The Economics of Friedrich Hayek.

• Author: Garrison, Roger W.

In a review of Robert Skidelsky's John Maynard Keynes: Economist as Savior, John Gray [2] asserted that Keynes was "the greatest economic thinker of our age." Don Boudreaux [1] called this common assertion into question, claiming that several others, including F. A. Hayek, are in contention for that honor. Gray's untitled reply hinted that Hayek and the others had too narrow a focus. The "increased specialization in economics since Keynes's day" precluded would-be contenders from having a comparable "transforming effect on economics as a discipline." It was Keynes, Gray reminds us, who "set the intellectual agenda for economics in our time."

Pinning the superlative on Keynes seems to require that we interpret "greatest" to mean "most influential - for good or for bad." G. R. Steele would not dispute that Keynes - or Marx - was "great" in the sense of "influential." But "great" in the sense of "markedly superior in character or quality" does not describe Keynes's ideas or their implied policies for managing the macroeconomy. In his preface, Steele understates the judgment that those ideas and policies are markedly inferior: "Keynes," he writes, "has much to answer for."

Steele is a latecomer to Hayekian scholarship and is apparently unaware of G. P. O'Driscoll's book [3], which has a similar theme. But his writing style is even, scholarly and readable, and his positive restatement of Hayekian thought gives us a well balanced survey of this alternative intellectual agenda. Citing John Hicks, Steele recognizes that economics was at a crossroads in the 1930s and that the road signs bore the names of Keynes and Hayek. He endorses Hayek's judgment that "the economist who is only an economist is likely to become a nuisance if not a positive danger" [p. xiii] and then goes on to show that the breadth and depth of Hayek's thinking are second to none. If Keynes was our savior, it was Hayek from whom he saved us. Steele gives us a refreshing glimpse of the economic understanding that might have developed had Hayek saved us from Keynes.

The first half of the book draws heavily from Hayek's Constitution of Liberty. In chapters on "Liberty and Law" and "Liberty and the Market," Steele provides a contrast between the elitist's conception of constructivist rationalism and the classical liberal's understanding of a spontaneous order. Chapters on "Economic and Social Science" and "The Socialist Calculation Debate" deal with contrasting methodologies and...