Friedrich Hayek is not an important figure in the history of macroeconomics. ...First, let me point out that Krugman uses a straw man fallacy, as he often does. He states that people claim "there was a great debate in the 1930s," but that's not the way I've ever heard it. In The Commanding Heights, for example, Daniel Yergin and Joseph Stanislaw very explicitly point out that Hayek did fall out of favor during the Great Depression, but he came back into favor when cracks started to appear in Keynesian economic theory.
These days, you constantly see articles that make it seem as if there was a great debate in the 1930s between Keynes and Hayek, and that this debate has continued through the generations. As Warsh says, nothing like this happened. Hayek essentially made a fool of himself early in the Great Depression, and his ideas vanished from the professional discussion.
So why is his name invoked so much now? Because The Road to Serfdom struck a political chord with the American right, which adopted Hayek as a sort of mascot — and retroactively inflated his role as an economic thinker. ...
But the Hayek thing is almost entirely about politics rather than economics. Without The Road To Serfdom — and the way that book was used by vested interests to oppose the welfare state — nobody would be talking about his business cycle ideas.
Second, what Krugman conveniently doesn't tell his readers is that Hayek is a Nobel laureate. Friedrich Hayek and Gunnar Myrdal won the 1974 Nobel Memorial Prize in Economic Sciences "for their pioneering work in the theory of money and economic fluctuations and for their penetrating analysis of the interdependence of economic, social and institutional phenomena." Krugman claims that "Hayek is not an important figure in the history of macroeconomics," but the theory of money and economic fluctuations are MACROECONOMIC concepts! And it should be obvious that the Swedes who award the prize are not part of "the American right."
That's OK. Krugman also regularly bashes Joseph Schumpeter, who gets his very own chapter in The Worldly Philosophers. In this poll, originally from a left-wing source, both Schumpeter and Hayek outrank Krugman as twentieth century economists. (Krugman's best work was done in the 1980s.)
It is true that Hayek's popularity is due in large part to politics, but the same is true of Krugman's popularity.