By 1969, Hayek understood his cycle theory and Keynes' as compatible

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"Quite simply, Hayek's aim was to analyze the mechanism by which an inflation-fed boom must, sooner or later, be reversed by a decline in investment. 'The cumulative process of contraction,' likely to then set in, however, he wrote in 1969, 'is another matter which must be analyzed by conventional means.' 'Conventional means,' In 1969, mean Keynesian means." -- Goodspeed, Rethinking the Keynesian Revolution, p.145

I have previously made this point on this blog: Hayek explains why the boom must end; Keynes explains why the bust gets as bad as it does. Once again, I see that Hayek got there decades before me.

Comments

  1. rob10:36 AM

    Does Goodspeed cite anything to confirm that when in 1969 Hayek said "Conventional means" that he did indeed mean "Keynsian means" ?

    Just seems a bit of a stretch to me to see Hayek conceding that.



    ReplyDelete
    Replies
    1. gcallah10:40 AM

      I think it is a bit of a stretch to suppose that in 1969, Hayek could have meant anything else by conventional means. Do you have some suggestion for what else he could've meant?

      Delete
    2. gcallah10:41 AM

      Besides which, by the 60s or 70s, Hayek was quite definitely saying that his position in the 30s and 40s was a mistake, and that he should've advised stronger measures To fight the secondary depression.

      Delete

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