_The Commanding Highs: The Battle of Ideas_ episode explains the economy’s alteration in construction between 1914 and 1970. every bit good as the operation of the markets and authorities during that clip. John Maynard Keynes and Friedrich von Hayek both had influential functions on the economic system in the twentieth century due to their opposing statements sing aggregative demand and classical liberalism. severally. Keynes’ “planned economy” thought and Hayek’s “market economy” both fought to determine the economic system into what they hoped was ideal for modern twenty-four hours society. Between the two. Keynes’ statement seemed to hold the most success. particularly in times of great demand. which is why I found his the most compelling.
After World War I. Germany and Austria were forced to pay the costs of the war. which was near impossible for them. until they began to publish more money in order to counterbalance for their deficiency of financess. Printing more money caused a hyperinflation to happen. where monetary values skyrocketed and people’s nest eggs decreased in value. By 1929. the market began to clang ; Bankss started shuting and 1000000s of people lost all of their money. It was at this clip that the authorities and the economic system were in despairing demand of a program that would resuscitate them from this lay waste toing clang.
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At this point. John Maynard Keynes came in with his theory in an effort to salvage the economic system from the Great Depression. He wrote a book explicating why the Great Depression occurred and what the authorities should make to forestall such an economic ruin from of all time go oning once more. As Robert Skidelsky. a British economic expert. said. “Concepts we take for granted today. like gross domestic merchandise. the degree of unemployment. the rate of rising prices. all to make with general characteristics of the economic system. were invented by [ Keynes ] ” ( Ch. 4 Europe. 1931 ) . His thought was that the authorities should pass money in order to maintain full employment. even if it meant conveying about a shortage. In the long tally. the addition in disbursement would profit the economic system overall. Roosevelt. being the President of the United States during this period. used this thought by making authorities bureaus to give citizens work.
As Daniel Yergin. an American writer. references. “ [ Roosevelt and the New Deal ] instituted a plan of modulating capitalist economy in a manner that had ne’er been done earlier. in order to protect people from what they saw as the foolhardiness of the unchained market” ( Ch. 5 Washington. D. C. . 1933 ) . Regardless of the attempt Friedrich Hayek put in to convert citizens that the authorities should non be given more control over the economic system. the bulk followed Keynes’ position. Once World War II hit. legion occupation chances opened up for the readying of the war. and the Great Depression was defeated. After the war ended. many states took to following Keynes theory. ensuing in successful economic systems and in some instances. socialism.
Hayek still did non believe Keynes’ program was traveling to work and wrote a sarcastic novel to disclaim this. The message he was acquiring across with this book was that “too much authorities planning means excessively much authorities power. and excessively much authorities power over the economic system destroys freedom and makes work forces slaves” ( Ch. 6 London. 1944 ) . In truth. Germany’s market had diminished and hyperinflation had caused the German currency to go worthless. go forthing them in demand of a new leader to alter their state of affairs. This is when a new manager of economic personal businesss. Ludwig Erhard. was appointed. He had similar positions to Hayek. including the belief that monetary value controls were non halting rising prices from happening. nor were they assisting the economic system in any manner.
For this ground. Erhard got rid of monetary value controls. go forthing citizens with more freedom. and less desire to do trades in the black market. This is an illustration of Friedrich von Hayek’s position of how the economic system should be run. He thought Keynes’ thought was giving the authorities excessively much power over the economic system alternatively of giving that influence to the citizens. Hayek followed the position of a libertarian named Ludwig von Mises who believed “markets. like people. needed to be free from authorities meddling” ( Ch. 3 Vienna. 1919 ) . He thought that the economic system would neglect because of the control over rewards and monetary values.
In the terminal. Keynes theory prevailed. which is why I find his statement more compelling. With the grounds to endorse him up. he seemed to be on the right path in footings of how the authorities should respond and how the economic system should be run. Many people prospered from his thoughts and beliefs. I believe that he made society experience more secure in footings of fundss and their overall manner of life.
