...going back to Hayek: attributing the failure to recover to trade restrictions was, in a way, characteristic. Hayek, like his modern followers, never could get his mind wrapped around the fact that the key problem in depressions, and the key observation his theory needed to explain, wasn’t misallocation of labor and other resources — it was mass unemployment. It’s not surprising to see that in the depths of depression he was focused on removing what was, in the end, a minor source of allocative inefficiency. But it’s a stark reminder of the extent to which he really, truly, didn’t get it. (Emphasis mine)Now, I have read a lot more of Hayek than has Krugman, and never once does Hayek blame the Great Depression on either Smoot-Hawley OR "allocative inefficiency." Hayek, instead, looks at the Great Depression in two stages.
First, there is the original crisis in which the monetary authorities forced down interest rates and allocated resources into lines of production which could not be sustained. THAT is the misallocation of resources of which Krugman speaks.
However, there is NO reason that this misallocation or series of malinvestments should LEAD TO A GREAT DEPRESSION. Hayek NEVER said that, so Krugman is misrepresenting him. (Gosh, I'm shocked, SHOCKED. Krugman is misrepresenting what someone is saying.)
Second, the Great Depression came about because of government RESPONSES to the original crises caused by the malinvestment of resources. Smoot-Hawley was one of the causes, but there were others, which Murray N. Rothbard lays out in his classic America's Great Depression.
Unfortunately, Krugman never will understand that point, not that the guy cares.