Keynesian economics created the illusion…….

Meghnad Desai writes:

• “Hayek, rejected in the 1930s, and feted in post-Keynesian times, did not make the grade in terms of public policy. Hayek had a theory of how it was banks which made mistakes of ‘mal-investing’ if credit was too cheap and how when they realised their error they jacked up the cost of credit and caused a crisis. But even Mrs Thatcher thought that his recipe was too severe. Hayek did not believe in rescuing banks or reflating the economy. He believed that capitalism only works if players are able and willing to take costs as well as rewards of free market. 
  
• Hayek lost but Chicago was triumphant. Bill Clinton and Tony Blair became globalisers. Clinton balanced the budget and Gordon Brown promised some golden rules to avoid booms and bust. There were more converts”.