Hayek's Conception of the Market

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Name Class Professor Date Hayek’s conception of the market placed greater faith in the market’s ability to generate economic activity than any form of government intervention; Keynes had a different concept of the market and its tendency towards equilibrium and full employment.


Hayek was a stout defender of free market and classical liberal idea of economy and against centralized planning and socialist economies while Keynes was for modern liberalism and espoused government intervention in a given economy to lift it from economic depression. In simpler terms, Hayek was for pure capitalism where government should not meddle with the market while Keynes called for government intervention in the market to achieve certain economic ends such as deflecting a crisis, pump priming the economy, achieving equilibrium and full employment. Hayek totally rejected the idea of collectivism believing that such structure can only be maintained by a centralized authority which could subsequently lead into totalitarianism. He believes that it is only free market, in contrast to a socialist or mixed economy, can coordinate an efficient allocation of resources and thus generate more economic activity than any form of government intervention. According to Hayek, “the price mechanism of the free market serves to convey information about supply and demand that is dispersed among many consumers and producers and which cannot be assembled or coordinated efficiently in any other way”. ...
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