In Masters of Money, produced in partnership with the Open University, BBC economics editor Stephanie Flanders examines how three extraordinary thinkers, Keynes, Hayek and Marx, helped shape the 20th century and continue to exert a huge influence on our world today. Stephanie begins by looking at John Maynard Keynes. Many argue only Winston Churchill had a greater impact on British life than Keynes over the last century. Even today his ideas remain crucial to one of the most important debates of our time: how can we escape from the economic crisis? Should governments borrow and spend their way out of trouble or slash spending and reduce the national debt?
With contributions from some of the world's leading economic thinkers including a Nobel laureate and the governor of the Bank of England, Stephanie Flanders argues Keynes has never been more relevant or controversial than now.
During his life, Keynes was credited with, amongst other things, helping to save capitalism from the Great Depression, funding the war against the Nazis and building post-war decades of growth and rising prosperity. And when the global crisis struck in 2008, it was his ideas that the world's leaders turned to to help avoid another depression.
John Maynard Keynes, 1st Baron Keynes, CB FBA (5 June 1883 -- 21 April 1946) was a British economist whose ideas have profoundly affected the theory and practice of modern macroeconomics, and informed the economic policies of governments. He refined earlier work on the causes of business cycles, and advocated the use of fiscal and monetary measures to mitigate the adverse effects of economic recessions and depressions. Keynes is widely considered to be one of the founders of modern macroeconomics, and the most influential economist of the 20th century. His ideas are the basis for the school of thought known as Keynesian economics, as well as its various offshoots.
In the 1930s, Keynes spearheaded a revolution in economic thinking, overturning the older ideas of neoclassical economics that held that free markets would, in the short to medium term, automatically provide full employment, as long as workers were flexible in their wage demands. Keynes instead argued that aggregate demand determined the overall level of economic activity, and that inadequate aggregate demand could lead to prolonged periods of high unemployment. Following the outbreak of World War II, Keynes's ideas concerning economic policy were adopted by leading Western economies. During the 1950s and 1960s, the success of Keynesian economics resulted in almost all capitalist governments adopting its policy recommendations.
Keynes's influence waned in the 1970s, partly as a result of problems that began to afflict the Anglo-American economies from the start of the decade, and partly because of critiques from Milton Friedman and other economists who were pessimistic about the ability of governments to regulate the business cycle with fiscal policy. However, the advent of the global financial crisis in 2007 caused a resurgence in Keynesian thought. Keynesian economics provided the theoretical underpinning for economic policies undertaken in response to the crisis by Presidents George W. Bush and Barack Obama of the United States, Prime Minister Gordon Brown of the United Kingdom, and other heads of governments.
In 1999, Time magazine included Keynes in their list of the 100 most important and influential people of the 20th century, commenting that: "His radical idea that governments should spend money they don't have may have saved capitalism." In addition to being an economist, Keynes was also a civil servant, a director of the British Eugenics Society, a director of the Bank of England, a patron of the arts and an art collector, a part of the Bloomsbury Group of intellectuals, an advisor to several charitable trusts, a writer, a philosopher, a private investor, and a farmer.
Masters Of Money: John Maynard Keynes ( 1/3 BBC)
According to conventional wisdom, today's global financial crisis happened because markets were not regulated enough. But what if the opposite is true? That it was excessive government meddling in the markets that caused the crash?
In Masters of Money produced in partnership with The Open University, BBC economics editor Stephanie Flanders examines the extraordinary influence of three intellectual titans - Keynes, Hayek and Marx and shows how they shaped the 20th century and continue to have a huge impact on our world today.
Stephanie turns her attention to the radical free-market economist Friedrich Hayek. Travelling from London to Vienna and America, she unravels the extraordinary life and influence of the only free-market thinker whose reputation has grown post-crisis.
With contributions from Central bankers, politicians and a Nobel laureate, she explores why despite his enormous influence, no government has ever dared to fully implement Hayek's solution to the problems of capitalism - set it virtually totally free from state control.
Friedrich August Hayek CH (8 May 1899 -- 23 March 1992), born in Austria-Hungary as Friedrich August von Hayek, was a British economist and philosopher best known for his defense of classical liberalism. In 1974, Hayek shared the Nobel Memorial Prize in Economic Sciences (with Gunnar Myrdal) for his "pioneering work in the theory of money and economic fluctuations and... penetrating analysis of the interdependence of economic, social and institutional phenomena."
Hayek is considered to be a major economist and political philosopher of the twentieth century. Hayek's account of how changing prices communicate information which enables individuals to coordinate their plans is widely regarded as an important achievement in economics. He also contributed to the fields of systems thinking, jurisprudence, neuroscience and the history of ideas.
Hayek served in World War I and said that his experience in the war and his desire to help avoid the mistakes that had led to the war led him to his career. Hayek lived in Austria, Great Britain, the United States and Germany, and became a British subject in 1938. He spent most of his academic life at the London School of Economics (LSE), the University of Chicago, and the University of Freiburg.
In 1984, he was appointed as a member of the Order of the Companions of Honour by Queen Elizabeth II on the advice of Prime Minister Margaret Thatcher for his "services to the study of economics." He also received the US Presidential Medal of Freedom in 1991 from president George H. W. Bush. In 2011, his article The Use of Knowledge in Society was selected as one of the top 20 articles published in the American Economic Review during its first 100 years.
Masters Of Money: Friedrich Hayek (2/3 BBC)
Stephanie Flanders examines one of the most revolutionary and controversial thinkers of all. Karl Marx's ideas left an indelible stamp on the lives of billions of people and the world we live in today. As the global financial crisis continues on its destructive path, some are starting to wonder if he was right.
Marx argued that capitalism is inherently unfair and therefore doomed to collapse, so it should be got rid of altogether. Today as the gap between rich and poor continues to cause tension, his ideas are once again being taken seriously at the heart of global business.
Stephanie travels from Marx's birthplace to a former communist regime detention centre in Berlin and separates his economic analysis from what was carried out in his name. She asks what answers does Marx provide to the mess we are all in today.
Masters of Money: Marx (3/3 BBC)