Keynes vs. Hayek Round Two

BY Paul Solman  April 28, 2011 at 5:39 PM EST

“We’ve been going back and forth for a century.” So began an economics rap between two long-dead English economists, interventionist John Maynard Keynes and governmentophobe Friedrich Hayek that went viral. The rap’s dress rehearsal debuted on the NewsHour back in December of 2009. The full video version soon materialized on the Internet and now boasts more than 2 million page views.

Today marks the release of Keynes v. Hayek 2.0. It brings us the rematch, set simultaneously at a Congressional hearing and boxing ring. Once again, it’s brilliantly done. Once again, Keynes “loses,” staggered in the new video by a Hayek haymaker. But Keynes is declared the winner nonetheless, reflecting the libertarian bias of the video makers, who see Keynesian government intervention as the dominant economic mode, though at the end, Hayek seems to be getting some favorable attention.

The first rap video was a surprisingly lively and thorough debate between Keynes and Hayek, friendly acquaintances and intellectual sparring partners in the 1930s and ’40s. Keynes died in 1946 and became the prophet of government economic intervention, from the New Deal through the Kennedy tax cuts of the early 1960s. Hayek lived through those decades in relative obscurity, only to see his star rise after the stagflation of the 1970s. He was a hero to free marketers Margaret Thatcher and Ronald Reagan, among others.

Today, the deceased dons represent the antipodes of global macro-economics. In version 1.0, Keynes rapped: “I want to steer markets.” Shouts Hayek: “I want them set free.”

Back in late ’09, we asked two live economists to comment on the Keynes-Hayek stand-off: George Mason University’s Russ Roberts, co-author of the rap video, a Hayek devotee, as the name of his blog, Cafe Hayek, would strongly suggest and Lord Robert Skidelsky, famous as Keynes’ biographer. They interpreted the respective heroes for us.

Timed to the new video release, we asked them to reprise their roles with respect to the current economic situation. Tomorrow, we publish Russ Roberts channeling Hayek. Monday, Keynes gets his chance to respond.