Hayek and the Keynesian avalanche

by McCormick, B. J

The debates between Friedrich Hayek and John Maynard Keynes enveloped their respective institutions--the London School of Economics and Cambridge University--and determined the research programmes of their colleagues. Hayek's criticisms of Keynes led to Keynes writing his famous General Theory; and from there, the Keynesian avalanche descended at the expense of Hayek's ideas. Decades later in the 1970's and 1980's, as Keynesian policies seemed to become increasingly ineffective and the Eastern European and Soviet economies failed, Hayek's ideas were revived and reappraised by politicians as well as economists. The time is now ripe to revisit this battle between economic giants, to consider the relationship between their ideas and how they influenced subsequent generations of economists and policymakers.