Posts Tagged ‘Hayek’

Keynes vs Hayek

Sunday, July 11th, 2010

In October of 1932, in the midst of the Great Depression, John Maynard Keynes, A.C. Pigou, and other Cambridge and Oxford economists published an invited letter in The Times, in which they advocated public spending on all manner of projects in order to put people to work.

[I]in present conditions, private economy does not transfer from consumption to investment part of an unchanged national real income. On the contrary, it cuts down the national income by nearly as much as it cuts down consumption. Instead of enabling labour-power, machine-power and shipping-power, to be turned to a different and more important use, it throws them into idleness.

Moreover, what is true of individuals acting singly is equally true of groups of individuals acting through local authorities. If the citizens of a town wish, to build a swimming-bath or a library, or a museum, they will not, by refraining from doing this, promote a wider national interest. They will be