the au

    Very interesting from an historical perspective, although the author wanders a bit at times.  Thorough retelling of a series of interesting conflicts between J.M. Keynes and his sycophantic followers and Friedrich Hayak and the Austrian School, based largely at the London School of Economics. 

    0 out of 1 people found this review helpful.

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  • Anonymous

    Posted June 9, 2014

    No text was provided for this review.

  • Anonymous

    Posted May 29, 2013

    No text was provided for this review.

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