ABSTRACT
The intellectual opponent who provided the most searching challenge to Friedrich Hayek's world-view was not on the Left, but a fellow liberal – John Maynard Keynes. Hayek's work can be read at one level as a long debate with Keynes and the Keynesians over the political means and policies which would best safeguard a liberal society. The passion which led Hayek to attack Keynes was only in part theoretical disagreement with Keynes's new-fangled monetary theory. The personal impression Keynes made was 'unforgettable'. Hayek remembered in particular 'the magnetism of the brilliant conversationalist with his wide range of interests and his bewitching voice'. The real disagreement between Keynes and Hayek was identified by Keynes in that same letter, the question of knowing where to draw the line between intervention and non-intervention. Hayek's theory therefore suggested that the crucial requirement for restoring profitability and recreating the conditions for economic expansion was to reduce costs by bringing down prices.
