Essay: John Maynard Keynes and Friedrich Hayek – Economies around WWI

John Maynard Keynes and Friedrich Hayek were economists. Keynes believed in government regulation of markets. Hayek believed in free markets. Lenin was against the world economy and opposed International Trade. His ultra-communist policies were a disaster in the Soviet Union. Keynes was an economic adviser to the British government during and after World War I. He opposed the terms of the Treaty of Versailles which Germany was forced to make reparations for the allies because it will lead to the destruction of the social and political stability of Germany. In Vienna after WWI, Hayek was member of the Austrian school of economics.
Stalin adopted the central planning which it means that decisions on what to produce, how to produce and for whom are taken by the government in a centrally managed bureaucracy.
Germany’s inflation after World War I completely destroyed the value of all personal bank accounts and bonds held by ordinary Germans. Germany’s inflation one of the main factors that helped Hitler raised to power.
The American stock market was in a bubble that led to a collapse in 1929. U.S. banks were investing their client’s deposits in the stock market. When the market crashed, a large part of the banks was closed. People afraid that banks will declare bankruptcy as a result with all their savings. They hurried to their banks and withdraw all the money. It was the end of the boom cycles. Economic activity in each country became very low during the Great Depression.
consumers and corporations had no money or the will to get out of the situation. Keynes thought that government could end the Great Depression and increase the growth of the sustainable economy. He was sure that government can also employ millions of workers to build public works and pay them. He suggested that the government could use money for purchases of goods and services from private firms. Keynes was more influential than Hayek. Hayek published his fundamental economic book The Road to Serfdom. Hayek linked between economic freedom and personal freedom, so the government control of the economy will inevitably lead to the destruction of Civil Liberties. Everyone had a job In the Second World War either fighting in the army or making weapons, and upgrade factories, expanding, building new for the production of war materials.
The war was nearing its end. Allies began concerned that Great Depression will come back. The allies established the Bretton Woods system. It was economic agreements and financial agreement to keep the business intact with each other. IMF and the World Bank have been established. Political parties in Britain aside their differences in order to fight During the Second World War.
There was an election in 1945. Winston Churchill and the Conservatives were opposed to the socialist Labor Party. Although Churchill was an undisputed war hero, he and his party lost the election. The Labor Party nationalized industries such as the production of coal, steel and rail crossing and strengthened the welfare state. Taxes on the rich increased, and National Health Service was a result of socialist Labor Party policy. Workers’ rights protected by many laws