Keynes Vs Hayek Essay

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Keynes Versus Hayek The relationship between economists John M. Keynes and Friedrich A. Hayek is quite complex. Both had influential roles in economic studies, emerging after World War II and during the Great Depression era (BBC). It’s important to note that both of these economists had opposing views when it came to economic theories and policies. Briefly summed up, Keynes theories were in support for government involvement in the economy (EconedLink). In contrast, Hayek argued that the government should have a lesser role in economic decisions in order to achieve greater economic freedom (EconedLink). These two opposing arguments are what have primarily stirred the Keynes versus Hayek debate. Of course, both Keynes and Hayek’s theories…show more content…
The concept of animal spirits is important to note as it goes against some of Hayek’s primary arguments. As has been mentioned previously, Hayek had an entirely different approach to economics. There have been arguments made that Hayek’s arguments are more related to politics rather than economics, although politics and economics tend to go hand-in-hand. Contrary to Keynes arguments, Hayek believed that artificially low interest rates would only lead to artificially high investment only causing greater issues that would turn an economic boom into a recession (Econedlink). According to the PBS segment on “Commanding Heights”, Hayek had some major concerns about inflation. Hayek believed that inflation was malign and had the potential to weaken a society and democracy (PBS Commanding Heights). Hayek argued that markets are unpredictable and relatable to human influences. Furthermore, Hayek discussed issues occurring in the money supply of the central bank and problems associated with artificially low interest rates. Moreover, Hayek was a supporter of less government intervention and more economic freedom for the people. Hayek suggested that the economy functions more efficiently when the people are provided with the freedom to make choices, a free market approach (Econedlink). The PBS “Commanding Heights” segment disclosed that Hayek believed that a competitive system would at some point “work itself out” (PBS Commanding Heights). Thus, there

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