Why the Keynes-Hayek Macro Debate Cannot be won by either Side

Pătruţi, Alexandru

doi:10.3280/spe2018-002006

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See Chapter 16 Sundry Observations On the Nature Of Capital ...1

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2023

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“…The General Theory is also the reason for which I previously claimed in another article that the Keynes-Hayek debate, in the way it is usually presented, does not have an a priori solution, see Patruti (2018). If one takes liquidity preference theory seriously, as in the case of the General Theory, no tendency towards equilibrium can develop.…”

Section: See Chapter 16 Sundry Observations On the Nature Of Capital ...mentioning

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2023

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Section: See Chapter 16 Sundry Observations On the Nature Of Capital ...mentioning

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“…I have myself written myself a whole book on the subject, which unfortunately was not translated yet in the English language. SeePatruti (2016).…”

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Keynes and Hayek: some common elements in business cycle theory

Pătruţi

2023

Brazil. J. Polit. Econ.

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Keynes and Hayek are usually perceived in the history of economic thought as intellectual rivals. Although it is true that in terms of policy recommendations, they have not always seen eye to eye, there are numerous theoretical elements that the two economists tend to share. This is especially true if one follows Axel Leijonhufvud (1976) in considering that Keynes’s fundamental theoretical work is the Treatise and not the General Theory. In the early 1930s, following the works of Wicksell (1989), both explained business cycles as caused by a discrepancy between savings and investment. They considered that in the modern economy the interest rate cannot speedily adjust these two magnitudes. To a certain extent, Keynes and Hayek even agreed on the dynamic sequence of prices in a “normal” depression. By the time the General Theory came out, liquidity preference obscured most of the commonalities between the two economists. Although Hayek introduced liquidity preference as a short run friction in his 1941 Pure Theory of Capital, he could not accept it as a fundamental determinant of the interest rate. However, in the 1970s Hayek began to believe that “normal” Hayekian crises could further degenerate into Keynesian depressions. By focusing on Keynes’s theoretical development prior to the elaboration of the General Theory in parallel with Hayek’s evolution throughout his life, we argue that a selective reading of their works could lead to a theoretical model in which Keynesian and Hayekian scenarios are specific cases of a more general theory.

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Why the Keynes-Hayek Macro Debate Cannot be won by either Side

Cited by 2 publications

References 8 publications

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Keynes and Hayek: some common elements in business cycle theory

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