Hayek's Conception of the Market Essay Example | Topics and Well Written Essays - 1000 words

Hayek's Conception of the Market - Essay Example In Hayek’s book Road to Serfdom, he articulated his rejection on the centralized planning of economies. He argued that public ownership of industries that is a characteristic of centralized economies would make the production of goods and services inefficient because of the absence of market dynamics such as competition that would â€Å"perfect† the production of goods and services that would eliminate waste. Hayek also cautioned that centralized planning of an economy is destructive to liberty because the planner would inadvertently tend to extend his or her control to other aspects in society thus becoming more comprehensive to the detriment of liberty.Keynes on the other hand favored government intervention through its fiscal and monetary policy to assuage the impact of recession and depression or financial crisis like the one the United States recently had in 2009. Keynes believe that it is not only the market that can make an economy work at a maximum efficiency bu t such can also be raised to that level by the intervention of the government. Keynes advocated collectivism through international coordination of fiscal and monetary stimulus to deflect and mitigate any downturn in economic cycle. He is also the sponsor of deficit spending to lift an economy from depression in contrast to Hayek’s proposal that it solely the market (free) that can achieve utmost efficiency in an economy. The classic example of this is Obama’s stimulus spending to bail the US economy out of the financial crisis.... nt because of the absence of market dynamics such as competition that would â€Å"perfect† the production of goods and services that would eliminate waste. Hayek also cautioned that centralized planning of an economy is destructive to liberty because the planner would inadvertently tend to extend his or her control to other aspects in society thus becoming more comprehensive to the detriment of liberty (Hayek 1944). Keynes on the other hand favored government intervention through its fiscal and monetary policy to assuage the impact of recession and depression or financial crisis like the one the United States recently had in 2009. Keynes believe that it is not only the market that can make an economy work at a maximum efficiency but such can also be raised to that level by the intervention of the government. In contrast to Hayek, Keynes advocated collectivism through international coordination of fiscal and monetary stimulus to deflect and mitigate any downturn in economic cyc le. He is also the sponsor of deficit spending to lift an economy from depression in contrast to Hayek’s proposal that it solely the market (free) that can achieve utmost efficiency in an economy. The classic example of this is Obama’s stimulus spending to bail the US economy out of the financial crisis (Censky and Riley 2011). Unlike Hayek who asserted that the market dynamics or its â€Å"invisible hand† will make the necessary corrections in the market to make it more efficient, Keynes believed otherwise. Keynes articulated his disagreement with Hayek in his book The General Theory of Employment, Interest and Money that market dynamics do not always correct itself. Hayek posited that market oriented economies are not always good in achieving efficiency that would lead to full employment