The_Battle_of_Ideas_-_Lecture_Part_I (1)

The_Battle_of_Ideas_-_Lecture_Part_I (1) - Respublica...

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Respublica Literaria Republic of Letters Respublica Literaria, 2392/2012 The Battle of Ideas John Maynard Keynes & Friedrich von Hayek Part I Lecture series XXIVI Based on , „ Commanding Heights The Battle for the World Economy‟ 2002, Yergin, Daniel and Stanislaw, Joseph Costantinos Berhutesfa Costantinos, PhD Professor of Public Policy, School of Graduate Studies, College of Business and Economics, AAU The history of economic thought is a juggernaut of blueprints penned by Adam Smith, Karl Marx, Lenin, Keynes, Hayek, Ricardo, Mill and many pundits who developed unparalleled thoughts throughout the centuries. The forces of the market-state chemistry and capital-labour relations have been the dominant focus of research that inform the vicissitudes witnessed in the inability of economic principles to explain the global crises witnessed in the 21 st Century. Adam Smith's vision is a blueprint for a completely new mode of social organisation, whose laws of the market -- the drive of individual self-interest in an environment of similarly motivated individuals will result in competition: the provision of goods in the quantities that society desires and at the prices it is prepared to pay . This regulator is competition. Karl Marx‟s final contribution lies elsewhere: in his dialectical materialist theory of history, analysed in Das Kapital with fury, but with cold logic . Finally, the drama ends. Today, governments everywhere would retreat from the commanding heights of their economies. In the battle of ideas, the pendulum had swung from government to market, from Keynes to Hayek. Only time would tell what people would ask of their governments in the event of a new recession, or a depression, or a war. Is the state indeed the only political ruling organ of that might act as a third force balancing the claims of its conflicting members or is there an escape from the inner logic, dialectics of a capitalist system, which would not only destroy itself but, in so doing, would give birth to its successor; in short, the negation of negation ?
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1. Introduction Air-raid sirens sound the alert. German bombers will pound another British city tonight. During the blitz, the two most important economists of the age shared air-warden duty on the roof of King's College, an English gentleman and an Austrian exile -- personal friends, but intellectual rivals. John Maynard Keynes helped the allied governments defend freedom by planning their wartime economies. Friedrich von Hayek thought government interference in the economy was a threat to freedom. The debate over market forces, whether you have economy that's based upon prices or on state, planning has been at the very heart of the economic battles of the last 100 years. For decades, the ideas of Keynes dominated the economies of the Western world. The market economy would go to excesses, and when things were in difficulty the market wouldn't work. Therefore the government had to step in. Hayek felt that the market would eventually take care of itself. At the start of the 20th century, Hayek and Keynes had witnessed the first age of
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