Commanding Heights: The Battle for the World Economy is a documentary film based on a book written by Daniel Yergin and Joseph Stainslow. The documentary is divided into three sections that portray the evolution of the global economy that we live in today. Over the last one-hundred years there has been a bitter struggle in the world of economics between those who believe the market should have complete control of the economy and those who believe that the government should regulate the economy. “The Battle of Ideas” is the first of three episodes that walks through aspects of 20th century world economy and its most significant school of ideas. “The Battle” is basically a struggle between free market and government control in the era of globalization. The two ideas are represented by two of the most famous and influential economists of the modern world, John Maynard Keynes and Frederick Von Hayek. They stand on opposite sides of the battle lines drawn between the two positions. Keynes is a staunch believer of the government intervention and regulation of the economy, whereas his personnel friend and ideological rival Hayek believes in the markets ability to control the economy. The differences in economic theory have spilled over into political debates, heated division within countries, and war. The battle between these two ideologies goes beyond sheer economic theory and spills over into individual’s beliefs on how the world should be run and organized.
John Maynard Keynes was an English economist who was educated at Cambridge University. He was considered by his peers and elders to have incredible potential as an influential world leader in the field of economics. During the First World War he served as an advisor to the government of the United Kingdom on how to organize their economy in the time of war. Keynes economic theory was based on the fact that in order to be successful an economy needed to be regulated and planned, to an extent, by the government. Based on his theory slight inflation was good, and necessary in order to keep unemployment down. The economy should be mixed between a free market economy for regular businesses and government regulation for the large industries such as coal, oil, and flight. He saw the errors of free market in the post war era and believed that through government regulation of the economy, those errors can be fixed. His theories and beliefs became known nationally through his publications of The General Theory. His friend and rival, Hayek, strongly disagreed with everything that Keynesian economics stands for.
Frederick Von Hayek was an Austrian born economist who attended the University of Vienna. He firmly believed that the market would take care of itself in any situation and that government intervention would only make the problem worse. He studied the famous economist Ludwig Von Mises who held the same believes and said, “The great flaw of socialism is that it doesn’t have a fluctuating price system”. Hayek believed that every industry should be free of government control and that inflation is the worst enemy of an economy, even worse than unemployment. The conflicting ideologies of the two men show, to a smaller scope, the economic struggles which every country in the world has gone through in the modern age.
The differences between Keynes’ theory of economics and Hayek’s theory are government’s role in the economy, the nature of inflation versus unemployment, and the style of government they support. Keynes supports big government, in which the government has a large role in moderating the economy and big industries and that unemployment is the economies worst enemy. Hayek on the other hand believes that government should have almost no role in the economy and that the most detrimental thing for an economy is inflation. The differences in economic theories have contributed to political differences and heated confrontations. For example, differences in…