Intellectual battle vs. policy battle

In his review of the book Keynes Hayek: The Clash that Defined Modern Economics (W.W. Norton & Company. 355 pages. $28.95), David R. Henderson wrote the following:

I shouldn’t leave this review without noting one major mistake Wapshott makes in discussing the recent financial crisis. Wapshott writes, “The mayhem suggested that the decades-long experiment in allowing barely restrained markets to generate growth and prosperity had failed.” In fact, markets, in Britain and in the United States, have been heavily restrained for almost a century. It’s true that free-market economists until recently were winning the intellectual battle. But they haven’t come close to winning the policy battle. Indeed, many of us think that if we had, the financial crisis would have been much less severe. [Link]

Intellectual battle is relatively easier to win than policy battle which is an outcome of the interplay of many different forces of which the intellectual force probably has one of the smallest weights!

The comments on the readability of Keynes’ ‘General Theory…’ are very interesting.

I must add that David Henderson wrote this blog post in December 2011.

Despite their intellectual battles, this is what Hayek had to say on Keynes on the latter’s death:

“the one really great man I ever knew, and for whom I had unbounded admiration. The world will be a very much poorer place without him.” [Link]

The quote is from a letter that Hayek wrote Keynes’s widow shortly after his death in 1946.

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