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.
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. In 1974, he was awarded a Nobel Prize. He received Britain’s Companion of Honor in 1984 and the U.S. Presidential Medal of Freedom in 1991.
Born in Vienna, Hayek read Ludwig von Mises’ book Socialism (1922) and became convinced that socialism could never fulfill its promises. He learned more as he attended Mises’ fabled economics seminar in Vienna.
During the 1930s, Hayek taught at the London School of Economics and, reflecting Mises’ influence, wrote a number of books making the case that the boom/bust cycle was caused by government manipulation of money and credit. But his rival, the English economist John Maynard Keynes, prevailed by urging government officials to tax and spend, which is what they wanted to do anyway.
Socialist economic planning captivated intellectuals and Hayek began analyzing it. Mises and other critics of socialism were little known outside of German language publications, so Hayek helped introduce their ideas to the English-speaking world. He gathered some of the most important essays in Collectivist Economic Planning (1935). Expanding on Mises’ insights, Hayek explained that the knowledge needed for a successful society is dispersed in the minds of millions, and socialist economic planners could never access enough of it to make good decisions. This is an important reason why their policies go wrong.
Then, Hayek focused on the political consequences of economic planning. He made clear that it meant the end of economic liberty. Government officials, not private individuals in an open market, made decisions about what should be produced, who should get how much and where people must work. Hayek observed that political liberty was impossible without economic liberty. He noted that while most people might agree that government should do a few things, like run national defense, when government tries to do more, it inevitably encounters more disagreement. More coercion is required to enforce its policies and government increasingly attracts thugs who enjoy brutalizing people. As if all this weren’t enough, Hayek traced the history of Nazism, socialism and communism back to common collectivist roots, suggesting that even the welfare state, a milder form of collectivism, entailed serious risks to liberty. These themes, developed in The Road to Serfdom (1944) made Hayek famous. The British socialist Prime Minister Clement Atlee ridiculed Hayek, but his government went on to enact peacetime forced labor, vindicating Hayek’s warning that a government-run economy sacrifices liberty.
Hayek was denounced, but The Road to Serfdom became a classic. It was translated into Chinese, Czech, Danish, Dutch, French, German, Hebrew, Italian, Japanese, Norwegian, Polish, Portugese, Russian, Spanish and Swedish. During the Cold War, copies circulated throughout the Soviet and East European underground. New York Public Library included it among the 100 most influential books of the 20th century, as did The Times Literary Supplement. Foreign Affairs rated it among the most important books of the last 75 years.
After the success of The Road to Serfdom, Hayek met many friends of liberty in America and Europe. In 1947, he launched the Mont Pelerin Society whose conferences became major gatherings. Hayek gained the respect, if not agreement, of intellectuals around the world.
Hayek explored more issues of a free society. In Capitalism and the Historians (1954), he helped set the historical record straight that free markets, far from making the poor poorer as socialist historians had been alleged, raised living standards for millions who otherwise would have starved. The Constitution of Liberty (1960) articulated principles for a rule of law and included a massive bibliography on the intellectual history of liberty. Hayek further developed his thinking about a rule of law in his trilogy Law, Legislation and Liberty which consists of Rules and Order (1973), The Mirage of Social Justice (1976) and The Political Order of a Free People (1979).
Hayek wrote many essays which abound with wonderful insights. His major essay collections are Individualism and Economic Order (1948), Studies in Philosophy, Politics and Economics (1967) and New Studies in Philosophy, Politics and the History of Ideas (1978). There’s some overlap with The Essence of Hayek (1984). Economic Freedom (1991) reprinted pamphlets he had written for the Institute of Economic Affairs, the best known of which attributed chronic monetary problems to the government monopoly of money.
During his long and distinguished career, Hayek taught at the London School of Economics, the University of Chicago, the University of Freiberg and the University of Salzburg.
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