Showing results for 
Search instead for 
Did you mean: 
Senior Advisor

Austrian vs Keynesian


Ludwig von Mises and Friedrich Hayek, leading figures in Austrian economics, maintained that an economy is too complex to be managed centrally.  Infinite decisions based on infinite pieces of knowledge cannot be managed by a central decision-maker.  From their standpoint, economies afford greater efficiency and satisfaction with limited government and a laissez-faire approach.

John Maynard Keynes and his disciples saw economies as inherently unstable.  They believed that government management of an economy is necessary to ensure full employment and high output.  For eighty-plus years, the Keynesian interventionist views have prevailed and enabled government to continue to grow and become increasingly intrusive.

Studies generally show an inverse relationship between large government and economic growth and well-being.  These can hardly be termed decisive.  Extreme cases of centralized economic management like Communist Russia, Communist China, Nazi Germany, Cuba, and North Korea are clear-cut.  All were economic failures which produced great human tragedy.

East Berlin and West Berlin, North Korea and South Korea, and Taiwan and Communist China were laboratory-like experiments.  In every instance, free-market economies dramatically outperformed government-directed economies.

The Social Welfare State has been the philosophy and excuse for bigger government.  The European States, its leading proponent, are in process of failing.  They will shortly be unable to meet their social promises and sovereign obligations.  This collapse appears imminent and will likely signal the retreat of this philosophy, at least for a while.

Read more:


We have Europe as an experimental failure as we speak.

1 Reply

Re: Austrian vs Keynesian

For you bookmarks.  Another set of discussions on the same topic:


This would be part 3 of 3. Links to 1 and 2 at the bottem of the page.