Hayek and Friedman: two counterrevolutions in monetary theory

Hansjörg Klausinger

Chapter 7 in Hayek’s Living Legacy in Economics, Philosophy and Policy, 2026, pp 116-139 from Edward Elgar Publishing

Abstract: By the 1970s the experience of high and increasing inflation coupled with stagnation and rising rates of unemployment gave rise to mounting criticism of the prevailing Keynesian mainstream, eventually characterized as a “counterrevolution in monetary theory.” This contribution will identify Milton Friedman and Friedrich A. Hayek as two main protagonists of this counterrevolution and compare their respective approaches. In short, the outcome of this investigation is that although both economists adhere to the ideas of classical liberalism and also share the belief in the importance of monetary stability, they diverge significantly in their views on the monetary policies by which to bring about stability. In this sense, they may be referred to as “uneasy comrades-in-arms.”

Keywords: Monetary Theory; Inflation; Unemployment; Monetarism; Keynesianism; Milton Friedman (search for similar items in EconPapers)
Date: 2026
ISBN: 9781035394234
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