John Maynard Keynes barely outlived World War II, and F.A. Hayek died nearly 20 years ago. But the contrasting economic philosophies they espoused during their lifetimes continue to help differentiate today’s political combatants.
Journalist Nicholas Wapshott chronicles the divide between the Keynesian and Haykian views in the recent book Keynes Hayek: The Clash That Defined Modern Economics. Wapshott chooses no winner in the debate, despite the fact that his book’s final chapter carries the title “And the Winner Is.”
A close reading suggests Wapshott leans more toward Keynes’ approach, though he freely reports Hayek’s influence.
Hayek drew attention to the paradox at the core of the American Constitution, that it appeared to endorse both individual rights and the powers of a strong federal government. Irritation at the ratchet effect of the government’s creeping influence underpinned the message of leaders like Goldwater and Reagan. The Republican Party, once home to the conservatives Hayek so despised, has become the principal agent of Hayekian libertarianism. Shorn of Northeastern patricians, such as Nelson Rockefeller, who believed Keynesianism facilitated a corporatist marriage between state spending and private profit, the Republicans, egged on by the Tea Party, have adopted Hayek’s cry for smaller government and have challenged Democrats to defend the status quo. In that sense, American politics has become increasingly Hayekian.
Wapshott discussed the book recently during a Duke University appearance and suggested that the 2012 presidential election will feature a pronounced “Keynes Hayek” element.
