Austrian fatalism made Hayek’s side politically unsalable in the Depression

Evidence

At the London School of Economics in the 1930s, when Hayek and Robbins were together on the faculty and Austrian businesscycle theory was prevalent, “the dominant view was that the depression was an inevitable result of the prior boom” and that “the only sound policy was to let the depression run its course, bring down money costs, and eliminate weak and unsound fi rms.” Such fatalist rhetoric, Friedman believed, was unsalable in a world searching for dynamic solutions. In contrast, the news of Keynes’s interpretation of the Depression “must have come like a fl ash of light on a dark night. It offered a far less hopeless diagnosis of the disease. More important, it offered a more immediate, less painful, and more effective cure in the form of bud get defi cits. It is easy to see how a young, vigorous, and generous mind would have been attracted to it.” Ironically, it was Friedman’s observation of the ascent of Keynesianism that demonstrated to him the importance of providing the public with policy proposals that offered practical solutions to the felt problems of the day. — Angus Burgin, The Great Persuasion, 490

Categorization

• XREF: Connects to the broader MPS history and the rhetoric-versus-technique debate about why Keynes won the interwar battle of ideas. — connects to: Hayek’s economics failed because it offered no remedy during the Depression — Angus Burgin, The Great Persuasion: Reinventing Free…, 81; Even Friedman rejected Hayek’s do-nothing policy as harmful in the Depression — Angus Burgin, The Great Persuasion: Reinventing Free…, 82; Austrian business cycle theory blamed politics and left crisis victims unsupported — Dieter Plehwe, Quinn Slobodian & Philip Mirowski (eds.), Nine Lives of Neoliberalism, 395 (+6 more)

Broader Connections

• Hayek’s economics failed because it offered no remedy during the Depression #expands (0.92) — Angus Burgin, The Great Persuasion, 81
• Austrian business cycle theory blamed politics and left crisis victims unsupported #expands (0.88) — Dieter Plehwe, Quinn Slobodian & Philip Mirowski (eds.), Nine Lives of Neoliberalism, 395
• Even Friedman rejected Hayek’s do-nothing policy as harmful in the Depression #corroborates (0.85) — Angus Burgin, The Great Persuasion, 82
• Robbins blamed state interventions rather than market failure for the Depression #expands (0.85) — Angus Burgin, The Great Persuasion, 73
• The Depression forced postwar conservatives to rebuild capitalism’s foundations, not defend them #expands (0.78) — Angus Burgin, The Great Persuasion, 33
• Depression-era American conservatism was weak as an intellectual force #corroborates (0.75) — Philip Mirowski & Dieter Plehwe (eds.), The Road from Mont Pèlerin, 1445