In today's Wall Street Journal, Dick Armey very nicely explains why Washington needs less Keynes and more Hayek. Here's a key paragraph:
Keynes's thinking was a decisive departure from classical economics,
because arbitrary "macro" constructs like aggregate demand had no basis
in the microeconomic science of human action. As Hayek observed, "some
of the most orthodox disciples of Keynes appear consistently to have
thrown overboard all the traditional theory of price determination and
of distribution, all that used to be the backbone of economic theory,
and in consequence, in my opinion, to have ceased to understand any
economics."
because arbitrary "macro" constructs like aggregate demand had no basis
in the microeconomic science of human action. As Hayek observed, "some
of the most orthodox disciples of Keynes appear consistently to have
thrown overboard all the traditional theory of price determination and
of distribution, all that used to be the backbone of economic theory,
and in consequence, in my opinion, to have ceased to understand any
economics."
