Good things stand the test of time. These two titans have been tilting at each other for nearly a century. And, a very clever video of actors rapping out their respective political economies has been circling the globe for over a year. A friend reminded Noman of it the other day, who appends it for your viewing enjoyment.
The number of views for this essentially intellectual entertainment encouraged the responsible parties to reprise their earlier success with Round Two. It's worth the ten minute investment in time.
Noman has read a lot more Hayek than he has Keynes. But, like all students of economics, he's read a lot of Samuelson, and Galbraith, and thus imbibed Keynesianism. To his mind, Hayek gets the better of it in nearly every regard. Keynesianism rests on the naive assumption, or fatal conceit, that experts sitting in a room with a blackboard can suspend all conflicts of interest, limitations on human knowledge and reasoning, and affects of original sin, to dictate solutions to socioeconomic problems. Only a Keynesian, or a straight-up totalitarian, could be an ardent environmentalist, for instance. Hayek's theory ultimately rests on the virtue of humility. People can only know so much, and governments should not pretend to an omniscience to which bureaucrats and experts cannot possibly attain.
On the substance of the debate, bottom-up v. top-down, it seems to Noman that the former is the only suitable political economy for a free people. Lap dogs, boot licks and other dependents might live comfortably in a top-down society, but not free persons. The ideal it seems would be a bottom-up society that affords free reign to human creativity, initiative and choice; provides a stimulus to effort; and creates ample space and encouragement for people to pursue moral formation along the lines of natural and theological virtues. A bottom-up economic system alone, without commitment to moral formation, would be insufficient to provide for the people that operated within it, despite its superior understanding of the wealth creation process. The human heart, as well as belly, must be freed and instructed to pursue what will genuinely feed it. This caveat is nevertheless preferable to the pretensions of individual persons who congratulate themselves on their superior compassion, merely because they favor public mechanisms that rob Peter in order to pay Paul--especially when they are Paul.
Reading these combatants, or even just watching the videos, indicates why a political class would prefer Keynes to Hayek. In a Hayekian system, free actors determine the allocation of resources through their cumulative, spontaneous decisions. For example, capital flows to highest return commensurate with acceptable risk depending on investors' preferences. What you know is paramount in an economy like this. In a Keynesian system, however, less money is left in the hands of spontaneous actors, and more is put into the hands of the cognoscente. So, for instance, capital flows to a subsidized industry that receives redistributed dollars. Naturally, those dollars might wind up in the hands of people whose expertise is lobbying, rather than producing whatever is being subsidized. Just as naturally, some of the redistributed funds are diverted to the pockets of the redistributors themselves, and those with claims on them. Thus, corruption, cronyism, conspiracy and waste are the watchwords of a Keynesian system, which favors who you know rather than what.
Noman hopes that you like the videos, and encourages you to read Hayek's last word on his thinking, "The Fatal Conceit." It's a good place to begin thinking about these matters.