Interpreting the Great Depression: Hayek versus Keynes.

Robert Skidelsky: "This is not intended to be a purely historical paper. I am interested in the light the Keynesian and Hayekian interpretations of the Great Depression throw on the causes of the Great Recession of 2007-9 and in the policy relevance of the two positions to the management of today’s globalizing economy. In my recent book, Keynes-The Return of the Master, I committed myself to the view that the present crisis was at root not a failure of character or competence but a failure of ideas, and quoted Keynes to the effect that ‘the ideas of economists and political philosophers, both when they are right and when they are wrong, are more powerful than is commonly supposed. Indeed, the world is ruled by little else’. So any enquiry into policy failures –assuming that these were at least partly responsible for the two crisis –inevitably turns into an enquiry into the ideas in the policy-makers’ minds, which are in turn, at least partly, the product of the economic models in the economists’ heads." Read the complete paper here.

I found it on the website of the Institute for New Economic Thinking. Founded in October 2009 with a $50 million pledge by George Soros, the New York City-based Institute for New Economic Thinking is a nonprofit organization providing fresh insight and thinking to promote changes in economic theory and practice through conferences, grants and education initiatives.The Institute recognizes problems and inadequacies within our current economic system and the modes of thought used to comprehend recent and past catastrophic developments in the world economy. The Institute embraces the professional responsibility to think beyond these inadequate methods and models and will support the emergence of new paradigms in the understanding of economic processes. Have a look at their website, an impressive and interesting bunch of people!