Smart politics, stupid politics,
and the Hayek-Keynes debate

By Witold Marciszewski

Once at my lecture on European Integrations,  a student expressed  his opinion  about an  European country (no matter which) that its government is undoubtedly stupid.  I did not object  the use of the word since  it has become fairly common in the political idiom (with Google you may find 80000 uses of the phrase “stupid politics” and almost half milion of “stupid politicians”). It was President Clinton who made the word  popular through the famous motto ot his governance: “It’s the economy, stupid“.  Hence, let us employ this expression freely, though with the obvious caution to use it for cognitive purposes, not for an angry emotional expression.

What would be the opposite to being stupid? Wise? Or rather smart? The latter proves  better in the present context, if you compare the following definitions.

wise =  marked by the exercise of good judgment or common sense in practical
matters;  smart = showing mental alertness and calculation and resourcefulness; stupid = neither wise nor smart, even unable to understand obvious truths.

It is not enough for a full-fledged politician to be  good in practical matters. He  is bound  as well  to be a person with wide theoretical perspectives, and those  need  alertness and a skill of calculation.  Simply,  he is bound to be smart.

Among the most  severe tests of a politician’s  intelligence, there is his capability of  responding to extreme situations, especially managing crises. As for the present global crisis, it needs an intelligent choice between two alternative and opposite sets of measures. Each of them results from a different economic worldview. One defended by John Maynard Keynes, the other one by a group of scholars called Austrian School; its  eminent representative was Friedrich Hayek who had entered a famed many years  debate with Keynes regarding relations between free market and government policies.

Now the question arises: whether  is it  smarter for a politician:  to follow Keynes advices  on economy, or those due to Hayek?  The  controversy of  these two intellectual leaders  is regarded  as a central debate in 20th-century economic thought.  The issue  gets most urgent in the time of global economic crisis. Some economists and politicians see  the way out in the Keynesian  strategy, while other ones claim the contrary. Which choise would be smarter?

Let me encourage  each from among this blog’s readers  to consider your choice: which part you take:, that of Keynes, or that of Hayek? Or else  – of both, depending on variable economic, social and political circumstances of the  time in which anti-crisis measures  should  be taken?

To assist your reflexions, two documents may prove helpful.  One of them is a film on the Keynes-Hayek controversy with some introducing comments. Another one is a comment on Nouriel Roubini’s consideration  regarding  circumstaces to be taken into account  when  deciding between Keynes and Hayek.