A sip of Hayek
Sir: Peter Lilley's essay on Keynes and the discovery of his critivs—Friedman and Hayek—(17 July) is very valuable. The insights that the Austrian school offer are worth underlining as they debunk much of' academic economics as 'the hubris of rationalism'.
The rot of inflation is enervating all the liberal democracies. Marxists infect us with the idea that it is deeply embedded in the nature of capitalism. The Keynesians in their fiduciary fraud effectively concede the point. Professor Friedman is a bonny fighter but he surrenders himself too much to the positivist assumptions of economists, but Hayek has made the great imaginative leap. His essay 'Choice in Currency' and his book Concurrent Currencies are dazzling manifestoes for the libertarian alternative.
Markets in money, and the abolition of the central bank monopolies, will dissolve the very possibility of inflation. But it effectively will render the work of all macroeconomics absurd. By denationalising inflation he blows the 'problems' of economists to the winds. The Austrian analysis which Tory politicians barely perceive, although some of them sup at the IEA, offers an immense opportunity. As it is they are being led up the monetarist cul-de-sac.
The Friedmanite Currency Commission ideas effectively ask for honest politicians, whereas the Austrians leave it to the people to choose—in the market place. Keynesians should try a sip of Hayek—they'll find it very relaxing.
Peter Clarke 20 Morrison Street, London SW11
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