The Keynes-Hayek showdown Essay

Published: 2021-06-29 01:39:29
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A disagreement occurs when a different opinion is expressed (Oxford Dictionary). To a certain degree, it is assumed by the question that disagreement aids in the pursuit of knowledge. There are cases that will be evoked that indicate otherwise. Isaac Newton stated that “if has seen further than others, it is by standing upon the shoulders of giants. ” (Hawking, 9) He is stating that those who develop future pursuits of intellect in the form of knowledge are those who best understand and develop further works created by major thinkers of prior times.
Newton believes that the in-depth study of others’ work, and at times disagreeing with some of it can push us forward in our pursuit of knowledge. The areas of knowledge being dealt with are pre-determined by the topic and are: human science and natural science. Natural science is a branch of science which deals with the physical world (Merriam-Webster). This includes physics, chemistry, and biology among others, including geology. This also includes human physiology. Anything in medicine discussing how our bodies work falls into the natural sciences.
When we take that a step further to discuss behavior, this is what constitutes human science. This type of science is a field that deals with the institutions as well as the functioning of human society. This also encompasses the interpersonal relationships of individuals as members of society. An example of this is economics, the study of how individuals as well as groups choose to employ productive resources (Merriam-Webster). There are different methods to acquire knowledge in the two areas being discussed. Inquiries in the human sciences are different in kind from the inquiries of the natural sciences.
The process in the natural sciences is far more concrete. Human sciences are not always as precise as natural sciences. This is because human behavior demands a method extremely sensitive to elements of whim or personal preference. Humans make irrational decisions. Those seeking knowledge or looking to make generalizations cannot account for all of these. The central disagreement amongst economists is a matter of economic philosophy. The two key schools of thought in economics are: Keynesian economics and free-market economics, represented by Hayek.
Keynesian economics was presented in an extensive economic theory in the 1930s. His belief was that a prosperous economy could be created by a combination of the private sector (investors unrelated to the government) and the aid of the government, through monetary and fiscal policies. These include policies that actively control money supply and interest rates as the economy changes, in an effort to keep employment high. (Giants of Finance: John Maynard Keynes. ) By contrast, the free-market economists advocate that the government take a “hands off” policy.
They believe that governments should allow the market to run freely, through the private sector. This view holds that there should be absolutely no intervention by the government, as this is held to be interference with the ability of a free economy to normalize itself. This appears to be in disagreement with the aforementioned theory that government involvement in the economy can be beneficial. (The Keynes-Hayek Showdown) These two economic philosophies each have merits as well as flaws. However, these strongly supported and clashing views are a central cause of disagreement among economists to this day.
Additionally, each philosophy hints at the way that these two economists think, and at their system of beliefs. Keynes came from a very liberal family and was open to radical ideas with regards to government intervention. Hayek, by contrast, was much more conservative and was brought up agreeing with the perspective that intervention only leads to greater issues in the future. This suggests that emotion may play a role in their points of view. They each have a bias towards what they have been brought up to believe. Emotion can, at times, skew our reasoning. This could have lead to holes or mistakes in their theories.
They would have each needed to put their bias behind themselves as their counterpart was looking for flaws in their model. It is evident that economics is not an exact science, as there are countless external factors that have an effect on the economy. This allows there to be two opposing theories, as results of a particular occurrence vary based on numerous reasons. For example, the result of an earthquake of the same magnitude has a very different effect on the economy in Japan than that in Haiti. Japan is far less vulnerable, and has measures in place to reduce damages.
Therefore, it is clear that different theories are applicable and will be effective in different instances. When there are tangible issues such as unemployment that must be dealt with, economists of either ideology will attempt to come up with solutions. The solution that may be determined by a combination of multiple solutions represents some form of a compromise. This compromise was aided by the disagreement and the two opposing perspectives put forth. These two men were both driven by the desire to have their own model be the one that is deemed as correct.

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