Friedrich Hayek: Difference between revisions
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'''Friedrich August von Hayek''' [[Order of the Companions of Honour|CH]] (8 May 1899{{ndash}}23 March 1992), was an Austrian and British [[economist]] and [[philosopher]] known for his defense of [[classical liberalism]] and [[free market|free-market]] [[capitalism]] against [[socialism|socialist]] and [[collectivism|collectivist]] thought. He is considered to be one of the most important economists and political philosophers of the twentieth century.<ref>Edward Feser (edt), ''The Cambridge Companion to Hayek'', Cambridge University Press (2007), ISBN 0521849772, p.13</ref> Hayek's account of how changing prices communicate signals which enable individuals to coordinate their plans is widely regarded as an important achievement in [[economics]].<ref>Skarbek, David, ''F. A. Hayek's Influence on Nobel Prize Winners'', Review of Austrian Economics 22(1) March 2009 http://www.davidskarbek.com/papers/HayekNobel.pdf</ref> One of the great [[polymaths]] of the 20th century, Hayek also contributed to [[jurisprudence]], [[neuroscience]] and the history of ideas. |
'''Friedrich August von Hayek''' [[Order of the Companions of Honour|CH]] (8 May 1899{{ndash}}23 March 1992), was an Austrian and British [[economist]] and [[philosopher]] known for his defense of [[classical liberalism]] and [[free market|free-market]] [[capitalism]] against [[socialism|socialist]] and [[collectivism|collectivist]] thought. He is considered to be one of the most important economists and political philosophers of the twentieth century.<ref>Edward Feser (edt), ''The Cambridge Companion to Hayek'', Cambridge University Press (2007), ISBN 0521849772, p.13</ref> Hayek's account of how changing prices communicate signals which enable individuals to coordinate their plans is widely regarded as an important achievement in [[economics]].<ref>Skarbek, David, ''F. A. Hayek's Influence on Nobel Prize Winners'', Review of Austrian Economics 22(1) March 2009 http://www.davidskarbek.com/papers/HayekNobel.pdf</ref> One of the great [[polymaths]] of the 20th century, Hayek also contributed to [[jurisprudence]], [[neuroscience]] and the history of ideas. |
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Hayek is one of the most influential members of the [[Austrian School of economics]], and in 1974 shared the [[ |
Hayek is one of the most influential members of the [[Austrian School of economics]], and in 1974 shared the [[The Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel]] with [[Gunnar Myrdal]] "for their pioneering work in the [[Monetary policy|theory of money]] and [[Business cycle|economic fluctuations]] and for their penetrating analysis of the interdependence of economic, social and institutional phenomena."<ref>{{cite web|url=http://nobelprize.org/nobel_prizes/economics/laureates/1974/index.html|title=The Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel 1974|author=[[Nobel Prize in Economics|Bank of Sweden]]|year=1974}}</ref> He also received the [[United States|U.S.]] [[Presidential Medal of Freedom]] in 1991 from president [[George H. W. Bush]].<ref>{{cite web|url=http://bushlibrary.tamu.edu/research/public_papers.php?id=3642&year=&month=|title=Remarks on Presenting the Presidential Medal of Freedom Awards|author=[[George H. W. Bush]]|date=1991-11-18}}</ref> |
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Hayek lived in Austria, Great Britain, the United States and Germany, and became a British subject in 1938. |
Hayek lived in Austria, Great Britain, the United States and Germany, and became a British subject in 1938. |
Revision as of 19:46, 11 September 2009
Friedrich August von Hayek | |
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Born | |
Died | 23 March 1992 | (aged 92)
Era | 20th-century philosophy |
Region | Western Philosophy |
School | Old Whig, Classical liberalism and Austrian School |
Main interests | Economics, social philosophy, political philosophy, Hebbian theory, philosophy of mind |
Notable ideas | Economic calculation problem, Catallaxy, Extended order, Dispersed knowledge, Spontaneous order, Hebbian theory |
Part of a series on |
Libertarianism |
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Part of a series on |
Liberalism |
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Friedrich August von Hayek CH (8 May 1899–23 March 1992), was an Austrian and British economist and philosopher known for his defense of classical liberalism and free-market capitalism against socialist and collectivist thought. He is considered to be one of the most important economists and political philosophers of the twentieth century.[1] Hayek's account of how changing prices communicate signals which enable individuals to coordinate their plans is widely regarded as an important achievement in economics.[2] One of the great polymaths of the 20th century, Hayek also contributed to jurisprudence, neuroscience and the history of ideas.
Hayek is one of the most influential members of the Austrian School of economics, and in 1974 shared the The Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel with Gunnar Myrdal "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."[3] He also received the U.S. Presidential Medal of Freedom in 1991 from president George H. W. Bush.[4]
Hayek lived in Austria, Great Britain, the United States and Germany, and became a British subject in 1938.
Early life
Hayek was born in Vienna, then capital of the Austro-Hungarian Empire, the son of a doctor in the municipal health service. Hayek's grandfathers were prominent academics working in the fields of statistics and biology. The paternal line had been raised to the ranks of the Austrian nobility, for its services to the state, a generation before his maternal forebears, also raised to the lower noble rank. Hayek's father turned his work on regional botany into a highly esteemed botanical treatise, continuing the family's scholarly traditions.
His mother's family belonged to the wealthier bourgeoisie. Also on his mother's side, Hayek was second cousin to the philosopher Ludwig Wittgenstein. His mother often played with Ludwig's sisters. Inspired by the accident of this family connection, Hayek became one of the first to read Wittgenstein's Tractatus Logico-Philosophicus when the book was published in its original German edition in 1921.
Already as a teenager, and at his father's suggestion, Hayek read the genetic and evolutionary works of Hugo de Vries and the philosophical works of Ludwig Feuerbach.[5] In school Hayek was much taken by one instructor's lectures on Aristotle's ethics.
In 1917 he joined an artillery regiment in the Austro-Hungarian Army and fought on the Italian front. Much of Hayek's combat experience was spent as a spotter in an aeroplane. He survived the war without serious injury and was decorated for bravery.
Hayek then decided to pursue an academic career, determined to help avoid the mistakes that had led to World War I. Hayek said about his experience: "The decisive influence was really World War I. It's bound to draw your attention to the problems of political organization." He vowed to work for a better world. [6]
Student and economist
At the University of Vienna, he earned doctorates in law and political science in 1921 and 1923 respectively, and he also studied philosophy, psychology and economics with a keen interest. For a short time, when the University of Vienna closed, Hayek studied in Constantin von Monakow's Institute of Brain Anatomy, where Hayek spent much of his time staining brain cells. Hayek's time in Monakow's lab, and his deep interest in the work of Ernst Mach, inspired Hayek's first intellectual project, eventually published as The Sensory Order (1952). It turned Mach's contribution on its head, locating connective learning at the physical, neurological levels in a direct rejection of the "sense data" associationism of the naive empiricists and logical positivists. Hayek presented his work to the private seminar he had created with Herbert Furth called the Geistkreis.[7]
During his years at the U. of Vienna Carl Menger's work on the explanatory strategy of social science and Friedrich von Wieser's commanding presence in the classroom left a lasting influence on Hayek.[8] Upon the completion of his University exams, Hayek was hired by Ludwig von Mises on the recommendation of von Wieser as a specialists for the Austrian government working on the legal and economic details of the Treaty of Saint Germain.[citation needed] Between 1923 and 1924 Hayek took advantage of an opportunity to work as a research assistant to Prof. Jeremiah Jenks of New York University, compiling macroeconomic data on the American economy and the operations of the U.S. Federal Reserve.
Initially sympathetic to Wieser's social democratic socialism, Hayek's economic thinking shifting away from socialism and toward the classical liberalism of Carl Menger after reading Ludwig von Mises' book Socialism. It was sometime after reading Mises Socialism that Hayek began attending Ludwig von Mises' private seminars, joining several of his University friends—including Fritz Machlup, Alfred Schutz, Felix Kaufmann,and Gottfried Haberler—who were also participating in Hayek's own more general private seminar.
With the help of von Mises, in the late 1920s Hayek founded and served as director of the Austrian Institute for Business Cycle Research, before joining the faculty of the London School of Economics (LSE) in 1931 at the behest of Lionel Robbins. Upon his arrival in London, Hayek was quickly recognized as one of the leading economic theorists in the world, and his development of the economics of processes in time and the coordination function of prices inspired the groundbreaking work of John Hicks, Abba Lerner, and many other in the development of modern microeconomics.[9] But from Hayek's own perspective his years in London were a frustrating experience—his Mengerian approach to economic explanation and his Mengerian extension of marginalist thinking to production choices in time were not understood by is British peers, most especially by those working in the British tradition of Alfred Marshall and John Maynard Keynes. Debate between Mengerian economists and Cambridge influenced economists over how to explain economic processes continues to this day.
Economists who studied with Hayek at the LSE in the 30s and 40s include Arthur Lewis, Ronald Coase, John Kenneth Galbraith, Abba Lerner, Nicholas Kaldor, George Shackle, Thomas Balogh, Vera Smith, L. K. Jah, Arthur Seldon, Paul Rosenstein-Rodan, and Oskar Lange. [10][11][12] Hayek also taught or tutored all sorts of other L.S.E. students, including David Rockefeller.[13].
Unwilling to return to Austria after the Anschluss brought it under the control of Nazi Germany in 1938, Hayek remained in Britain and became a British subject in 1938. He held this status for the remainder of his life, although he did not live in Great Britain after 1950. He lived in the United States from 1950 to 1962 and then mostly in Germany, although briefly in Austria as well.[14]
The Road to Serfdom
It was during this time that he wrote The Road to Serfdom. Hayek was concerned about the general view in Britain's academia that Fascism was a capitalist reaction against socialism. A chapter in the book is entitled, "The Socialist Roots of Nazism." The book was to be the popular edition of the second volume of a treatise entitled "The Abuse and Decline of Reason".[15] It was written between 1940-1943. The title was inspired by the French classical liberal thinker Alexis de Tocqueville's writings on the "road to servitude".[16] It was first published in Britain by Routledge in March 1944 and was quite popular, leading Hayek to call it "that unobtainable book," also due in part to wartime paper rationing.[17] When it was published in the United States by the University of Chicago in September of that year, it achieved greater popularity than in Britain. At the arrangement of editor Max Eastman, the American magazine Reader's Digest also published an abridged version in April 1945, enabling The Road to Serfdom to reach a far wider audience than academics.
The libertarian economist Walter Block has observed critically that while the The Road to Serfdom makes a strong case against centrally-planned economies, it appears only lukewarm in its support of pure laissez-faire capitalism, with Hayek even going so far as to say that "probably nothing has done so much harm to the liberal cause as the wooden insistence of some liberals on certain rules of thumb, above all of the principle of laissez-faire capitalism".[18]. In the book, Hayek writes that the government has a role to play in the economy through the monetary system, work-hours regulation, and institutions for the flow of proper information.[19]
Chicago
In 1950, Hayek left the London School of Economics for the University of Chicago, becoming a professor in the Committee on Social Thought. Hayek's first class at Chicago was a faculty seminar on the philosophy of science attended by many of the University's most notable scientists of the time, including Enrico Fermi, Sewall Wright and Leó Szilárd. During his time at Chicago, Hayek worked on the philosophy of science, economics, political philosophy, and the history of ideas. Most of his economic notes from this period have yet to be published. He did not become part of the Chicago School of Economics.[20]
After editing a book on John Stuart Mill's letters he planned to publish two books on the liberal order, The Constitution of Liberty and "The Creative Powers of a Free Civilization" (eventually the title for the second chapter of The Constitution of Liberty).[21] He completed The Constitution of Liberty in May 1959, with publication in February 1960. Hayek was concerned "with that condition of men in which coercion of some by others is reduced as much as is possible in society".[22] Hayek was disappointed that the book did not receive the same enthusiastic general reception as The Road to Serfdom had sixteen years before.[23]
Freiburg and Salzburg
From 1962 until his retirement in 1968, he was a professor at the University of Freiburg, West Germany. Hayek regarded his years at Freiburg as "very fruitful".[24] It was here where he wrote most of Law, Legislation and Liberty. This was intended for a technical audience, and it was published in three volumes in 1973, 1976 and 1979.
He became professor at the University of Salzburg from 1969 to 1977; he then returned to Freiburg, where he spent the rest of his days. When Hayek left Salzburg in 1977, he wrote that "I made a mistake in moving to Salzburg". The economics department was small and the library facilities were inadequate.[25]
Nobel laureate
On 9 October, 1974 it was announced that Hayek would be awarded the The Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel, along with Swedish socialist economist Gunnar Myrdal. He was surprised at being given the award and believed that he was given it with Myrdal in order to balance the award with someone from the opposite side of the political spectrum.[26] During the Nobel ceremony in December 1974 Hayek met Russian dissident Aleksandr Solzhenitsyn. Hayek later sent him a Russian translation of The Road to Serfdom and Solzhenitsyn was surprised that someone who had not lived in Russia could see so clearly the effects of socialism.[26] The Prize brought much greater public awareness of Hayek and has been described by his biographer as "the great rejuvenating event in his life".[27]
Later life
In February 1975 Margaret Thatcher was elected leader of the British Conservative Party. The Institute of Economic Affairs arranged a meeting between Hayek and Thatcher in London soon after.[28] During Thatcher's only visit to the Conservative Research Department in the summer of 1975, a speaker had prepared a paper on why the "middle way" was the pragmatic path the Conservative Party should take, avoiding the extremes of left and right. Before he had finished, Thatcher "reached into her briefcase and took out a book. It was Friedrich von Hayek's The Constitution of Liberty. Interrupting our pragmatist, she held the book up for all of us to see. 'This', she said sternly, 'is what we believe', and banged Hayek down on the table".[29]
In 1977 Hayek was critical of the Lib-Lab pact, in which the British Liberal Party agreed to keep the British Labour government in office. Writing to The Times, Hayek said: "May one who has devoted a large part of his life to the study of the history and the principles of liberalism point out that a party that keeps a socialist government in power has lost all title to the name "Liberal". Certainly no liberal can in future vote "Liberal"."[30] Hayek was criticised by Liberal politicians Lord Gladwyn and Andrew Phillips, who both claimed that the purpose of the pact was to discourage socialist legislation. Lord Gladwyn pointed out that the German Free Democrats were in coalition with the German Social Democrats.[31] Hayek was defended by Professor Antony Flew who stated that the German Social Democrats, unlike the British Labour Party, had since the late 1950s abandoned public ownership of the means of production, distribution and exchange and had instead embraced the social market economy.[32] In 1978 Hayek came into conflict with the Liberal Party leader David Steel who claimed that liberty was only possible with "social justice and an equitable distribution of wealth and power, which in turn require a degree of active government intervention" and that the Conservative Party were more concerned with the connection between liberty and private enterprise than between liberty and democracy. Hayek claimed that a limited democracy might be better than other forms of limited government at protecting liberty but that an unlimited democracy was worse than other forms of unlimited government because "its government loses the power even to do what it thinks right if any group on which its majority depends thinks otherwise". Hayek stated that if the Conservative leader had said "that free choice is to be exercised more in the market place than in the ballot box, she has merely uttered the truism that the first is indispensable for individual freedom while the second is not: free choice can at least exist under a dictatorship that can limit itself but not under the government of an unlimited democracy which cannot".[33]
Hayek visited Chile several times in the 1970s and 1980s during the reign of dictator General Augusto Pinochet, and was so impressed with Pinochet's regime that he even held Société Mont Pélérin meetings there. Hayek believed that Pinochet's dictatorship would only need to be in place for a "transitionary period", long enough to reverse decades of state regulation, stating in an interview, "My personal preference leans toward a liberal dictatorship rather than toward a democratic government devoid of liberalism.". [34] [35] Hayek recommended similar reforms for the Keynesian economy in the United Kingdom to Prime Minister Margaret Thatcher. Thatcher said "the remarkable success of the Chilean economy [was] a striking example of economic reform from which we can learn many lessons, [but] in Britain with our democratic institutions and the need for a high degree of consent, some of the measures adopted in Chile are quite unacceptable."[36]
In 1984, he was appointed as a member of the Order of the Companions of Honour (CH) by Queen Elizabeth II of the United Kingdom on the advice of the British Prime Minister Margaret Thatcher for his "services to the study of economics". Hayek had hoped to receive a baronetcy, and after he was awarded the CH he sent a letter to his friends requesting that he be called the English version of Friedrich (Frederick) from now on. After his twenty-minute audience with the Queen, he was "absolutely besotted" with her according to his daughter-in-law, Esca Hayek. Hayek said a year later that he was "amazed by her. That ease and skill, as if she'd known me all my life". The audience with the Queen was followed by a dinner with family and friends at the IEA. When, later that evening, Hayek was dropped off at the Reform Club, he commented: "I've just had the happiest day of my life".[37]
In 1991 President George H. W. Bush awarded Hayek the Presidential Medal of Freedom, one of the two highest civilian awards in the United States, for a "lifetime of looking beyond the horizon". Hayek died in 1992 in Freiburg, Germany.
Work
The economic calculation problem
Hayek was one of the leading academic critics of collectivism in the 20th century. Hayek believed that all forms of collectivism (even those theoretically based on voluntary cooperation) could only be maintained by a central authority of some kind. In his popular book, The Road to Serfdom (1944) and in subsequent works, Hayek claimed that socialism required central economic planning and that such planning in turn had a risk of leading towards totalitarianism, because the central authority would have to be endowed with powers that would have an impact on social life as well, and because the knowledge required for central planning is inherently decentralized.
Building on the earlier work of Mises and others, Hayek also argued that while, in centrally planned economies, an individual or a select group of individuals must determine the distribution of resources, these planners will never have enough information to carry out this allocation reliably. The efficient exchange and use of resources, Hayek claimed, can be maintained only through the price mechanism in free markets (see economic calculation problem). In The Use of Knowledge in Society (1945), Hayek argued that the price mechanism serves to share and synchronize local and personal knowledge, allowing society's members to achieve diverse, complicated ends through a principle of spontaneous self-organization. He used the term catallaxy to describe a "self-organizing system of voluntary co-operation."
In Hayek's view, the central role of the state should be to maintain the rule of law, with as little arbitrary intervention as possible.
Spontaneous order
Hayek viewed the free price system, not as a conscious invention (that which is intentionally designed by man), but as spontaneous order, or what is referred to as "that which is the result of human action but not of human design". Thus, Hayek put the price mechanism on the same level as, for example, language.
Hayek attributed the birth of civilization to private property in his book The Fatal Conceit (1988). He explained that price signals are the only means of enabling each economic decision maker to communicate tacit knowledge or dispersed knowledge to each other, in order to solve the economic calculation problem.
Investment and choice
Perhaps more fully than any other economist, Hayek investigated the choice theory of investment involving the inter-relations between non-permanent production goods and "latent" or potentially economic permanent resources, building on the choice theoretical insight that, "processes that take more time will evidently not be adopted unless they yield a greater return than those that take less time."[38] Hayek's work on the microeconomics of the choice theoretics of investment, non-permanent goods, potential permanent resources, and economically adapted permanent resources mark a central dividing point between Hayek's work on central planning, trade cycle theory, the division of knowledge, and entrepreneurial adaptation and that of most all other economists, most especially that of the macroeconomic "Marshallian" economists in the tradition of John Maynard Keynes and the microeconomic "Walrasian" economists in the tradition of Abba Lerner.
The business cycle
Capital, money, and the business cycle are prominent topics in Hayek's early contributions to economics. Mises had earlier explained monetary and banking theory in his Theory of Money and Credit (1912), applying the marginal utility principle to the value of money and then proposing a new theory of industrial fluctuations based on the concepts of the British Currency School and the ideas of the Swedish economist Knut Wicksell. Hayek used this body of work as a starting point for his own interpretation of the business cycle, which defended what later became known as the "Austrian Theory of the Business Cycle". In his Prices and Production (1931) and The Pure Theory of Capital (1941), he explained the origin of the business cycle in terms of central bank credit expansion and its transmission over time in terms of capital misallocation caused by artificially low interest rates. Hayek claimed that: The past instability of the market economy is the consequence of the exclusion of the most important regulator of the market mechanism, money, from itself being regulated by the market process. In accordance with arguments outlined in his essay The Use of Knowledge in Society, he argued that a monopolistic governmental agency like a central bank can neither possess the relevant information which should govern supply of money, nor have the ability to use it correctly. [39]
Social and political philosophy
In the latter half of his career Hayek made a number of contributions to social and political philosophy, which he based on his views on the limits of human knowledge[40], and the idea of spontaneous order in social institutions. He argues in favor of a society organized around a market order, in which the apparatus of state is employed almost (though not entirely) exclusively to enforce the legal order (consisting of abstract rules, and not particular commands) necessary for a market of free individuals to function. These ideas were informed by a moral philosophy derived from epistemological concerns regarding the inherent limits of human knowledge.
Hayek disapproved strongly of the notion of 'social justice'. He compared the market to a game in which 'there is no point in calling the outcome just or unjust'[41] and argued that 'social justice is an empty phrase with no determinable content'[42]; likewise 'the results of the individual's efforts are necessarily unpredictable, and the question as to whether the resulting distribution of incomes is just has no meaning'[43]. He regarded any attempt by government to redistribute income or capital as an unacceptable intrusion upon individual freedom: 'the principle of distributive justice, once introduced, would not be fulfilled until the whole of society was organized in accordance with it. This would produce a kind of society which in all essential respects would be the opposite of a free society[44].
However, Hayek was prepared to tolerate 'some provision for those threatened by the extremes of indigence or starvation, be it only in the interest of those who require protection against acts of desperation on the part of the needy'[45].
In his philosophy of science, which has much in common with that of his good friend Karl Popper, Hayek was highly critical of what he termed scientism: a false understanding of the methods of science that has been mistakenly forced upon the social sciences, but that is contrary to the practices of genuine science. Usually scientism involves combining the philosophers' ancient demand for demonstrative justification with the associationists' false view that all scientific explanations are simple two-variable linear relationships. Hayek points out that much of science involves the explanation of complex multi-variable and non-linear phenomena, and that the social science of economics and undesigned order compares favourably with such complex sciences as Darwinian biology. These ideas were developed in The Counter-Revolution of Science: Studies in the Abuse of Reason, 1952 and in some of Hayek's later essays in the philosophy of science such as "Degrees of Explanation" and "The Theory of Complex Phenomena".
In The Sensory Order: An Inquiry into the Foundations of Theoretical Psychology (1952), Hayek independently developed a "Hebbian learning" model of learning and memory– an idea which he first conceived in 1920, prior to his study of economics. Hayek's expansion of the "Hebbian synapse" construction into a global brain theory has received continued attention[citation needed] in neuroscience, cognitive science, computer science, behavioral science, and evolutionary psychology.
Hayek and conservatism
Hayek attracted new attention in the 1980s and 1990s with the rise of conservative governments in the United States, United Kingdom, and Canada. After winning the 1979 election, Margaret Thatcher appointed Keith Joseph, the director of the Hayekian Centre for Policy Studies, as her secretary of state for industry in an effort to redirect parliament's economic strategies. Likewise, David Stockman, Ronald Reagan's most influential financial official in 1981 was an acknowledged follower of Hayek.[46]
Hayek wrote an essay titled Why I Am Not a Conservative[47] (included as an appendix to The Constitution of Liberty), in which he disparaged conservatism for its inability to adapt to changing human realities or to offer a positive political program. Although he noted that modern day conservatism shares many opinions on economics with classic liberals, particularly a belief in the free market, he believed it's because conservatism wants to "stand still", whereas liberalism embraces the free market because it "wants to go somewhere". Hayek identified himself as a classical liberal, but noted that in the United States it had become almost impossible to use "liberal" in its original definition, and the term "libertarian" has been used instead. However, for his part Hayek found this term "singularly unattractive" and offered the term "Old Whig" (a phrase borrowed from Edmund Burke) instead. In his later life he said: "I am becoming a Burkean Whig". [48]
Influence and recognition
Hayek's profound influence on the development of economics is universally acknowledged. Hayek is the second most frequently cited economist (after Kenneth Arrow) in the Nobel lectures of the prize winners in economics – particularly that his lecture was critical of the field of orthodox economics and neo-classical modelization. A number of Hayek's fellow winners of the prize in economics – such as Vernon Smith and Herbert Simon – recognize Hayek as the greatest economist of the modern period. Another Nobel winner,Paul Samuelson belieives that Hayek was worthy of his award but nevertheless avers that "there were good historical reasons for fading memories of Hayek within the mainstream last half of the twentieth century economist fraternity. In 1931,Hayek’s Prices and Production had enjoyed an ultra-short Byronic success. In retrospect hindsight tells us that its mumbo-jumbo about the period of production grossly misdiagnosed the macroeconomics of the 1927–1931 (and the 1931–2007) historical scene".[49]. Hayek is widely recognized for having introduced the time dimension to the equilibrium construction, and for his key role in helping to having inspired the fields of growth theory, information economics, and the theory of spontaneous order. The "informal" economics presented in Milton Friedman's massively influential popular work "Free to Choose" (1980), is explicitly Hayekian in its account of the price system as a system for transmitting and coordinating knowledge. This can be explained by the fact that Friedman taught Hayek's famous paper "The Use of Knowledge in Society" (1945) in his graduate seminars.
Harvard economist and former Harvard University President Lawrence Summers explains Hayek's place in modern economics this way: "What's the single most important thing to learn from an economics course today? What I tried to leave my students with is the view that the invisible hand is more powerful than the [un]hidden hand. Things will happen in well-organized efforts without direction, controls, plans. That's the consensus among economists. That's the Hayek legacy."[50]
By 1947, Hayek was an organizer of the Mont Pelerin Society, a group of classical liberals who sought to oppose what they saw as socialism in various areas. He was also instrumental in the founding of the Institute of Economic Affairs, the free-market think tank that inspired Thatcherism.
Hayek had a long-standing and close friendship with philosopher of science Karl Popper, also from Vienna. In a letter to Hayek in 1944, Popper stated, "I think I have learnt more from you than from any other living thinker, except perhaps Alfred Tarski." (See Hacohen, 2000). Popper dedicated his Conjectures and Refutations to Hayek. For his part, Hayek dedicated a collection of papers, Studies in Philosophy, Politics, and Economics, to Popper, and in 1982 said, "... ever since his Logik der Forschung first came out in 1934, I have been a complete adherent to his general theory of methodology."[51] Popper also participated in the inaugural meeting of the Mont Pelerin Society. Their friendship and mutual admiration, however, do not change the fact that there are important differences between their ideas.[52]
Hayek's greatest intellectual debt was to Carl Menger, who pioneered an approach to social explanation similar to that developed in Britain by Bernard Mandeville and the Scottish moral philosophers (cf. Scottish Enlightenment). He had a wide-reaching influence on contemporary economics, politics, philosophy, sociology, psychology and anthropology. For example, Hayek's discussion in The Road to Serfdom (1944) about truth, falsehood and the use of language influenced some later opponents of postmodernism.[53]
Legacy and honors
Even after his death, Hayek's intellectual presence was noticeable, especially in the universities where he had taught: the London School of Economics, the University of Chicago, and the University of Freiburg. A number of tributes resulted, many posthumous.
- A student-run group at the LSE Hayek Society, was established in his honor.
- At Oxford University, the Oxford Libertarian Society was previously known as the Hayek Society.
- The Cato Institute named its lower level auditorium after Hayek, who had been a Distinguished Senior Fellow at Cato during his later years.
- Also, the auditorium of the school of economics in Universidad Francisco Marroquín in Guatemala is named after him.
Hayek's work on price theory has been central to the thinking of Jimmy Wales about how to manage the Wikipedia project.[54]
Selected bibliography
See also: List of books by Friedrich Hayek
- Monetary Theory and the Trade Cycle, 1929.
- Prices and Production, 1931.
- Profits, Interest and Investment: And other essays on the theory of industrial fluctuations, 1939.
- The Road to Serfdom, 1944.
- Individualism and Economic Order, 1948.
- The Constitution of Liberty, 1960.
- Law, Legislation and Liberty (3 volumes)
- 1) Rules and Order, 1973
- 2) The Mirage of Social Justice, 1976
- 3) The Political Order of a Free People, 1979
- The Fatal Conceit: The Errors of Socialism, 1988. (The content of the book was heavily influenced by William Warren Bartley)[55]
Notes
- ^ Edward Feser (edt), The Cambridge Companion to Hayek, Cambridge University Press (2007), ISBN 0521849772, p.13
- ^ Skarbek, David, F. A. Hayek's Influence on Nobel Prize Winners, Review of Austrian Economics 22(1) March 2009 http://www.davidskarbek.com/papers/HayekNobel.pdf
- ^ Bank of Sweden (1974). "The Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel 1974".
- ^ George H. W. Bush (1991-11-18). "Remarks on Presenting the Presidential Medal of Freedom Awards".
- ^ UCLA Oral History 1978 Interviews with Friedrich Hayek, pp. 32-38
- ^ http://www.pbs.org/wgbh/commandingheights/shared/minitext/tr_show01.html
- ^ "The Viennese Connection: Alfred Schutz and the Austrian School" by Peter Kurrild-Klitgaard.
- ^ UCLA Oral History 1978 Interviews with Friedrich Hayek
- ^ [1]
- ^ J. K. Galbraith, "Nicholas Kaldor Remembered", in Nicholas Kaldor and Mainstream Economics: Confrontation or Convergence?, New York: St. Martin's Press.
- ^ Sir Arthur Lewis Autobiography
- ^ Alan Ebenstein, Friedrich Hayek: A Biography, p. 62, 248, 284.
- ^ Interview with David Rockefeller
- ^ Samuel Brittan, 'Hayek, Friedrich August (1899–1992)', Oxford Dictionary of National Biography, Oxford University Press, 2004, accessed 28 April 2009.
- ^ Alan Ebenstein, Friedrich Hayek. A Biography (New York: Palgrave, 2001), p. 107.
- ^ Ebenstein, p. 116.
- ^ Ebenstein, p. 128.
- ^ Hayek, Constitution of Liberty, University Chicago Press (1960) pp. 502-3
- ^ Block W. (1996). "Hayek's Road to Serfdom". Journal of Libertarian Studies.
- ^ F. A. Hayek, Hayek On Hayek: An Autobiographical Dialogue (Liberty Fund, 2008) p. 128.
- ^ Ebenstein, p. 195.
- ^ F. A. Hayek, The Constitution of Liberty (London: Routledge & Kegan Paul, 1960), p. 11.
- ^ Ebenstein, p. 203.
- ^ Ebenstein, p. 218.
- ^ Ebenstein, p. 254.
- ^ a b Ebenstein, p. 263.
- ^ Ebenstein, p. 261.
- ^ Richard Cockett, Thinking the Unthinkable. Think-Tanks and the Economic Counter-Revolution, 1931–1983 (Fontana, 1995), pp. 174-6.
- ^ John Ranelagh, Thatcher's People: An Insider's Account of the Politics, the Power, and the Personalities (Fontana, 1992), p. ix.
- ^ "Letters to the Editor: Liberal pact with Labour", The Times (31 March, 1977), p. 15.
- ^ "Letters to the Editor: Liberal pact with Labour", The Times (2 April, 1977), p. 15.
- ^ "Letters to the Editor: German socialist aims", The Times (13 April, 1977), p. 13.
- ^ "Letters to the Editor: The dangers to personal liberty", The Times (11 July, 1978), p. 15.
- ^ Greg Grandin, professor of history, New York University, Empire's Workshop: Latin America, the United States, and the Rise of the New Imperialism, pp. 172,173, Metropolitan, 2006, ISBN 0805077383.
- ^ Dan Avnôn, Liberalism and its Practice, p. 56, Routledge, 1999, ISBN 0415193540.
- ^ Naomi Klein, The Shock Doctrine: The Rise of Disaster Capitalism, pp. 164–169, Macmillan, 2008, ISBN 0312427999.
- ^ Ebenstein, p. 305.
- ^ The Pure Theory of Capital (pdf), Chicago: University of Chicago Press, 1941/2007 (Vol. 12 of the Collected Works): p. 90.
- ^ Hayek, Friedrich (1989). The Collected Works of F.A. Hayek. University of Chicago Press. p. 202. ISBN 978-0-226-32097-7.
- ^ The Use of Knowledge in Society
- ^ [The Mirage of Social Justice, chap. 10]
- ^ [ibid. chap. 12]
- ^ [The Constitution of Liberty, chap. 6]
- ^ [ibid.]
- ^ [The Constitution of Liberty, chap. 19]
- ^ Kenneth R. Hoover, Economics as Ideology: Keynes, Laski, Hayek, and the Creation of Contemporary Politics (2003) p. 213
- ^ Why I Am Not a Conservative
- ^ E. H. H. Green, Ideologies of Conservatism. Conservative Political Ideas in the Twentieth Century (Oxford: Oxford University Press, 2004), p. 259.
- ^ [2]
- ^ Lawrence Summers, quoted in The Commanding Heights: The Battle Between Government and the Marketplace that Is Remaking the Modern World, by Daniel Yergin and Joseph Stanislaw. New York: Simon & Schuster. 1998, pp. 150-151.
- ^ See Weimer and Palermo, 1982
- ^ See Birner, 2001, and for the mutual influence they had on each other's ideas on evolution, Birner 2009
- ^ e.g., Wolin 2004
- ^ Katherine Mangu-Ward: Wikipedia and Beyond. Jimmy Wales' sprawling vision, June 2007
- ^ Liberty - The Fatal Deceit
Bibliography
- Birner, Jack, 2001, "The mind-body problem and social evolution," CEEL Working Paper 1-02.
- Birner, Jack, and Rudy van Zijp, eds., Hayek: Co-ordination and Evolution: His legacy in philosophy, politics, economics and the history of ideas (1994)
- Birner, Jack, 2009, "From group selection to ecological niches. Popper's rethinking of evolutionary theory in the light of Hayek's theory of culture", in S. Parusnikova & R.S. Cohen (eds.), Rethinking Popper, Boston Studies in the Philosophy of Science Vol. 272, Springer 2009
- Brittan, Samuel "Hayek, Friedrich August (1899–1992)", Oxford Dictionary of National Biography, (2006) online
- Caldwell, Bruce, 2005. Hayek's Challenge: An Intellectual Biography of F.A. Hayek.
- Cohen, Avi J. "The Hayek/Knight Capital Controversy: the Irrelevance of Roundaboutness, or Purging Processes in Time?" History of Political Economy 2003 35(3): 469-490. Issn: 0018-2702 Fulltext: online in Project Muse, Swetswise and Ebsco
- Doherty, Brian. 2007. Radicals for Capitalism: A Freewheeling History of the Modern American Libertarian Movement
- Ebenstein, Alan O., 2001. Friedrich Hayek: A Biography.
- Frowen, S. ed., (1997) Hayek: economist and social philosopher
- Gamble, Andrew. (1996) The Iron Cage of Liberty, an analysis of Hayek's ideas
- Gray, John, 1998. Hayek on Liberty.
- Hacohen, Malachi, 2000. Karl Popper: The Formative Years, 1902 – 1945.
- Horwitz, Steven. "Friedrich Hayek, Austrian Economist." Journal of the History of Economic Thought 2005 27(1): 71-85. Issn: 1042-7716 Fulltext: in Swetswise, Ingenta and Ebsco
- Issing, O. (1999) Hayek, currency competition and European monetary union
- Kasper, Sherryl, 2002, The Revival of Laissez-Faire in American Macroeconomic Theory: A Case Study of Its Pioneers. Chpt. 4.
- Kley, Roland, 1994. Hayek's Social and Political Thought. Oxford Univ. Press.
- Muller, Jerry Z., 2002. The Mind and the Market: Capitalism in Western Thought. Anchor Books.
- Pavlík, Ján. 2004 [3]. University of Economics, Prague F. A. von Hayek and The Theory of Spontaneous Order. Professional Publishing 2004, Prague [4].
- Rosenof, Theodore, 1974, "Freedom, Planning, and Totalitarianism: The Reception of F. A. Hayek's Road to Serfdom," Canadian Review of American Studies.
- Samuelson, Richard A. "Reaction to the Road to Serfdom." Modern Age 1999 41(4): 309-317. Issn: 0026-7457 Fulltext: in Ebsco
- Shearmur; Jeremy, 1996. Hayek and after: Hayekian Liberalism as a Research Programme. Routledge.
- Touchie, John, 2005. Hayek and Human Rights: Foundations for a Minimalist Approach to Law. Edward Elgar.
- Vanberg, V. (2001). "Hayek, Friedrich A von (1899–1992)," International Encyclopedia of the Social & Behavioral Sciences, pp. 6482–6486. Abstract.
- Vernon, Richard. "The 'Great Society' and the 'Open Society': Liberalism in Hayek and Popper." Canadian Journal of Political Science 1976 9(2): 261-276. Issn: 0008-4239 Fulltext: in Jstor
- Weimer, W., and Palermo, D., eds., 1982. Cognition and the Symbolic Processes. Lawrence Erlbaum Associates. Contains Hayek's essay, "The Sensory Order after 25 Years" with "Discussion."
- Wolin, R. 2004. The Seduction of Unreason: The Intellectual Romance with Fascism from Nietzsche to Postmodernism. Princeton University Press, Princeton.
Primary sources
- Hayek, Friedrich. Hayek on Hayek: an autobiographical dialogue, ed. S. Kresge and L. Wenar (1994)
- Hayek, Friedrich. The collected works of F. A. Hayek, ed. W. W. Bartley and others (1988–)
See also
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External links
![](http://upload.wikimedia.org/wikipedia/commons/thumb/f/fa/Wikiquote-logo.svg/34px-Wikiquote-logo.svg.png)
- The Hayek Scholar's Page
- UCLA Oral History 1978 Interviews with Friedrich Hayek
- Bio from the Ludwig von Mises Institute
- List of Articles written by Hayek from the Ludwig von Mises Institute
- Hayek's influence on Friesian philosophy
- Official 1974 Nobel Prize page
- Bio and online works on Econlib
- The Road to Serfdom in Five Minutes Hayek's book, as illustrated by Look Magazine, condensed into a 5-minute movie
- Hayek, F. A Directory of links on Hayek from the Open Source Directory
- F A Hayek on the Adam Smith Institute website
- Hayek Bio at hayek.de
- Reason magazine's article on what Hayek might think of gay marriage (describes the conservatism vs. liberalism dispute)
- Information and Economics: A critique of Hayek essay included in the book Towards a New Socialism reviewed by the hayekian Len Brewster
- The economics of information, market socialism and Hayek's legacy
- Hayek and Socialism by Bruce Caldwell
- The Market Dynamics of Speculation: Hayekian Market Signals and the Rise of the Culture Industries
- The Connectionist Mind: A Study of Hayekian Psychology by Barry Smith
- Hayek Links The most extensive list of links on Hayek
- "The Road from Serfdom", interview in Reason by Thomas W. Hazlett
- Hayek and the Idea of Plan-Coordinationby Israel Kirzner
- IDEAS/RePEc
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