Markets & Economy
There are two major economic philosophies. John Maynard Keynes studied economics from 1906-1946. Keynes’ major contribution to economics was mostly his research on macroeconomics as well as his study on the business cycle (the periods of growth, followed by periods of economic recession). Keynes believed in Government spending in the form of public works projects during economic periods of recession to spur job creation. He believed that while the market did well creating jobs during economic “booms”, the Government would do well to create economic growth through massive public works projects during the economic “busts”. He also believed in heavy deficits during “bust” cycles, arguing a “multiplier” could be factored in. Keynes’ multiplier stated that for every dollar spent on public works projects, three dollars (respectively) would be added to the economy. Keynes’ work has influenced many politicians and central banks since World War I. Keynes is often regarded as one of the most influential people (and economists) in the 20th Century.
Friedrich Hayek studied economics from the early 1920’s until his death in 1992. Adversely Hayek’s major contribution was in the field of microeconomics. During his time serving in the first World War, he was a pupil of Keynes, but through his studies at The University of Vienna, he became acquainted with Ludwig von Mises (1881-1973). Mises won Hayek over with his principles on economics, often pointing out the faults of Keynes. Eventually, Hayek’s study on the business cycle as well as the fundamental “laws” of economics, led Hayek and Keynes down a path of conflicting ideologies. Hayek believed that Keynes’ philosophies weren’t principally sound and could easily be debunked. Hayek criticized Keynes often. His most influential criticism of Keynes was his critique of macroeconomics in general. Hayek believed that in order to be able to predict an economic outcome using macroeconomics, you would need to know every possible variable in every part of the economy. He likened it to a football game. Hayek believed that in order to know the outcome of a football game, you would need to know the status of every player on the field, what they ate the night before, their physical status, their mental state, their lung capacity, etc. Hayek was most notably famous for defending classical Liberalism (modern day Libertarianism) in his book “The Road to Serfdom”, which outlined the importance of personal choice in an economy, since personal choice drove the market to find the most efficient solution to market issues. In addition, personal choice and a broad assortment of competition meant prices would be kept low while consumer satisfaction could remain high. Hayek also criticized Keynes’ philosophy on Government projects, stating the massive amount of Government spending would make the “busts” in the business cycle worse further down the road. Hayek closed out his career with a Nobel Prize in economics in 1974 and was given the Presidential Medal of Freedom in 1991.
At Vote Liberty, we believe in solid economic principle. We also believe in the natural laws of economics. There are always unintended consequences to Government spending. The evidence of massive Government spending run amok is bountiful and leads us to a general conclusion: we should avoid Government spending whenever possible or practical. If there is a free-market solution, it should be allowed to grow unhindered and competition should not be limited by Government. At Vote Liberty, we will always advocate for freedom of choice in the marketplace. If we limit people’s choices, we limit the ability to obtain services, thereby limiting the opportunity for maximum satisfaction among all people. People should be as free to choose in the marketplace as they are in the voting booth.
Friedrich Hayek studied economics from the early 1920’s until his death in 1992. Adversely Hayek’s major contribution was in the field of microeconomics. During his time serving in the first World War, he was a pupil of Keynes, but through his studies at The University of Vienna, he became acquainted with Ludwig von Mises (1881-1973). Mises won Hayek over with his principles on economics, often pointing out the faults of Keynes. Eventually, Hayek’s study on the business cycle as well as the fundamental “laws” of economics, led Hayek and Keynes down a path of conflicting ideologies. Hayek believed that Keynes’ philosophies weren’t principally sound and could easily be debunked. Hayek criticized Keynes often. His most influential criticism of Keynes was his critique of macroeconomics in general. Hayek believed that in order to be able to predict an economic outcome using macroeconomics, you would need to know every possible variable in every part of the economy. He likened it to a football game. Hayek believed that in order to know the outcome of a football game, you would need to know the status of every player on the field, what they ate the night before, their physical status, their mental state, their lung capacity, etc. Hayek was most notably famous for defending classical Liberalism (modern day Libertarianism) in his book “The Road to Serfdom”, which outlined the importance of personal choice in an economy, since personal choice drove the market to find the most efficient solution to market issues. In addition, personal choice and a broad assortment of competition meant prices would be kept low while consumer satisfaction could remain high. Hayek also criticized Keynes’ philosophy on Government projects, stating the massive amount of Government spending would make the “busts” in the business cycle worse further down the road. Hayek closed out his career with a Nobel Prize in economics in 1974 and was given the Presidential Medal of Freedom in 1991.
At Vote Liberty, we believe in solid economic principle. We also believe in the natural laws of economics. There are always unintended consequences to Government spending. The evidence of massive Government spending run amok is bountiful and leads us to a general conclusion: we should avoid Government spending whenever possible or practical. If there is a free-market solution, it should be allowed to grow unhindered and competition should not be limited by Government. At Vote Liberty, we will always advocate for freedom of choice in the marketplace. If we limit people’s choices, we limit the ability to obtain services, thereby limiting the opportunity for maximum satisfaction among all people. People should be as free to choose in the marketplace as they are in the voting booth.