It would be very hard to explain the current recession using Hayek’s macroeconomics in fewer words than has been achieved by Hayekian macroeconomist Brad DeLong:
After the most recent downturn, however .. things have been different. The downturn was not caused by a liquidity squeeze. The Federal Reserve cannot wave is wand and return asset prices to their pre-downturn configuration. The entrepreneurial problems of recovery are much more complex: not to recall what it used to be profitable to produce but rather to figure out what new things it will be profitable to produce in the future.
At one time the leading experts on Hayekian macroeconomics in Britain were future top officials in the Labour government. And in that country still today many of the leading economists and political theorists influenced by — and keen students of — the work of Hayek are leading figures in the Labour party. Karl Popper, who tells us he learned more from Hayek than any other figure excepting only Taski, has a life long social democrat. In American terms, even uber-Hayek fan Margaret Thatcher could be listed as left of the American center.
So there is nothing out of the ordinary in the whole scheme of things for partisan Democrat Brad DeLong to understand the world in Hayekian macro terms. And note well. It’s standard issue today for top Democrat economists to sing the praises of Hayek’s economics. And even Barack Obama extols the two most controversial claims Hayek ever advanced in economics and political economy.