Question

give two different reasons why Hayek expected an economic collapse in every socialist country.

Each reason (A and B) must use economic fundamentals to demonstrate the problems expected by Hayek. (note: It is not sufficient simply to state that in the late 20th century many socialist countries collapsed, proving Hayek’s long term forecast. You must give two of Hayek’s reasons.)

Answer 1

Answer

The biggest difference between Keynes and Hayek was that Keynes seemed to treat money as the most important fundamental of the economy, as if it was the goal of economics to get more money, as if money itself was wealth. Also, simple economic activity for its own sake is overemphasized.

Hayek is considered a major social theorist and political philosopher of the 20th century. His theory on how changing prices relay information that helps people determine their plans is widely regarded as an important milestone achievement in economics. This theory is what led him to the Nobel Prize