Friedrich Hayek

"If any twentieth-century economist was a Renaissance man, it was Friedrich Hayek. He made fundamental contributions in political theory, psychology, and economics. In a field in which the relevance of ideas often is eclipsed by expansions on an initial theory, many of his contributions are so remarkable that people still read them more than fifty years after they were written. ... Hayek was the best-known advocate of what is now called Austrian economics."

"F. A. Hayek is quite possibly the most eminent free-market economist and social theorist of the postwar world. He was born in Vienna in 1899 and entered the University of Vienna immediately following the end of the First World War. Hayek took his doctorates in jurisprudence in 1921 and in political theory in 1923. Although his work in economics would earn him the Nobel Prize in 1974, Hayek's interests were far broader. Over the course of a long and productive life, he made significant contributions to a number of disciplines, including political and social theory, psychology, and the history of ideas."

"Hayek's life spanned the twentieth century, and he made his home in some of the great intellectual communities of the period. Born Friedrich August von Hayek in 1899 to a distinguished family of Viennese intellectuals, Hayek attended the University of Vienna, earning doctorates in 1921 and 1923. Hayek came to the University at age 19 just after World War I, when it was one of the three best places in the world to study economics (the others being Stockholm and Cambridge, England)."

"Hayek developed fundamental insights about what's needed for liberty to flourish. He showed that essentials of a free society, like language, markets and legal customs, arise spontaneously and aren't created by government. He identified fatal flaws of government-run economies. ... Born in Vienna, Hayek read Ludwig von Mises' book Socialism (1922) and became convinced that socialism could never fulfill its promises."

"F. A. Hayek, the 1974 Nobel Memorial Prize winner in Economic Sciences, was an economist and philosopher best known for his defense of classical liberalism and free-market capitalism against socialist and collectivist thought."

"Hayek was one of the most important free market economists of the 20th century. He was a member of the 'Austrian school of economics', taught at the London School of Economics, wrote extensively on banking and monetary theory, the socialist calculation debate, and the theory of spontaneous orders."

"The ideas of Austrian economist F.A. Hayek (1899-1992) had an enormous impact during the late 20th century. Among those who acknowledged his influence have been Nathaniel Branden, Winston Churchill, Ed Crane, Richard Epstein, Antony Fisher, Milton Friedman, F.A. Harper, Vaclav Havel, Henry Hazlitt, Israel Kirzner, Mario Vargas Llosa, Robert Nozick, P.J.O'Rourke, George Orwell, Karl Popper, Virginia Postrel, Leonard Read, Ronald Reagan, Julian Simon, Hernando de Soto, Thomas Sowell and Margaret Thatcher. The Adam Smith Institute named Hayek 'Man of the Century.' The Wall Street Journal included Hayek among the most influential economists of the millennium."

"Building on the work of that other great Austrian economist, Ludwig von Mises, and combining a respect for inherited wisdom with an understanding that freedom is fundamentally disruptive, Hayek showed that the uncoordinated actions of individuals generate wonders -- market prices, language, scientific progress -- that the deliberate designs of central planners never could."

"Another thing that helped form my policy orientation was when Hayek came to Chicago in 1950. He attracted quite a number of very able students, Sam Peltzman, Ron Hamowy, Ralph Raico, Shirley Letwin. There were quite a group of them. Hayek drew very high quality people. ... These were libertarians, all of them, though Hayek would not have labeled himself a libertarian. As you know, he always avoided the term conservative, too. He would call himself an Old Whig."

"The LSE ... had attracted a number of very talented rising stars among whom was the Austrian economist Friedrich Hayek ... Hayek ... attempted to incorporate the theory of capital as involving production plans over time along the lines indicated by Böhm-Bawerk. ... From Hayek he had learned about the importance of subjectivism, the importance of the fact that economic value was in the final analysis a matter of individual appraisal. ... Lachmann is fond of quoting Hayek's remark that 'every important advance in economic theory during the last hundred years was a further step in the consistent application of subjectivism' ..."

"He soon became embroiled in a heated debate with Keynes, in which Keynes argued for monetary and fiscal 'stimulus' to end the depression, instead of Hayek's free-market solution. ... At the same time, Hayek began amplifying Mises's criticisms of socialism, explaining that a developed system of division of labor is just too complex to be controlled and directed through any form of central planning. ... This argument culminated in Hayek's most influential book, The Road to Serfdom, published in 1944 ..."

"One of Hayek's most important and lasting contributions to human understanding has been his development of a theory of spontaneous order. Hayek argued (echoing the 18th-century Scottish moral philosopher Adam Ferguson) that much, if not most, of the social order is 'the result of human action, but not of human design.' ... Hayek also emphasized that a system of division of labor brings with it a division of knowledge. ... His insight into the nature of knowledge in society led Hayek to also highlight that the fundamental role of all forms of competition ... is to serve as a discovery procedure."

"This section is perhaps the earliest form of F. A. Hayek's argument in The Road to Serfdom, in a chapter titled 'Why the Worst Get to the Top,' where he describes why in activist governments bad people will tend to be attracted to and obtain positions of power. It is here also that Milton touches upon what Hayek called the knowledge problem. That is, there is no way that any one person or group of persons could have enough knowledge to properly order and plan the market of ideas so as to deliver the necessary concepts to the necessary people."

"For example, Hayek, who absorbs from Menger an Austrian emphasis on process and spontaneous order, enunciated a profoundly dialectical critique of utopianism. ... Hayek railed against both collectivist and atomist viewpoints. For Hayek, since no human being can know everything there is to know about society, people cannot simply redesign it anew. Human beings are as much the creatures of their context as they are its creators. Hayek's rejection of utopianism is a repudiation of what he calls 'constructivist' rationalism. "

"Hayek was the 20th century's most prominent developer of the Austrian business cycle theory. ... As a student, he developed the basis of a cognitive theory, which he revised and published in 1952 in The Sensory Order. He wrote extensively on the method of the social sciences in The Counter-Revolution of Science, also published in 1952 and one of his most important statements on the subject. Throughout the 1950s and 1960s, he developed a body of social theory about knowledge and competition."

"Hayek's scholarly and scientific achievements were immense and enduring. They include his contributions to Austrian economics in business-cycle theory and in the great debate on economic calculation under socialism; his discovery of the centrality of the problem of knowledge in society; and his work on the methodology of the social sciences, where he refined and defended methodological individualism. ... By his close collaboration with the most eminent liberal scholars in all parts of the world and his founding of the Mont Perelin Society, Hayek amply demonstrated his dedication and his leadership."

"In 1944 he dedicated The Road to Serfdom to 'The Socialists of All Parties,' generously presuming that 'they would recoil if they became convinced that the realization of their program would mean the destruction of freedom.' Their schemes, he argued in this sober warning, had already led to tyranny in Germany and Russia, and good intentions would not save them."

"Though his 1974 Nobel Prize was in Economic Science, his scholarly endeavors extended well beyond economics. He published 130 articles and 25 books on topics ranging from technical economics to theoretical psychology, from political philosophy to legal anthropology, and from the philosophy of science to the history of ideas. Hayek was no mere dabbler; he was an accomplished scholar in each of these fields of inquiry."

"His 1944 bestseller The Road to Serfdom helped catalyze the free-market political movement in the United States and continues to sell thousands of copies a year. ... Citing the 'proof of time,' Encyclopedia Britannica recently commissioned Caldwell to replace its formulaic 250-word Hayek profile with a nuanced discussion more than 10 times as long. Harvard has added him to the syllabus of Social Studies 10, its rigorous introductory social theory course."

"Hayek raised freedom to the 'supreme principle.' In his trilogy, Hayek advances the conception of the Scottish philosophers, their Whig allies in politics, the common law tradition, the later contributions of German historians, and, of course, Menger. Hayek (1973a) [Law, Legislation and Liberty, Volume I] provides the most complete and systematic theoretical case for his view of liberty. Some of his ideas on the limitations of knowledge and the emergence of order were developed in his economic work. ... His uniting economic analysis with legal and moral theories was a distinctively Hayekian contribution."

"When F.A. Hayek's The Road to Serfdom was published by the University of Chicago Press in 1944, the publishers didn't expect much of the book. But when Hazlitt submitted a rave review to the New York Times Book Review, calling it the most important political book of that generation, the editor of the review had it published on page one, launching the book immediately onto the bestseller lists, and its visibility onto every major college campus in America. Needless to add, it was Hayek's book, more than any other, that established the credibility of libertarian ideas to intellectuals and academics alike"

"Again and again, Spencer emphasized how extraordinary human progress develops naturally when people are free. Consider this passage from Principles of Sociology:

... Knowledge developing into science ... now guides productive activities at large, has resulted from the workings of individuals prompted not by the ruling agency but by their own inclinations. ...

Spencer anticipated the work of Nobel Laureate F.A. Hayek who reminded the world why spontaneous market action, not central planning, is responsible for humanity's most stunning achievements."

"When Hayek won the Nobel Prize in 1974, my professors were flabbergasted, and bewildered by my very public excitement. Some had never heard of him; others only knew him as the author of The Road to Serfdom and they asked what that had to do with 'real economics'? ... the especial highlight of these two summers was that for both of them Friedrich A. Hayek ... was present as a senior research fellow. ... Hayek was the epitome of the old world Viennese gentleman, generous with his time, patient with questions many of which he must have heard a hundred times over his long career, and often amusingly self-deprecating ..."

"As F.A. Hayek explained in The Road to Serfdom, such an impulse toward dictatorship among those 'impatient with the impotence of democracy,' as he put it, occurs frequently. He argued that it is a function of citizens giving their republics too expansive a mandate for addressing the ills of society through central planning. ... For example, Hayek argued that Weimar Germany’s embrace of planning paved the way for the rise of Adolph Hitler ..."

"Over the years, many internationally renowned economists, including Friedrich A. Hayek, participated in the colloquium sessions. ... why should the discovery and earning of such profits be considered 'good' from the wider social point of view? Part of Kirzner's answer is a development of Hayek's insight that corresponding to the division of labor in society is an inevitable division of knowledge. ... Hayek emphasized that the coordination of the actions of millions of specialized producers and consumers around the global market is brought about through the price system."

"Hayek was an economist by training who wrote against the backdrop of the failed experiment of European socialism. He championed the decentralized systems of decision-making and rebelled against the planned economy that rested on dubious social calculations. Hayek was not a believer in the power of reason to think our way to sound social conclusions. He believed that markets worked well because prices allowed people to signal to each other as to the value they attached to certain resources, without having to give lengthy explanations as to the uses to which those resources were put."

"As F. A. Hayek later noted, 'When Socialism first appeared in 1922, its impact was profound. It gradually but fundamentally altered the outlook of many of the young idealists returning to their university studies after World War I. I know, for I was one of them. ...' ... Hayek devoted great attention to understanding the proper role of law in guaranteeing rights and became convinced that law itself was a discovery process, analogous to the market process. Just as market institutions evolve, so the legal order is the result of an evolutionary process. The market is a spontaneous order that cannot be planned in advance. "

"Another 15 years later, however, Hayek's views on money and monetary policy radically changed. About a year after being awarded the Nobel Prize in economics in 1974, he delivered a lecture on 'International Money' in September 1975 at a conference in Switzerland. In early 1976, it was published in London as a monograph under the title Choice in Currency: A Way to Stop Inflation."

"In the 20th century, F. A. Hayek reintroduced the idea of the 'denationalization of money' in the context of fiat (unbacked) monetary standards. Hayek argued that competition among private producers of fiat money would keep its purchasing power more stable. Other libertarian monetary economists endorse Hayek's call for an end to legal restrictions against private money, but they question his predictions that dozens of distinct monetary units would circulate in parallel in the same economy or that the public would prefer unbacked private money to the more traditional sort of commodity-backed private money."

"In addition to presenting material to appear in the third volume of Law, Legislation and Liberty, F.A. Hayek presented a postscript on 'The Three Sources of Human Values.' He examined the errors of sociobiology, the evolution of self-maintaining complex structures, rules of conduct, the discipline of freedom, and the reemergence of suppressed primordial instincts; and criticized both Marx and Freud. ... Hayek set the atmosphere for the rest of the meeting by his optimistic attitude toward the change in the intellectual climate. The intellectual world, he said, is witnessing a reversal of the dominance of collectivist ideas."

"Friedrich Hayek, a Nobel-prize winner and Keynes's greatest opponent of the 1930s—but also a personal friend—said of Keynes much later, however, that 'He was so convinced that he was cleverer than all the other people that he thought his instinct told him what ought to be done, and he would invent a theory to convince people to do it.' ... F. A. Hayek, Hayek on Hayek—An Autobiographical Dialogue edited by Stephen Kresge and Leif Wenar (Chicago: University of Chicago Press, 1994), p. 97."

"No event precisely marks the rebirth of modern libertarianism—remnants of the classical view endured, to be sure ... But a useful marker is of course the 1944 publication of F.A. Hayek's The Road to Serfdom, a withering critique of central planning. An Austrian economist but in truth a polymath, Hayek would go on to publish broadly philosophical works — The Constitution of Liberty in 1960 and the three-volume Law, Legislation, and Liberty in the 1970s, among much else ..."

"When living in Vienna, Popper was a socialist, and The Open Society reflected its radical character. Nevertheless, both he and F. A. Hayek were struck by strong similarities between some of its features and Hayek's Road to Serfdom. In later years, Popper's views became closer to those of Hayek, and he became convinced that the political pursuit of equality was a danger to liberty. However, ... Popper's political views did not change substantially ... Although he recognized free markets as useful, he did not share Hayek's optimism about the self-coordinating characteristics of a market-based social order."

"Another Nobel Laureate, Friedrich Hayek (who was born two years after Frank Engle), now seems ahead of his time for his prescient recognition of the dangers of encroaching government regulation and control. He advocated a climate of freedom for the cultivation of human dignity, prosperity, and economic security. ... Hayek was a leader of the Austrian school of economics, which affirmed the philosophical and qualitative nature of economic thought, not just mathematical modeling and statistical analysis."

"By contrast, Rand did not take well to the writings of F. A. Hayek. Hayek, a student and associate of Mises and an eventual Nobel laureate in economics, had published The Road to Serfdom in 1944. In her Marginalia, Rand expressed the conviction that Hayek's work was 'real poison' because it compromised the case for freedom with various 'collectivist' and 'altruist' justifications. For Rand, such compromises made Hayek a 'pernicious enemy' of the individualist movement; nothing less than a full, moral defense of unadulterated laissez-faire capitalism would do."

"Next I'd recommend the works of F. A. Hayek. His seminal work The Road to Serfdom was first published in 1944 and has become a classic warning against the dangers to freedom inherent in the planned economy; it's as powerful today as the day it was written. Chapters like 'Why the Worst Get on Top' and 'The End of Truth' are both provocative and chilling. Don't pass this one up! Then move on to not one but two other masterpieces by Hayek: The Constitution of Liberty and the three volume set Law, Legislation, and Liberty. These are among the most richly rewarding books you will ever read."

"In like fashion, Hayek's insistence on the rule of law has implications that Szasz finds congenial. The rule of law, as Hayek conceives it, requires that legislation group people in objective categories. Absent this, they stand vulnerable to the arbitrary acts of government agents. If one accepts Szasz's view that there are no objective criteria of mental illness, it at once follows that the law can take no account of it. Hayek declined to draw this conclusion, and Szasz has no patience with his acceptance of the 'doctrinal claim' that those diagnosed as mentally ill bear no responsibility for their actions ..."

"It is astonishing how soon Leonard's action began to produce important results. Friedrich Hayek, in London, impressed by Read's initiative, raised the money the next year, 1947, to call a conference at Vevey, Switzerland, of 43 libertarian writers, mainly economists, from half a dozen nations."

"I recently wrote a paper to accompany the facsimile German edition of Prices and Production. I identified what seemed to me to be elements of Hayek's later work on coordination, miscoordination, and knowledge. I argued that the germs of his later ideas can be traced to this volume, especially his description of the upswing stage of the cycle. ... Current investors are making decisions which anticipate the decisions of others down the road, which are in fact not there. Leaving the exact mechanism aside, that is the kind of thing Hayek taught us to look for in analyzing the market process."

"Hayek was an extraordinarily learned man. His knowledge and insights spanned not only economics, for which he was awarded the Nobel Prize in 1974, but also philosophy, history and even psychology. ... Hayek transcended nationality like few others in the 20th century. Stephen Kresge, Editor of The Collected Works of F.A. Hayek, which the University of Chicago Press is publishing in 22 volumes, likens Hayek's global reputation to that of the physicists Niels Bohr and Albert Einstein."

"In 1944, Hayek wrote a seminal book, The Road to Serfdom, which argued that government central planning inevitably led to the rise of the totalitarian socialist state. Marxists maintained that fascism was a form of decaying capitalism, but Hayek’s book also included a trenchant critique of Nazism as a form of socialism. After writing The Road to Serfdom, Hayek toured the United States. The trip contributed to his decision to issue a call to free-market advocates to meet at Mont Pelerin."

"The right triangle, which Hayek introduced in his Prices and Production, gave him a leg up on Keynes, who paid no attention to production time. Consumer spending was represented by one leg of the triangle. This macroeconomic magnitude had the attention of both Keynes and Hayek The other leg tracks the goods-in-process ... The Hayekian triangle allows us to show that (1) increased saving can make for more output but only in the more-distant future and (2) monetary expansion can deceive the market and derail the process that would otherwise keep production plans on track with intertemporal consumption preference."

"Hayek's particular and profound contribution to the debate over the feasibility of socialism was the following argument: that the more complex a society, the more difficult it becomes for a central planner to possess the required knowledge to co-ordinate all the economic activity of that society. In a system of division of labour, human knowledge is also divided. Each member of society possesses a small fraction of all the world's knowledge."

"Last week's episode is only the latest reminder of the tendency of socialism to lead to dictatorship, as identified by the Nobel Prize-winning economist Friedrich Hayek in The Road to Serfdom. In 1944, when he wrote his book, Hayek noted that the crimes of the German National Socialists and Soviet Communists were, in great part, the result of growing state control over the economy. ... Hayek was fortunate enough to live to see the defeat of both the Nazi and Soviet totalitarian regimes. Unfortunately, there are still places where Hayek's most dire warnings remain relevant. Nicolas Maduro's Venezuela is one such place."

"The term is now used with a variety of meanings which have little in common beyond describing an openness to new ideas, including some which are directly opposed to those which are originally designated by it ... This movement derives, however, from two distinct sources, and the two traditions to which they gave rise, though generally mixed to various degrees, coexisted only in an uneasy partnership and must be clearly distinguished if the development of the liberal movement is to be understood."

"Fundamentally, in a system in which the knowledge of the relevant facts is dispersed among many people, prices can act to coördinate the separate actions of different people in the same way as subjective values help the individual to coördinate the parts of his plan. ... The mere fact that there is one price for any commodity ... brings about the solution which (it is just conceptually possible) might have been arrived at by one single mind possessing all the information which is in fact dispersed among all the people involved in the process."