Hayek and Keynes on capital

G. R. Steele

Jens Hölscher

VICTORIA Chick

pp. 237-258

in: Stephen F. Frowen (ed), Hayek: economist and social philosopher, Basingstoke, Palgrave Macmillan, 1997

Abstract

Friedrich Hayek and John Maynard Keynes each produced original and highly distinctive work in economics; but although they shared a common philosophical perception (see Steele, 1993a), there was no empathy in respect of their economics. Indeed Hayek was brought to the London School of Economics in 1931, in a move that was perceived as a counter to Keynes' influence (see Kahn, 1984, p. 181). Thereafter intermittent exchanges arose from the cross-criticism of Keynes' policy-oriented analysis of "macroeconomic" aggregates and of Hayek's highly abstract analysis of money, capital and business fluctuations. In the event, Keynes' star was coruscant as Hayek's dimmed; and the acclaim of Keynes' General Theory contrasted with the neglect of Hayek's Pure Theory of Capital. The discussion that follows is a contribution to a much wider thesis: that each of these developments is a matter for regret.