ICED BORSCHT

In the lat­est issue of Reason (not yet avail­able online), Brian Doherty has a great review of British writer Nicholas Wapshott’s new book, Keynes, Hayek: The Clash That Defined Modern Economics. He writes:

The book is rid­dled with errors of judg­ment, espe­cially about Hayek’s posi­tion. Wapshott thinks that Austrian the­ory is “mech­a­nis­tic” and based on a belief that the “free mar­ket was vir­tu­ous.” In fact, Hayek’s notion was that mar­kets were highly organic, espe­cially com­pared to Keynes’ vision of manip­u­lat­ing economies like machin­ery, and Hayek’s Austrian per­spec­tive was stud­iedly and delib­er­ately value-free in its eco­nomic analy­sis. While Austrians tend to think free mar­kets redound to the great­est ben­e­fit of the great­est num­ber, that con­clu­sion arose from their sci­en­tific under­stand­ing of how the world worked, not a moral judg­ment about how it should be.

That’s what it all boils down to, right? One side posits that over-regulation of indus­try per­verts mar­ket forces and sends con­fus­ing mar­ket sig­nals to all trans­ac­tors. The method­ol­ogy used to arrive at this posi­tion requires no emo­tional com­po­nent, mostly because such a com­po­nent would infect the process and obfus­cate the march toward desired eco­nomic effects. The other side lets moral com­po­nents infect the process, and “infect” is exactly the right choice of word because no mat­ter how good their inten­tions are, the clumsy, slow, mech­a­nis­tic process by which they exe­cute their plans invari­ably fails.

Go organic!

Related arti­cles

• Why Failure Doesn’t Discredit Keynes (reason.com)
• Keynes — Hayek by Nicholas Wapshott — review (guardian.co.uk)
• The Friday Podcast: Keynes Vs. Hayek (npr.org)

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