2 - Hayek on money and the business cycle

Summary

Since The Road to Serfdom Hayek has been known primarily as a philosopher of freedom. He published ideas about money and macroeconomic policy (for example, his advocacy of the “denationalization” of money) but, though this work may have influenced politicians such as Margaret Thatcher and Ronald Reagan, it was never taken seriously by economists. By the 1970s he was, in the minds of most economists, at best a political philosopher in a world where economics had become highly technical, and at worst an ideologue. Either way, economists did not consider him someone to be taken seriously. Before the Second World War, on the other hand, Hayek was generally accepted, even by those who did not agree with him, as an economist of the first rank, undertaking research in business-cycle theory that demanded their attention. In his controversy with Keynes in 1930-31, Hayek, in a sense, stood on a par with Keynes (in so far as the newly arrived enfant terrible could be on a par with an established authority): they offered visions of capitalism and how to remedy its macroeconomic problems that vied for attention at a time when these were more pressing than at almost any other time in history.