OU on the BBC: Masters Of Money - Hayek
According to conventional wisdom, the global financial crisis happened because markets got out of control – they were too free.
But what if the real cause was because they weren’t free enough? What if well-meaning but flawed attempts by governments to manage capitalism’s ups and downs actually did more harm than good? What if politicians and central bankers actually caused the crisis they were trying to prevent?
These are the profound ideas of the great Austrian free market thinker Friedrich Hayek (1899-1992). They are explored in the second episode of Masters of Money presented by BBC Economics Editor Stephanie Flanders. The series examines the lives and revolutionary ideas of three of the most influential economists of the last 150 years: John Maynard Keynes, Karl Marx and Hayek. Their ideas shaped the world we know today.
Hayek’s life spanned the great and terrible events of the twentieth century including two world wars, the depression the rise and fall of communism and fascism and the rise of free-market economics. Born in Austria he spent his life grappling with one of the biggest challenges of the modern age - how to tame the increasingly complex global economy. His answer – set capitalism freer than any government has ever dared allow it to be - was so breath-taking he was dismissed by politicians as being too radical for much of the 20th century. But now, post-crash, when so many other ideas have been found wanting, does he hold the answers?
Hayek saw the market as a telecommunications system for processing billions of pieces of information about all our need and desires. It “knows” more than individuals ever can and that’s why attempts to control it by politicians and central bankers it are doomed to end in failure.
Stephanie explores how Hayek’s belief in the unfettered market brought him in to conflict with John Maynard Keynes – perhaps the most influential economist of the 20th century. Their battle of ideas in the 1930 defined a fault line in economics to this day. If an economy gets into trouble, should a government step in to try to fix it?
Keynes argued “yes”.
Hayek said not.
He said only by letting recessions do their job would the market eventually fix itself.
The program also discusses the impact of The Road to Serfdom, Hayek’s hugely influential book arguing that state intervention in the economy inevitably leads to tyranny. It recently returned to the top of the best seller lists in America over sixty years after it was first published.
Finally the programme examines Hayek’s most explosive idea of all – abolishing national currencies altogether. Flanders reveals the story of Bernard von Nothaus who has created his own currency – the Liberty Dollar - inspired by Hayek. The American authorities call von Nothaus a “domestic terrorist” and he now faces up to twenty five years in prison having been found guilty of counterfeiting in 2011.
With contributors including the Governor of the Bank of England, former Chairman of the US Federal Reserve Paul Volcker, Nobel laureate Paul Krugman and US Presidential candidate Congressman Ron Paul, Lord Lawson, Lord Patten and the first ever TV interview with daughter-in-law Eska Hayek, the programme provides a telling portrait of a man whose ideas changed the course of the 20th century.
Masters Of Money: Hayek will be shown on BBC Two. We'll bring you more details as soon as they're announced.
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Originally published: Monday, 6th August 2012
Last updated on: Monday, 24th September 2012
- Body text - Creative-Commons: The Open University
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