Normally Austrians talk about the two big debates of the interwar period - the socialist calculation debate and the Hayek-Keynes debate. And those were big, particularly if "big" here means something like "had major, direct consequences on policy." It's a fun conversation to try to argue which one was more important.
But the more I think about it, and the more that the reaction to the events of the last few years plays out, especially the revival of Keynesian-style thinking, the more I think they come in second and third place.
The most important economics debate of the interwar period was the Hayek-Knight debate over capital theory. Just over a decade ago, Pete and Karen Vaughn made an argument like this in HOPE. (Ungated version here.) I thought it was an important point then, but I am even more convinced of it now. The short version of the argument is that it is disagreements over the nature of capital and how decisions about its allocation are made that are at the root of the other two debates!
I don't have the time to develop this more fully, nor is a blog post the place to do it, but look at the debate we've been having here this week, as well as a bunch of earlier posts on the stimulus and Keynes. The centrality of capital to the calculation debate should be equally clear (after all, Ol' Karl knew what was at the center of matters when he titled his magnum opus).
Austrians have often treated capital theory as being an "advanced" topic that's "so hard," and one that we steer graduate students away from. I think that's been a mistake. I think it needs to be front and center in our vision of how social coordination and cooperation takes place, and it should be one of the first things, and not one of the last, we teach in Austrian courses.
The vision of a capital-using economy that starts with Menger and goes through Mises, Hayek, and Lachmann, and now our good friend Peter Lewin, is what marks the distinctiveness of the Austrian approach. We need to do a much better job of making that clear, and it would be a great dissertation project for someone to do for the Hayek-Knight debate what Lavoie did for the calculation debate. Just as the early 80s was the perfect time for Don's project, the time is ripe for one on capital theory.