Another Open Letter to Paul Krugman

by Don Boudreaux on August 10, 2013

in Economics, Hayek, Myths and Fallacies, State of Macro

Prof. Paul Krugman
Department of Economics
Princeton University
Princeton, NJ

Dear Prof. Krugman:

On your blog you write – in response to the popularity of the Hayek-Keynes rap videos done by John Papola and my co-blogger, Russ Roberts – that “back in the 30s nobody except Hayek would have considered his views a serious rival to those of Keynes” (“More On The Disappearance Of Milton Friedman,” Aug. 9).

Do you regard the Nobel economist John Hicks to be “nobody”?  In his 1967 article “The Hayek Story,” Hicks – who was professionally active during the 1930s – observed that “When the definitive history of economic analysis during the nineteen thirties comes to be written, a leading character in the drama (it was quite a drama) will be Professor Hayek….  Hayek’s economic writings … are almost unknown to the modern student; it is hardly remembered that there was a time when the new theories of Hayek were the principal rival of the new theories of Keynes.  Which was right, Keynes or Hayek?”*

Reasonable people can disagree over the relative merits of Hayek’s and Keynes’s economics, but no one who is familiar with the history of economic thought can deny that Hayek’s views in the 1930s were widely considered then to be “a serious rival to those of Keynes.”

Donald J. Boudreaux
Professor of Economics
Martha and Nelson Getchell Chair for the Study of Free Market Capitalism at the Mercatus Center
George Mason University
Fairfax, VA  22030

* Sir John Hicks, “The Hayek Story,” Critical Essays in Monetary Theory (Oxford: Oxford University Press, The Clarendon Press, 1967), p. 203.

P.S. See also this blog post by my GMU Econ colleague Alex Tabarrok.

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