For those of you that don't know about his JMCB article, White makes a great argument that Hayek said he wanted to stabilize MV in response to a piece by Brad DeLong. The trouble is, he also made alarmingly liquidationist statements. I hate this tendency to act like people are dummies because of Hayek's inconsistency or the tendency to act like because Hayek said X on Tuesday it means he didn't say Y on Friday. The latter absolutely does not follow from the former.
It's hard to get around this: "...if we pass from the moment of actual crisis to the situation in the following depression, it is still more difficult to see what lasting good effects can come from credit expansion."
That is not stabilizing MV. Krugman is quite right.
You see this with Road to Serfdom too, such that I've just developed the habit of tuning out of any posts about the book. Farrant and McPhail do a really masterful job on this one taking down the Caldwell/Boettke position by pointing out that - as with the MV stabilization/liquidationist issue - Hayek did indeed make strong slippery slope arguments sometimes and didn't at other times. The Caldwell/Boettke camp usually responds to this by pointing out the times that Hayek wasn't making the strong slippery slope arguments. But that doesn't disprove the point - that only demonstrates that Hayek was highly inconsistent!
Hayek lived a long life, people are allowed to change their minds, and people are also allowed to be careless with words sometimes. What bothers me is:
1. Cases like Larry White treating Krugman like he's being intellectually lazy for pointing out that Hayek was clearly a promoter of liquidationism on many occasions, and
2. The failure to recognize that this seems to be a particularly common problem with Hayek. You wouldn't get liquidationism jumbled up together with anti-liquidationism in Keynes or Friedman, for example. But you do with Hayek, and it's a problem that seems to come up a lot. If we still can't agree on the message of the Road to Serfdom or if we still can't agree on the message of the interwar macro work, it seems to me the obvious conclusion is not that Krugman is a dummy - but that Hayek was all over the map. And it seems to me it's reasonable to assume he is culpable for being all over the map - i.e., to the extent that he was a liquidationist he was culpable for being a liquidationist and deserves to be called out on it.