Mark Mancino on Keynes vs. Mises

Mark Mancino has always been an avid researcher and historical fan of economic strategy and theory. Recently there has been a big talk about John Keynes and Ludwig von Mises.  Here’ s brief history of the two.  What do you think of their policies and beliefs?

John Maynard Keynes and Ludwig von Mises are two of the most well-known economists in history. The two men both lived in the same era, being born in the 1880’s, but had different economic ideas. Mises is considered a neo-classical economist, while Keynes founded a more modern movement which took his name: Keynesian economics.

Mises, along with his most famous student Friedrich August von Hayek, was one of the most prominent members of the Austrian school of economic thought. Though born and educated in Austria, Mises moved to the United States during the 1930’s to escape Nazi oppression. Many historians believe that this event greatly impacted his economic thinking. Mises believed that governments are unable to efficiently direct a nation economy due to the complexity of the economy and the slow nature of government response. He believed that economies performed best without government interference.

Keynes is the most influential economist of the modern era. Keynes was born and lived in England. Though Keynes also lived during the rise of Nazism in Europe, most historians believe he was most influenced by the Great Depression. Keynes believed that governments could make decisions regarding monetary policy and other factors to influence the economy in order to smooth out economic cycles. In the United States, the policy decisions of the Federal Reserve to raise and lower interest rates to increase or decrease economic activity to manage inflation is an example of Keynesian intervention in the economy.

The most simplistic explanation of the differences between Keynes and Mises is that Keynes believed that governments could play an active and beneficial role in a nation’s economy, while Mises believed that government intervention caused more harm than good. Though the governments of most European nations and the United States have used Keynesian practices in the late 20th and 21st centuries, there is still considerable debate in these countries as to the effectiveness of these policies.

By Mark Mancino