Our world is defined by economics. Its theories are the engines that empower production, endow us with wealth, and open the riverways of international trade. It has given us the free market -- the cornerstone of commercial enterprise -- and the welfare state -- a safety net to protect the least fortunate from the worst of life's cruelties. No one reading this has not been shaped by its ideas, or benefited from the structure it has granted to the nations that shelter them. But as much as the practice of economics have unleashed the productive powers of humanity, it has also wrought unimaginable harm. For it has not only set into motion the business cycle, the vagaries of which have the power to crush the dreams of entrepreneurs and hard-workers everywhere, it has allowed governments the world over to seize upon its ideas as justification for all manner of exploitation.
If our world is defined by economics, then economics is defined by its theorists. And no two men did more to shape 20th century economic thought than John Maynard Keynes and F. A. Hayek. This is their battle.
By most measures, J. M. Keynes was the most consequential economist of the 20th century. An Englishman of immense charm and intellect, he created the field of macroeconomics, that sub-discipline of economics which attempts to grapple with a nation's economy as a whole instead of its countless constituent parts. An advisor to governments and an advocate for the impoverished, Keynes advocated a kind of benevolent interventionism in the national economy never before attempted on such a broad and systematic scale. He believed that governments could mitigate economic upheaval, and its devastating consequences for the poor, by stimulating their economies during downturns, acts of boldness and confidence that would shorten the troughs of the business cycle and allow their economies to maintain full employment. His ideas lead to a revolution in economic thought that, in the halls of power, went unchallenged for 40 years until the stagflation of the 1970s which Keynesian economics was helpless to combat.
In virtually every way, F. A. Hayek was Keynes' polar opposite. Austrian by birth, Hayek staunchly argued that government should not intervene in its national economy. Limited by his poor grasp of English and his tendency to fall back on labyrinthine mathematical constructs to justify his positions, he believed that any good the government did by intervening to mitigate the pain of an economic downturn was more than offset by the risks it took in doing so. For not only do governments lack sufficient knowledge to properly guide their economies, they might well be encouraged by their occasional successes to widen their intervention, creating slippery-slope scenarios in which all civil power is eventually and inevitably grasped by the state. In other words, authoritarianism... Given that Hayek did much of his writing in the aftermath of two epic world wars, largely prosecuted by authoritarian states, this argument seemed to have merit. However, for decades, Hayek's advocacy for non-interference fell on the deaf ears of a world that considered it heartless, especially compared to Keynes' policies of careful and caring intervention.
Instilling drama and panache into an intellectual argument between two ivory-tower academics is a considerable challenge. And so it is to the credit of Mr. Wapshott, a British journalist, that he has imbued Keynes Hayek with an energy that transforms its dry subject into a battle worthy of the billing. The author is utterly convincing in his contention that the ideological war waged by Keynes, Hayek and their disciples has had a profound impact on the world as we know it. After all, political giants from LBJ to Margaret Thatcher, from Nixon to Reagan, have used the models these two men espoused as justification for their economic policies. And in our world, there are no greater forces than governments.
However, as much as this piece succeeds in its core contention, it is also both a wonderful biography and a treatise on modern economic theory. It deeply delves into the lives of these two men, chronicling their fascinating private and public lives with equal attentiveness. In this, the author allows his readers an opportunity to know these men, to revel in their moments of brilliance and to sympathize with their crushing defeats. Their episodes of Cassandra-like perception into the intertwined natures of economics and human nature, abound. But Keynes Hayek would be nothing more than a slick biography without its admirable ability to reduce complicated economic concepts into language the layperson can understand. Everything, from macroeconomics to the Keynesian multiplier are explained with clarity and brevity.
For anyone remotely interested in the tug-of-war the West is currently enduring between advocates of the free market and proponents of the welfare state, this is a must-read. Gripping and thorough work that is as informative as it is engaging. Exactly what I want from a history text. (5/5 Stars)
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