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10-05-2013, 12:44 PM
(This post was last modified: 09-01-2022, 01:02 AM by Fearless Community.
Edit Reason: Checked Encoding
)
Aloha,
Keynes theory of an anti-cyclical economic policy has been proven succesful in serveral situations.
Problem is the most western states do notsupport their economy in a crisis only .
Politicians tend to buy votes by promising expensive changes like tax reduction or new highways, improving social policy
is the most favourite reason to spend even more money the state does not have
And that is a little problem in Keynes theory as he underestimated the greed of politicians.
But that is not the problem of Hayek.
Hayek and Keynes had some interesting discussion in 1932 about a newly released theory of Keynes who tried to explain
the mass unemployment in the early 1930's caused by the wonderful credit policy of the USA and Germany aswell as other WWI participants.
Anyway: Keynes thought the unemployment is a result of falling demand for goods in general. In addition he stated enterprises would rather follow their "animal spirits" than trusting a rational calculation and thus failing a lot of economic operations.
Hayek has a point in criticising Keynes for his monocausal explanation as he cant not generalise one enterprise's failure and make it responsible for the enitre mass unemployment.
Keynes theory is based on macro-economy whereas Hayek's is based on micro-economy.
I would never come to a conclusion wether one theory is better than the other as both parties state interesting and reasonable arguments but to be honest one of them is talking about apples while the other one talks about oranges and you cant compare apples to oranges.
Thank you for sharing and enjoy your day
- Crowh
Keynes theory of an anti-cyclical economic policy has been proven succesful in serveral situations.
Problem is the most western states do notsupport their economy in a crisis only .
Politicians tend to buy votes by promising expensive changes like tax reduction or new highways, improving social policy
is the most favourite reason to spend even more money the state does not have
And that is a little problem in Keynes theory as he underestimated the greed of politicians.
But that is not the problem of Hayek.
Hayek and Keynes had some interesting discussion in 1932 about a newly released theory of Keynes who tried to explain
the mass unemployment in the early 1930's caused by the wonderful credit policy of the USA and Germany aswell as other WWI participants.
Anyway: Keynes thought the unemployment is a result of falling demand for goods in general. In addition he stated enterprises would rather follow their "animal spirits" than trusting a rational calculation and thus failing a lot of economic operations.
Hayek has a point in criticising Keynes for his monocausal explanation as he cant not generalise one enterprise's failure and make it responsible for the enitre mass unemployment.
Keynes theory is based on macro-economy whereas Hayek's is based on micro-economy.
I would never come to a conclusion wether one theory is better than the other as both parties state interesting and reasonable arguments but to be honest one of them is talking about apples while the other one talks about oranges and you cant compare apples to oranges.
Thank you for sharing and enjoy your day
- Crowh