The Elgar Companion to John Maynard Keynes
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The Elgar Companion to John Maynard Keynes

Edited by Robert W. Dimand and Harald Hagemann

The most influential and controversial economist of the twentieth century, John Maynard Keynes was the leading founder of modern macroeconomics, and was also an important historical figure as a critic of the Versailles Peace Treaty after World War I and an architect of the Bretton Woods international monetary system after World War II. This comprehensive Companion elucidates his contributions, his significance, his historical context and his continuing legacy.
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Chapter 54: Friedrich August Hayek

Hansjörg Klausinger


During the 1930s, for a short time Friedrich August Hayek was regarded as the main antagonist of John Maynard Keynes as a theorist of money and the cycle. After sketching the overlapping parts of their biographies and their personal relationship, this chapter focuses on their mutually hostile reviews from the 1930s and on their opposing explanations of economic crises. In particular, although starting from the common ground of a Wicksellian approach, Hayek and Keynes differed in many respects: on structural versus aggregate explanations of the cycle, saving or spending as the way out of the crisis, or on the role ascribed to money wage cuts. In general terms, the vital difference was in economic philosophy, that is, about the belief that cleverly construed economic policies may improve upon the homeostatic properties of the market system or not.

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