Pros And Cons Of Hayek

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Hayek saw the bust as a healthy and necessary readjustment. The way to avoid the busts, he argued, is to avoid the booms that cause them. Hayek believed that Keynesian policies to combat unemployment would inevitably cause inflation, and that to keep unemployment low, the central bank would have to increase the money supply faster and faster, causing inflation to get higher and higher. Hayek’s thought, which he expressed as early as 1958, is now accepted by mainstream economists (see phillips curve). His basic argument was that government control of our economic lives amounts to totalitarianism. “Economic control is not merely control of a sector of human life which can be separated from the rest,” he wrote, “it is the control of the means for all our ends.” Hayek's capitalism, like Adam Smith's, was a humble, conservative approach that sought to limit the damage that evil men can do. history has proven time and time again that economic prosperity has come mostly from regions that have allowed free markets to flourish with limited intervention from government, while economic stagnation has come mostly from regions with excessive government intervention.…show more content…
If socialism required the replacement of the market with a central plan, then, Hayek pointed out, an institution must be established that would be responsible for formulating this plan. Hayek called this institution the Central Planning Bureau. To implement the plan and to control the flow of resources, the bureau would have to exercise broad discretionary power in economic affairs. It would have no means of knowing which production possibilities were economically feasible. The absence of a pricing system, Hayek said, would prove to be socialism’s fatal

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