Hayek’s economics failed because it offered no remedy during the Depression

Evidence

Hayek faced the prohibitive challenge of advocating for quiescence in the face of an economic catastrophe that Keynes claimed he could solve. His colleague John Hicks later observed, “It is in its application to defl ationary slumps that the Hayek theory is at its worst; and it is a terrible fact that it was in just such conditions— in 1931– 2—that it was fi rst propounded.” Hicks recalled that in the absence of a forceful reply to Keynes, Hayek’s theories gradually “slipped through our fi ngers” as economists turned their focus toward what they perceived to be more urgent problems. Students at the LSE were hesitant to accept a theory that seemed to offer no clear route out of the crisis. — Angus Burgin, The Great Persuasion, 81

Hayek faced the prohibitive challenge of advocating for quiescence in the face of an economic catastrophe that Keynes claimed he could solve. His colleague John Hicks later observed, “It is in its application to defl ationary slumps that the Hayek theory is at its worst; and it is a terrible fact that it was in just such conditions— in 1931– 2—that it was fi rst propounded.” Hicks recalled that in the absence of a forceful reply to Keynes, Hayek’s theories gradually “slipped through our fi ngers” as economists turned their focus toward what they perceived to be more urgent problems. — Angus Burgin, The Great Persuasion, 81

Categorization

• XREF: Supports the book’s core argument that MPS arose partly in response to this intellectual defeat, and connects to the reader’s Mont Pèlerin milieu focus. — connects to: Austrian fatalism made Hayek’s side politically unsalable in the Depression — Angus Burgin, The Great Persuasion: Reinventing Free…, 490; Even Friedman rejected Hayek’s do-nothing policy as harmful in the Depression — Angus Burgin, The Great Persuasion: Reinventing Free…, 82; Neoclassical economics had no framework for deflationary crises — Mark Blyth, Austerity: The History of a Dangerous…, 158 (+4 more)
• corroborated: 2 independent passages support this claim — Angus Burgin, The Great Persuasion: Reinventing Free…, 81

Broader Connections

• Neoclassical economics had no framework for deflationary crises #expands (0.78) — Mark Blyth, Austerity, 158
• Key Austrian works failed commercially while Keynesianism dominated economics #corroborates (0.72) — Mark Blyth, Austerity, 384