The Commanding Heights : Battle of Ideas Introduction : The Commanding Heights largely covers the 20th century macroeconomic situation with a backdrop of the World Wars, considered from the perspectives of two different schools of thoughts of John Meynard Keynes and Friedrich Von Hayek – an Englishman, and an Austrian refugee respectively. The world economy was on the verge of a paradigm shift due to adoption of new political and economic ideologies (with capitalism seemingly having failed the people), technologies, and globalization. Scenario Statement : Europe was ravaged due to the World War, with Austria having lost and largely bankrupt ; the Allied Forces were on their tail for ‘reparations’ – paying up the cost of war. America on the other hand, although being better off for the initial decade, went through a different economic crisis of it’s own that resulted from a ‘radio bubble’, that burst in the late 1920s. Thus, many of the world’s largest economies were in trouble, inflation skyrocketing, unemployment rampant, and productivity in a crisis, thereby causing economists and thinkers like Keynes to institutionalize ideologies like the government getting involved in the free market. Von Hayek however was vary of the governments entering the market, being of the opinion that these companies would lose their freedom and the society at large – it’s autonomy, due to the constant intervention of the government on the basis of the power wielded by it. Solutions : Keynes’ solution hinged on the theory that the government should be making economic policies and monetarily support them in implementing them accordingly whenever possible. The government’s supportive policies based on Keynes’ recommendations saw a certain slight trunaround in the dismal situation that were the post-war countries. United States flourished under the new government-stabilized competitive market where the industries that were under constant flux saw some stability, and the pain of unemployment was alleviated. Hayek’s ideologies however propagated a different approach where he saw government intervention as just another step towards a totalitarian economy. Post the Second World War, Winston Churchill adopted Hayek’s ideologies in his British political campaigns but eventually lost due to the people now having lost their faith in the old order and leaning towards a more socialist economy – the Labour Party thus coming into power by a huge margin. In Russia too, under Stalin’s rule, ‘scientific socialism’ began coming into vogue with the Red Army imposing it where not easily accepted. In Britain consequently, the Labour Party brought with a ‘mixed’ economy where the nationalized and private companies co-existed and flourished together.
