Keynes Versus Hayek: on the Appropriateness of Government Intervention in Markets

Abstract

In keeping with the pattern of the last century, today we observe staunch and oftentimes vociferous opposition to even the prospect of state intervention in the market place to either curtail recessionary downturns or mitigate the corollaries of market failure. To whom or to what is this knee-jerk revulsion to government interference attributable? Is it justified? And what is the role of government in the contemporary economy? Figures that have dominated this hemisphere of thought include free-market advocates such as Friedrich von Hayek. On the other end of the spectrum, personalities like John Maynard Keynes challenged fundamentally the idea that market economies will automatically adjust to create full employment, in the process setting the parameters of a debate that rages on into the contemporary era.