Friedrich Hayek
Economic Perspective
Subtopic
Subtopic
Economic Significance
Life and times
Keynes
Contemporary of Hayeck,Believes the market unchecked will produce more depressions. Governments should more actively plan and manipulate the free market
socially
Post WWI
Hayek sees hyper inflations impact in Germany and believes the economy can only be fixed by letting the free market take its course
Economically
Great Depression
people suffer greatly with the boom and bust cycles of the free market
WWII
governments spend to arm and unemployment drops drammactically
Post WWII
Western Economies boom for 30 years. Keynes ideas credited for the success
politically
Stagflation (1970's)
inflation and unemployment both rise. Not possible accoriding to Keynesians. Western Economies in recession
Thatcher and Regan elected in U.K. and U.S. first time Hayeks policies are widely used. Western economies recover
Hayeks ideas take hold and are the predominant theory, now touted by Friedman, in governments making policy unitl the 2008 recession
Hayek's ideas on deregulation and no government intervention lead to banks and ivetment firms taking more and more risks and leads to 2008 recession. Keynesian ideas are tried to ease the great recession
Cause and Effect
Hayek writes Road to Serfdom.
Hayek ostracized for having opposite view to Keynes, no government intervention. Let free markets rule.
Hayek goes to teach University of Chicago, continues to teach his theories
Mentors and influences Milton Friedman
ignored by governments
Keynes raised to Economic Sainthood
recession of 1970's
monetary policy(Hayeks ideas) is now the main government economic policy in the west
leads to great deregulation of nationalized government industries
intended Consequences
recession ends western economies start to boom
greater growth leads to more blief in Hayek's theories and more prosperity into the 90's and 2000's and less government regulation
economies hit record highs in GDP and the stock market in the mid 2000's
lowest regulation of the financial sector since the 1929 stock market crash. Record Highs for GDP and stocks continue
Uninetnded Consequences
deregulation leads to huge gap in income inequality
companies use free trade and deregulation to outsource.
huge profits
loss of manufacturing jobs in the West
Investment banks over extended begin to falter and go Bankrupt.
leads to greatest recession since the great depression.
return to a more balanced government approach in the markets