Hayek edges Keynes to victory

Last night’s Hayek vs Keynes debate was a pretty impressive affair. I arrived at the Old Building 15 minutes before kick off and ended up being the last person permitted into the East Building to watch on video link. The long queue of disappointed people behind me had to find alternative entertainment for the evening. It became abundantly clear that this high turnout was achieved with no small contribution from the Adam Smith Institute.

To warm us up we had the latest video from Econstories, which features a senate debate and boxing match analogy which Hayek wins with a knock out blow; yet Keynes is declared winner regardless. It seemed most of us in the video link room had seen this before and thoroughly enjoyed it but a quiet pause at the end of the video was punctured by a passionate stony faced man behind me yelling “pathetic nonsense!” as if the American producers would hear him.

There is nothing like an angry heckle to spoil the mood. People kept their heads down in case a real boxing match kicked off there and then. Obviously, passions in the Keynesian camp also ran high. The young economics geeks could be relied upon to create a parallel dimension on Twitter. In this universe the heckler was openly ridiculed, tweets kept coming, and the sense of anticipation was palpable. There seemed to be plenty to talk about despite nothing new occurring on stage.

The event itself opened with the moderator leading a straw poll. He asked the audience to make some noise and shout “Yo Keynes” and “Yo Hayek”. Very intellectual. Hayek supporters, asked to shout second, were well prepared to add volume to the argument.

Lord Sidelsky offered up a mix of theory, ad hominem and humour and quickly fell foul of Godwin’s Law as he attempted to attach Hayek to Hitler. Jamie Whyte was unexpectedly dry and excessively relaxed. Perhaps he felt that an effort to appear casual would cure his nerves, who knows, but his accusation that Keynesianism was purely an irrational faith in state-action touched a nerve. I found my self willing him to sit up straight and deliver his words with more power and deliver stronger blows.

Selgin also sat back, but was clearly excited to be there, fidgeting, shifting and waving his graphs for the audience. As a result he seemed to dominate the Hayek side of the argument batting away Keynesian arguments with a series of strong sound-bite rebuttals.

Sidelsky attempted to counter with an interesting dentist analogy. Apparently we go to a dentist seeking competent and humble action, and not to be told our teeth will fall out on their own. This was readily undermined by Selgin’s analogy to a hangover which has no easy cure save mature abstinence and foresight. Of course, Sidelsky misses the fact that if my teeth are going to fall out then I may decide, quiet sensibly, not to waste money I don’t have on dentists. Altogether unpersuasive.

Towards the end, debate centred around the policy prescriptions each philosopher would apply to the present circumstances. Selgin’s gave an erudite defence of inaction in case the actions taken caused malinvestments which became the cause of the next meltdown. Here Keynes won out, it seems that the desire to do something  overcomes even the urge to avoid doing harm.

Working with libertarians has introduced an unavoidable Hayekian bias in me. Leonard Peikoff’s endorsement of Ludwig von Mises helps too, but I was determined to listen closely to the Keynesian view. I did my best, and am committed to reviewing the audio as well, but what I heard from the left lacked the conceptual coherence of the Hayekian argument. It did not present cause and effect relationships between all the known features of the business cycle and Hayek’s explanation does. In addition the theory rests on concepts of how individuals make decisions that are readily verifiable against your own experiences. For me, these epistemological problems totally undermine the Keynesian position.

I saw that the Keynesians in the audience had got themselves worked up to make a noise once more for their hero, but justice was done when the more numerous Hayekians shouted them down once again.


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