This is Hayek writing, or at least publishing, in 1979:
The primary duty today of any economist who deserves the name seems to me to stress, at every opportunity, the fact that the present unemployment is the direct and inevitable consequence of the so-called full employment policies pursued for the past twenty-five years. Most people still mistakenly believe that an increase in aggregate demand will eliminate unemployment for some time. Nothing short of the realization that this remedy, though usually effective in the short run, produces much more unemployment later, will prevent the public exerting irresistible pressure to resume inflation as soon as unemployment increases substantially.
To understand this basic truth is to recognize that the majority of economists whose advice governments have been following everywhere in Britain and the rest of the Western world during this period have thoroughly discredited themselves and ought to do penance in sackcloth and ashes. What was almost unquestioned orthodoxy for close to thirty years has been thoroughly discredited. And the economic crisis also marks a severe setback in the authority of economics – or at least marks the long-overdue collapse of the fashionable Keynesian doctrine that has dominated opinion for a generation. I am fully convinced that before we can hope to return to reasonable stability, not to mention lasting prosperity, we must exorcise the Keynesian incubus.
This is from “Unemployment: Inevitable Consequence of Inflation” (p 39) in a pamphlet titled, Unemployment and Monetary Policy put out by the Cato Institute during the Great Stagflation of the 1970s. To Hayek then, as it was to me just a couple of years ago, it seemed impossible that Keynesian economics could survive a disaster as deep and enduring as this. Yet the certainty is that rather than donning sackcloth and ashes, Keynesian economics is more entrenched than ever. The kind of writing seen here in Hayek writing in the 1970s has been mirrored by virtually no one today. I write this sort of thing, but who else, where else can you find it?
“Most people still mistakenly believe that an increase in aggregate demand will eliminate unemployment”. This is the fact of the matter, then as now. And if we do have that second wave recession, it will be blamed on the efforts made to remedy this problem, not on the public spending which came before. To this day, I cannot recall anyone arguing that it was the public spending that wrecked the Japanese economy in the 1990s. So it is with our economies today. Keynesian theory has had another triumph as will be recorded in all of the textbooks that are published hereafter.