The discussion is about the way economies of the world work and the role of governments in the economy. This is through analyzing the conflict between the ideologies of John Maynard Keynes and Friedrich Hayek. A conflict between unemployment and inflation may summarize the Keynes and Hayek conflict. This is because Keynes ideas and policies got influence from his experiences of unemployment in his country while Hayek’s influence came from experiences of inflation in his country. Keynes believed full employment was necessary to create an economic equilibrium. Keynes saw economics as a system and described the term macroeconomics. He also came up with the idea econometrics. Keynes assumes that governments should do things because voters expect the governments to do so.
The panel juxtaposes Keynes opinion of economics with the ideas of the Australian economist Friedrich Hayek. The discussion portrays Hayek as the proponent of free markets as well as the skeptic toward the intervention of the state. On the other hand, the primary principle of the Keynesian policies is that free markets are susceptible to failures. The cure for these slumps lies in state intervention that will boost demand and dictate further investment. According to Keynes, the financial economic clash leads many countries in the world to either of the two ideologies. The Keynesian policy concerns with the ideas of massive deficit spending and inflation in order to stimulate stagnant economies, while Hayek policies are about controlling prices with little intervention from the government.
The discussion is to foster the understanding Keynes’s modern day revival using the context of the long-running battle (clash) between ideas of Keynes and those of Friedrich Hayek. The discussion is successful in showing this goal, but there is no single conclusion of which ideology is superior. The panel depicts Keynes philosophy as the savior of capitalism, which favors a mixed economy in order to suppress popular angst of reason and prevent authoritarian alternatives (fascism and communism).
The panelists see the severity of the 2008 to 2009 financial and economic turmoil as resembling the Great Depression of the 1930s. The financial-economic turmoil was due to greed, tax-rate cuts, the GOP, in addition, to damaging regulations in the past decade. This is what today passes as laissez-faire capitalism. This crash leads to renewed interest in the economic policies founded by John Maynard Keynes and Friedrich Keynes.
There is the belief that Keynesianism can save capitalism from itself as well as from eventual political tyranny. The panel does this without denying the many instances when Keynes expressed a hatred for free markets and individualism. There is an acknowledgement of the return of the policies of Keynes, but there is also the position that they may be hastily implemented and, as a result, be ineffectual. This is especially the case given that multi-dollar stimulus schemes in the past three years (since 2008) have failed to boost growth or jobs. The panel posits that Keynesianism lost credit in the 1970s because of the failure to explain stagnant inflation and challenges from efficient market theorists.
Hayek and Keynes knew each other remarkably well. However, their disagreements in terms of ideas and policies ran deeply from generation to generation. This clash is even present in today’s America where one side of politics is talking about unemployment while the other is talking about inflation. According to the panel, Obama is a timid Keynesian while Romney is Hayekian. This is because Obama’s government concerns itself with creating jobs while the Romney side seems to say that the market may sort itself without the help of the government. However, taking sides depend on individual psychology. Optimists may be on the side of Keynes, while pessimists may fall on the side of Hayek.