Hayek achieved his dream of becoming a university academic, but could he really challenge the intellectual prowess and political influence of the master John Maynard Keynes?
Friedrich von Hayek had abandoned his early socialism in favour of neoliberal free market ideas. But the fashionable theory sat somewhere between the two. John Maynard Keynes, who always denied being influenced by the German revolutionary Karl Marx, had apparently devised a historic compromise between the markets and socialist state planning.
Keynes argued that the government should use its economic powers to manage the markets. This included government lending and spending to promote growth, and encouraging housewives to spend their savings. The Cambridge professor attained his prestige and influence because his prescriptions had survived academic scrutiny and practical application during the wars.
Hayek had an almost impossible task. He had to devise an economic counter-argument to Keynes, and to expose any logical inconsistency in his analysis and works. The “war of ideas” would have global economic consequences. And the Marxists, Fabians and Keynesians who dominated both Cambridge and the London School of Economics (LSE) were not going to make it easy.