ABSTRACT
Though Harrod-Keynesian economics had become the accepted orthodoxy after the Second World War, the group of Austrian neo-classical economists argued for tight monetary control of inflation and free-market capitalism. Ludwig von Mises and Friedrich Hayek denied the feasibility of Keynes’ mixture of liberty and state intervention. For them socialism was the only real alternative to the classical model. That was the world they inhabited after the Second World War. Socialism, depending on the economy being controlled directly by government, would create a huge and expensive central planning bureaucracy which could never work as effectively as market forces. Comparison of American and Soviet living standards appeared to demonstrate this truth. Their arguments, supported by Friedman at Chicago university, became the alternative to Harrod-Keynesian economics, available for implementation whenever governments were so inclined.
