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arguing.
Hayek joined Vanmeses semenars. Austrian school of though
markets work and governments dont. New Soviet socialism will not
succeed because government controls the prices and wages.
Free markets do it best.
Lennons new economic policy farmers can buy and sell land and can
land produce
Commanding heights of the economy controlled by the government.
Lennon died within a year. In less than 30 years 1/3 or world lived in
Lennons idea of Maxism. Stallin introduced central planning.
Capitalism looked to be doomed in 20s. Germany and Austria were
paying for the war losses. More money printed and resulted in hyper
inflation.
Hyper inflation wiped out the savings of the middle class. Most people
supported Nazis as they had lost everything.
1920s was a boom time in American cities. People were buying
stocks. Black Thursday oct 29, 1929 the great depression
started.
1930s it was despair with no ability earn, invest, or consume.
They withdrew the savings. Half the banks closed.
15 million people unemployed.
With failure of capitalism, fascism took wind.
Hayek wrote macro economics and analyzed why capitalism
failed.
Potential collapse of democratic government, was one of his
focuses.
Kanes had to come up with an answer. Roosevelt was facing a
difficult challenge as a president. Roosevelts new deal
introduced building highways, damns, and national park. Also
regulating capitalism.
He regulated capitalism. Industry became subject to many rules
and regulations. Started setting prices
1936 Kanes published his general theory on how to fight the
depression and became the most influential economist.
Governments should spend against the wind and at hard times
put the purchasing power in the hands of citizens.
Harvard university had become his home and established his
school of general theory and he influenced Washingtons
decisions.
World war II made it possible for Kantianism to become
government policy.
He believed that what worked in war will work in peace.
1944: Hayek feared that Kanes work was a big step towards the
wrong direction. The road to serfdom: too much government
planning means too much government power and it destroys
freedom and makes people slaves.
He rejected macro economics and rejected any government
interventions even in great depression.
In the battle of ideas Hayek was on the losing.
Kanes attended a gathering to organize the post war economy.
World bank and IMF were formed. Kanes idealism and humanity
was plausible.
1945: war was over. Final allies meeting was in Berlin between
Germany, GB and USSR. Tremendous loss in the faith of maket
economy.
1945 troops in Britain came home to a general election. During
war socialist party was in government.
Churchill opposed government over regulation. GB elected a
socialist government and Churchill was out.
Private owners were compelled to sell their businesses. Labor
created a mixed economy and national industries co-existed with
enterprises. Welfare provided health insurance and full benefits.
Russia was a military and economic giant. Scientific socialism
ended fascism. Capitalism and free market was in loosing. Cold
war had begul 1947.
Hayek was all about freedom and he saw socialist ideas as a
threat to freedom. Milton Chicago was on of the participants of
his gathering. Hayek: Democracy is impossible with free
economy.
The strength of socialist is to have the courage to dream big.
Hayek prevented a long battle of ideas.
Germany was left falling apart economically. West Germanys
currency was worthless. Ludwig Airhard was a free market
economist who was a follower of Hayek, he was the finance
minister of Germany.
New currency was introduced in Germany. Airhard without
permission went on radio and gave up all the price control. GB
was not happy and wanted Airhard to answer and he said I
havent changed the pricing control, I have abolished them.
The market started working and everything that was hidden for
10 years came to counters for sale. Germany also provided a
good social program.
German modern economy took over Britains planned economy.
India celebrated its freedom. Gandhi wanted a simple india with
self sufficient villigers. Nehru wanted to state led economy like
that of Russia. Public sector took over the commanding heights.