Keynes Versus Hayek Essay

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Keynes versus Hayek

There are differences between Keynes and Hayek on the role of savings in the economy.
Keynes believed that it was a waste to save money, it only lead to destruction and prevent economic growth. He didn’t agree with private investment. He felt by keeping money in your pocket is senseless because soon we will all be dead. You can’t take the money with you. He also felt that the government should increase spending during times of recessions.
In contrast, Hayek believed that you must save money so that you could later invest the money wisely. He felt time would multiply your interest. He felt that time did not matter. He believed the same principles of the economy that applied in the 1920 still applied in 2005. …show more content…
Jobs are a means, not the end in themselves.
People work to live better, to put food on the shelves.
Real growth means production of what people demand.
That’s entrepreneurship, not your central plan.

There was a significant difference in opinion between Keynes and Hayek when it came to government central planning directing an economy through bailouts. Keynes supported bailouts because he felt that governments could use fiscal and monetary policy to control aggregate demand. He believed that policy- makers must selectively intervene into markets in ways that would improve on market outcomes.

Hayek felt that economic booms and bust are the result of excessive credit expansion. He believed the bailouts were balanced off the back of the lowest in the working society and merely ineffective investments. He felt that government stimulus spending would merely prolong the recession and slow the adjustment process. Hayek believed the proper role of government is to provide the rule of law, enforce contracts, and protect property rights, leaving the rest to market force. He felt the spark needed to jump start the economy would be made by consumer and producers and borrowers and lenders. (Microeconomics, 14e. Gwartney ,pg 361).

[Hayek] And yet it continues as a justification
For bailouts and payoffs by pols with machi-nations. You provide them with cover to sell us a free lunch, Then all that we’re left with is debt, and a bunch. If you’re living
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