Via Mark Thoma, David Warsh finally says what someone needed to say: Friedrich Hayek is not an important figure in the history of macroeconomics.
These days, you constantly see articles that make it seem as if there was a great debate in the 1930s between Keynes and Hayek, and that this debate has continued through the generations. As Warsh says, nothing like this happened. Hayek essentially made a fool of himself early in the Great Depression, and his ideas vanished from the professional discussion.There's a famous incident where Margaret Thatcher, freshly elected as leader of the Opposition, in a shadow cabinet meeting put a copy of The Road to Serfdom down on the table and said, "This is what we believe."
So why is his name invoked so much now? Because The Road to Serfdom struck a political chord with the American right, which adopted Hayek as a sort of mascot — and retroactively inflated his role as an economic thinker.
I've been arguing for a while that a lot of the problems with our economic system can't be laid at the feet of economists - mainstream economics pretty much understands the problem and understands what to do about it. Where there is debate is among politicians, who by and large, I think, don't appreciate (or indeed understand) the economics.
