Hayek, Friedrich August von
Friedrich August von Hayek 1899–-1992
Austrian philosopher, economist, and social scientist.
For forty years, Hayek was the leading intellectual defender of economic free markets. With his mentor, Ludwig von Mises, he was the most well-known exponent of the Austrian School of Economics, which emphasizes the inability of governments to predict the economic needs and wants of a society and the destructive nature of political attempts to manipulate the value of money. His most widely known work, The Road to Serfdom (1944), propelled him to international fame by arguing, just as the Second World War was ending, that Western democracies were in danger of following Germany down the road to tyranny by relying too much on government intervention in the economic sphere. Convinced that economic problems have their solution in a proper understanding of human nature, in mid-career Hayek moved beyond economics to the realm of philosophy. His later works emphasized the role families, private property, and habitual honesty played in developing a “spontaneous order” in free societies, producing prosperity and political freedom. Hayek's emphasis on the moral imperative and economic efficiency of liberty made him the philosophical father of modern libertarianism and placed him among a handful of twentieth-century thinkers most influential on free-market economic policies and conservative thought in general.
Hayek was born May 8, 1899, in Vienna, Austria, to a family of scientists and scholars. He earned two doctorates from the University of Vienna, studying under important figures within the Austrian School of Economics. After finishing his degrees Hayek went to work for leading Austrian economist Mises at an Austrian government office, then joined him in founding an institute to examine cycles of business activity. Hayek would refer to Mises as the greatest intellectual influence on his life and devote much of his efforts to building on Mises's critique of socialism. Hayek's early work on the causes of boom and bust in business cycles garnered him an invitation to become professor of Economic Science and Statistics at the London School of Economics. Here his criticism of government interference in the economy brought him into conflict with supporters of the powerful English proponent of economic planning, John Maynard Keynes. The dire economic consequences of the Great Depression discredited Hayek's theories in the eyes of the economic and political establishment. At the end of World War II, however, Hayek gained worldwide fame through publication of The Road to Serfdom. In this book Hayek argued that government planning, if not checked, would inevitably bring tyranny as political leaders demanded increasing discretion to deal with the inescapable failure of their plans and the equally inevitable resistance of individuals to state control over their lives. In 1950 Hayek became professor of Social and Moral Sciences at the University of Chicago. Here he turned increasingly to questions of methodology, arguing in numerous publications that methods of study developed in the natural sciences are inappropriate to the study of human nature and the social order. Here also he wrote his most systematic work of political thought, The Constitution of Liberty (1960), which established him as the leading intellectual proponent of the idea that human freedom is the highest moral and political good. In 1962 Hayek became professor of Economic Policy at the University of Frieburg. On his retirement in 1967 he became honorary professor at the University of Salzburg. The high point of Hayek's career came in 1974, when he was awarded the Nobel Prize for Economics. He shared the prize with socialist economist Gunnar Myrdal. Hayek died March 23, 1992.
Hayek's early work in economics focused on monetary theory and the trade cycle. He published several articles and a book in German before making his entrance onto the international stage. He accomplished this through a series of four lectures at the London School of Economics, published under the title Prices and Production (1931). In it, Hayek theorized that when a government artificially lowers interest rates in an attempt to increase investment, it produces an over-expansion of productive capacity, which is inevitably followed by a severe economic contraction. This book gained Hayek the enmity of the supporters of Keynes, who promoted monetary expansion as a means by which to end the Great Depression. Critical hostility and economic events meant that, during this era, Hayek's technical works in economics received scant attention. Ironically, it was Hayek's most polemical work, The Road to Serfdom, that gained him worldwide notoriety and a status as the leading theorist of free-market economics that lasts to this day. In 1948 Hayek published a collection of essays, under the title Individualism and Economic Order, elaborating on his view that socialist governments lack the ability to institute price levels that will produce the savings and investments needed to maintain economic growth. By this time Hayek was convinced that economists were bringing more harm than good to the public because they were using fundamentally flawed methods in their study of human interaction. His Counter-Revolution of Science (1952) is a collection of essays centered on the argument that the methods of the natural sciences are inappropriate to the study of human action because, unlike plants and inanimate objects, human beings exercise free will. The centrality of free will in Hayek's thought was clearly demonstrated in his most systematic work, The Constitution of Liberty. In this work Hayek sought to combine economic, political, and biological arguments to present a unified theory of human freedom. He argued that free societies spontaneously develop an economic and political order building on members' talents and the group's historical knowledge. Attempts to overturn or supercede the spontaneous order of these institutions would institute a regime of unlimited discretion and power. During the next thirty years Hayek produced a stream of books and articles elaborating his critique of centralized planning and the flawed social-science methods he believed were being used to support it. His final work, The Fatal Conceit (1991), was an appropriate summing up of his career, blaming oppression in the twentieth century largely on intellectuals' self-flattering view that they could use government to create a “just” society when justice is a meaningful concept only in judging individual, not group conduct.
Critical reception of Hayek's work has varied greatly depending on the era and the political persuasion of the reviewer. His economic views, long disparaged on the political left, gained a rebirth with the rise of free-market governments in Britain and the United States during the 1970s and 1980s, and reached new heights with the collapse of the Soviet Union. Critics on the left continue to attack his work for its hostility toward the pursuit of social justice. Even on the political right Hayek's work spurs controversy because he rejected both centralized planning and the pull of tradition. He attached to his Constitution of Liberty an appendix explaining “Why I am not a Conservative,” that continues to garner criticism among defenders of tradition and praise among those committed to free markets and material progress as absolute goods. Critics of all political persuasions agree, however, that Hayek was a powerful system builder, dedicated to the idea that freedom is both the natural basis and the proper goal of human society.
Prices and Production (lectures) 1931
Profits, Interest and Investment (essays) 1939
The Pure Theory of Capital (nonfiction) 1941
The Road to Serfdom (philosophy) 1944
Individualism and Economic Order (essays) 1948
The Counter-Revolution of Science: Studies on the Abuse of Reason (essays) 1952
The Constitution of Liberty (philosophy) 1960
Studies in Philosophy, Politics and Economics (essays) 1967
Law, Legislation and Liberty, Vol. 1, Rules and Order (philosophy) 1973
Law, Legislation and Liberty, Vol. 2, The Mirage of Social Justice (philosophy) 1978
Law, Legislation and Liberty, Vol. 3, The Political Order of a Free People (philosophy) 1979
The Fatal Conceit: The Errors of Socialism [edited by W. W. Bartley] (philosophy) 1991
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SOURCE: “Dr. Hayek on Money and Capital,” in The Economic Journal, Vol. 42, No. 1, March, 1932, pp. 42-53.
[In the following review of Hayek's Prices and Production, Sraffa criticizes Hayek for his assumption that money should not be used as a tool for increasing investment.]
To deal with the theory of money, from its doctrinal history down to the inevitable practical proposals, touching upon some of the most perplexing parts of the subject, and all this in four lectures, must have been a feat of endurance on the part of the audience as much as of the lecturer. For, however peculiar, and probably unprecedented, their conclusions may be, there is one respect in which the lectures collected in [Prices and Production]1 fully uphold the tradition which modern writers on money are rapidly establishing, that of unintelligibility. The fault must lie in the subject itself, or in the theories which are directed to elucidate it, for this notoriously is the case even with writers otherwise the most lucid. And Dr. Hayek himself in an excellent introductory lecture, in which he traces in the history of thought the sources of his own doctrine, is a model of clearness.
Taken as a whole, there is this to be said in favour of the book—that it is highly provocative. Its one definite contribution is the emphasis it puts on the study of the effects of monetary changes on the...
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SOURCE: A review of The Road to Serfdom, in The Journal of Political Economy, Vol. 54, No. 3, June, 1946, pp. 269-70.
[In the following review of Hayek's Road to Serfdom, Schumpeter praises Hayek's sincerity but disagrees with his belief that people want and are capable of exercising individual freedom.]
[The Road to Serfdom] is a political book, so Hayek—setting an excellent example—frankly tells us in his Preface. It is, moreover, a courageous book: sincerity that scorns camouflage and never minces matters is its outstanding feature from beginning to end. Finally, it is also a polite book that hardly ever attributes to opponents anything beyond intellectual error. In fact, the author is polite to a fault; for not all relevant points can be made without more plain speaking about group interests than he is willing to resort to. In this respect—perhaps also in others—he might have learned a useful lesson from Karl Marx.
The theme probandum of the fifteen chapters of the book—the “Conclusion” (xvi) does not do justice to what precedes—is easy to state. For the last quarter of a century or so, we have abandoned the road of promise, the road that, through freedom and individual endeavor, leads to cultural and economic achievement—in fact the road of Western civilization: “Not merely nineteenth- and eighteenth-century liberalism, but the basic...
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SOURCE: A review of The Counter-Revolution of Science: Studies on the Abuse of Reason, in The Journal of Philosophy, Vol. XLIX, No. 17, August 14, 1952, pp. 560-65.
[In the following review of Hayek's Counter-Revolution of Science, Nagel disagrees with Hayek's contention that the importation of the methods of natural science into the study of human interaction is wrong-headed and doomed to produce unworkable political programs.]
In this interesting book—its contents first appeared as separate articles, chiefly in Economica—Professor Hayek constructs a methodological underpinning for the critique of current social theory and economic policy he published earlier, particularly in his The Road to Serfdom. The first of its three parts seeks to establish certain fundamental differences between the methods of the natural and social sciences. It argues that “scientism”—the assumption that the methods of the former disciplines are identical with those of the latter—is an abuse of reason, and is the intellectual foundation for all variants of contemporary socialism. The second part is a study in the history of ideas. It locates the source of modern scientific hubris in the École Polytechnique; it traces the development of scientism in the writings of Saint-Simon, Comte, the Saint-Simonians, and their more recent progeny; and it includes a plea for a thorough...
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SOURCE: “Hayek on Liberty,” in Economica, Vol. 28, No. 109, February, 1961, pp. 66-81.
[In the following review of Hayek's Constitution of Liberty, Robbins praises Hayek's commitment to individual freedom but criticizes his refusal to include English nineteenth-century Utilitarians such as Jeremy Bentham among its defenders.]
[The Constitution of Liberty]1 is a very ambitious book. “It has been a long time,” says the author, “since that ideal of freedom which inspired modern Western civilization and whose partial realization made possible the achievements of that civilization was effectively restated”2: it is such a restatement which is here attempted. The range covered is extensive: social philosophy, jurisprudence, economics and politics are all summoned to make their contribution to the main theme and a broad historical perspective informs the whole. In a revealing passage Professor Hayek explains that, although he still regards himself as mainly an economist, he has “come to feel more and more that the answers to many of the pressing social questions of our time are to be found ultimately in the recognition of principles that lie outside the scope of technical economics or of any other single discipline”.3 It is with such principles that this book is chiefly concerned.
The argument falls into three parts. The first deals...
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SOURCE: “Hayek on Liberty,” in Philosophy, Vol. XXXVIII, No. 145, October, 1963, pp. 346-60.
[In the following review of Hayek's Constitution of Liberty, Rees favorably examines Hayek's distinction between fact-based, empirical liberalism and liberalism that is overly abstract and hence based on a false view of human nature.]
Professor Hayek's book [Constitution of Liberty]1 is a massive contribution to the persistent question of the limits of state action. It runs counter to prevailing notions about the role of government in economic and social matters to such an extent that a common reaction to its publication has been to simply shrug it off as eccentric or antediluvian. But the rarity of any fundamental discussion of our political ideals and the assumptions of our social policy ought of itself to ensure a wide welcome for a work that constitutes a formidable challenge to accepted standards in this realm. Unfortunately, opinions about its value are likely to continue along established lines. Opponents of ‘dirigisme’ will echo the words of Mr A. A. Shenfield (in a volume of essays on Hayek's book entitled Agenda for a Free Society2), who regards it as ‘one of the great books of our time, profound in analysis, ample in scholarship, noble in spirit … masterly in all its parts’. Advocates of a controlled economy who see nothing but good in the rise...
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SOURCE: “Hayek's Contribution to Economics,” in Essays on Hayek, New York University Press, 1976, pp. 13-59.
[In the following essay, Machlup provides an extensive review of Hayek's contributions to economic theory and the defense of free markets.]
This review of the scholarly publications of Friedrich A. von Hayek is arranged under the following headings: Biographical Sketch; Bibliographical Overview; Money, Credit, Capital, and Cycles; Socialism, Planning, and Competitive Capitalism; Legal and Political Philosophy; History of Ideas; An Essay in Psychology; Philosophy of Science; and Final Assessment.
Friedrich August von Hayek was born in Vienna on May 8, 1899 into a family of scientists and academic teachers. His grandfather was a biologist, specializing in zoology; his father, a doctor of medicine, turned to research in botany and lectured in this field as professor extraordinarius at the University of Vienna; one of F. A. Hayek's brothers became professor of anatomy at the University of Vienna; and his other brother, after a start in industrial chemistry, is now professor of chemistry at the University of Innsbruck. In view of this strong family allegiance to the natural sciences, F. A. Hayek's interest in economics, law, and philosophy seems to be an aberration. Such a hypothesis, however, would be mistaken in as much as it fails to...
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SOURCE: “The New Thought of F. A. Hayek: His Political and Legal Theory,” in Modern Age, Vol. 20, No. 1, Winter, 1976, pp. 54-61.
[In the following essay, Shenfield reviews the connections between Hayek's legal and political thought, emphasizing his commitment to the rule of law as the primary defense of human liberty against political encroachments.]
After Professor Hayek had published his Constitution of Liberty, he could perhaps have sat back to enjoy the fame and ease that what appeared to be the culminating work of a great career of scholarship had made his due. However, that was not in the character of the man. His mind has never ceased to probe the fundamentals of political and legal theory. Hence, despite its monumental character and stature, The Constitution of Liberty has proved to be not only not his last word on the immensely important and difficult problems of its subject, but a platform for deeper exploration.
Of course, as all know who have followed closely the development of Hayek's thought, it was already marked by a high degree of maturity many years ago. Thus his ceaseless search for new and deeper truth, or for ever more precise formulations of it, displays the rare integrity of his scholarship. The quest for truth is obviously an endless adventure, but most of us are content to scale the mere foothills of knowledge and understanding and then...
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SOURCE: “Understanding How Society Works,” in Hayek, His Contribution to the Political and Economic Thought of Our Time, Universe Books, 1985, pp. 15-40.
[In the following excerpt, Butler provides an overview of Hayek's theories regarding the ways by which human beings come to form societies.]
If we are to understand how society works, we must attempt to define the general nature and range of our ignorance concerning it.1
Throughout his writings, Hayek points to a very common but mistaken belief about the way in which social institutions work. Put simply, this is the belief that since man has himself created the institutions of society and civilisation (such as the law, moral codes and social institutions), he must also be able to alter them at will so as to satisfy his desires or wishes.2
At first, this view seems very reasonable and rather encouraging. It suggests that if we want to build a better society, we are quite able to scrap our existing laws, values and institutions and replace them with ones which will bring about a more desirable state of affairs. After all, we created our institutions, so we can change them. But Hayek maintains that this view rests on a deep misunderstanding of the true origins of social life and institutions, and that the reconstruction of society which it supposes to be possible...
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SOURCE: “The Austrian Connection: Hayek's Liberalism and the Thought of Carl Menger1,” in Austrian Economics, edited by Wolfgang Grassl and Barry Smith, New York University Press, 1986, pp. 210-24.
[In the following essay, Shearmur traces the roots of Hayek's political and economic views in the thought of Austrian social theorist Carl Menger.]
Despite his Austrian origins, Hayek is often regarded as the latter-day spokesman of a largely British liberal tradition. This tradition—ranging through Mandeville, Hume, the Scottish Enlightenment, Burke and bits of J. S. Mill—is, however, in some ways Hayek's own creation. For it was he who grouped these people together and attributed to them a common position, which he then developed in his own writings (Hayek 1967, 1978). This he contrasted with another more rationalistic strand in liberalism, which he denounced as ‘false individualism’, for example in his Individualism: True and False of 1945.2
Hayek's readers in the English-speaking world have had some difficulty in placing his views. There have been some attempts to assimilate them to conservatism (e.g. Letwin 1976). But Hayek is an enthusiast for change,3 and is single-minded in his attachment to the market. He has, for example, written of his
faith in the...
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SOURCE: “A Road to Hell Paved With Good Intentions,” in Forbes, Vol. 153, No. 2, January 17, 1994, pp. 60-4.
[In the following essay, Sowell discusses the role played by Hayek and his Road to Serfdom in gaining support for free markets in the aftermath of World War II and the ensuing Cold War.]
The 20th century looked for many decades as if it were going to be the century of collectivism, and for a while totalitarianism seemed like “the wave of the future,” as it was called back in the 1930s. Fascism in Italy, communism in the Soviet Union, and Nazism in Germany looked like only the beginning, momentous as those beginnings were. Fascist and semi-fascist regimes sprang up from Spain to Eastern Europe, even before World War II began, and Japan's evolution in Asia carried the same hallmarks of fanatically nationalistic despotism, tinged with racism.
Even the military defeat of the Axis powers in World War II seemed only to foreshadow the spread of new forms of collectivism—communism in Eastern Europe, China, Indochina, and Cuba, and socialism in much of Western Europe and Africa, with ever more leftward trends in the United States under the name of “liberalism.” Anyone who would have predicted the reversal of this trend, with privatization being introduced by socialist and labor governments from France to New Zealand in the 1980s, much less the collapse of communism in...
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SOURCE: “Hayek and the Left,” in Political Quarterly, Vol. 67, No. 1, January-March, 1996, pp. 46-53.
[In the following essay, Gamble discusses the reception of Hayek's writings among critics on the political left.]
Hayek is one of the most important thinkers of the twentieth century, but there has always been a tendency for intellectuals on the left to neglect or belittle his achievement. He has been frequently dismissed as a right-wing ideologue, whose energies were spent in a crusade against socialism and an attempt to revive an obsolete creed, economic liberalism. His arguments have often been regarded as exaggerated and polemical.
This reputation was established almost as soon as Hayek arrived in England to take up a chair in economics at the LSE in 1931. Here he quickly became involved in a controversy over the causes of the Depression and what to do about it. One of Lionel Robbins' motives in recruiting him was to help counter the influence of Keynes and Cambridge in what at that time was a very small economics profession. The political implications of Hayek's position as set out in his 1931 LSE Lectures ‘Prices and Production’ were quickly spotted by John Strachey, who first brought Hayek to wider notice by devoting a great deal of space to him in The Coming Struggle for Power, published in 1932, and the Nature of...
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SOURCE: “The Twentieth Century: The Limits of Liberal Political Philosophy,” in An Uncertain Legacy: Essays on the Pursuit of Liberty, edited by Edward B. McLean, The Intercollegiate Studies Institute, 1997, pp. 193-224.
[In the following essay, Gray criticizes Hayek for constructing a philosophical system that is too dependent on the logic of economic exchange in explaining all kinds of human interaction.]
In Friederich August von Hayek's work we find one of the most ambitious attempts we possess thus far to develop a comprehensive liberal political philosophy. Unlike the fashionable liberalisms which take their cues from Rawls, Hayek's is noteworthy in making plain its dependency on a particular philosophy of history and on the results of economic theory. In a way that is only comparable with the liberalism of J. S. Mill, Hayek's liberalism expresses an entire, if not always an entirely coherent world view—a fact which goes far in explaining both the strengths and the weaknesses of Hayek's thought. The system-building ambition and the cross-disciplinary synoptic perspective which animate Hayek's work make of it an extraordinary intellectual adventure, in comparison with which recent liberal theorizing is most tame and conventional. Hayek's work is, or should be, exemplary in the features it has in common with the thought of the Scottish Enlightenment—especially the connections it forges between...
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SOURCE: “Social Justice: The Hayekian Challenge,” in Critical Review, Vol. 11, No. 1, Winter, 1997, pp. 65-80.
[In the following essay, Lukes examines Hayek's challenge to the idea that societies can and should be reshaped and made more just.]
Over two decades ago Friedrich Hayek declared himself convinced that “social justice” is a mirage: an illusory goal whose pursuit, moreover, can only lead to disaster. The expression, he thought, described “the aspirations which were at the heart of socialism”; indeed, “the prevailing belief in ‘social justice’ is at present probably the gravest threat to most other values of a free civilization” (Hayek 1976, 65, 66-67). “So long as the belief in ‘social justice’ governs political action,” he wrote, “this process must progressively approach nearer and nearer to a totalitarian system” (ibid., 68). The phrase, he declared, embodies a “quasi-religious belief”—“almost the new religion of our time”—but has “no content whatever,” and serves “merely to insinuate that we ought to consent to a demand of some particular group” (ibid., xi-xii). The advocates of social justice, Hayek claimed, promise to “co-ordinate the efforts of the members of society with the aim of achieving a particular pattern of distribution regarded as just, but trying to do this in a society of free individuals must make that society unworkable”...
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SOURCE: “The Liberalism/Conservatism of Edmund Burke and F. A. Hayek: A Critical Comparison,” in Humanitas, Vol. X, No. 1, 1997, pp. 70-88.
[In the following essay, Raeder compares Hayek's thought with that of Edmund Burke to argue that both share a commitment to a conservative, moderate liberalism.]
Edmund Burke, the passionate defender of the “ancient principles”1 of his forebears, might be surprised to discover that he originated a new school of political thought. By all accounts, however, he is the “modern founder of political conservatism,”2 and generations of ‘conservative’ thinkers have found his life and work a rich source of philosophical and practical wisdom. Burke, of course, was a statesman and not a political philosopher, and he never produced anything that may be regarded as a systematic political treatise. Nevertheless, he embraced a consistent political creed that governed his actions throughout his life. The thesis of this essay is that Burke's implicit political creed is, in all essential respects, the doctrine articulated by the twentieth-century social philosopher F. A. Hayek. Hayek's aim, he said, was to “restate”3 or systematize those basic principles whose observance generated and sustain Western constitutional government and the free society. The “classical liberal” principles articulated by Hayek were also those that...
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SOURCE: “The Road Not Taken: Hayek's Slippery Slope to Serfdom,” in The National Interest, No. 51, Spring, 1998, pp. 56-66.
[In the following essay, McInnes argues that Hayek's Road to Serfdom had less impact on political thought and practice than his supporters have claimed.]
This is another story about a book, a curious book that went from bestseller to oblivion and back several times over. The millions of copies it sold in a score of languages “completely discredited” its author, exactly as he foresaw it would. Although he was regarded as one of the leading theoretical economists of the century, the economists of the University of Chicago (whose university press had published the offending book) refused to have him on their faculty. No matter, by living to be over ninety he buried not only them but also the very notion of a planned economy, which had been the target of his essay. The book in question is Friedrich Hayek's The Road to Serfdom. Looking back to its publication fifty-four years ago one can easily see the reasons both for its enduring fame and for the discredit it brought on its author.
Published in the United States and Britain while the war against Nazi Germany was still raging, the book said that the democracies risked going the same way as Germany because their politicians and their intellectuals had fallen for the idea that an economy could be...
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Leube, Kurt R. and Albert A. Zlabinger eds. Political Economy of Freedom: Essays in Honor of Friedrich A. Von Hayek, pp. 253-319. Munich: Philosophia Verlag, 1985.
Comprehensive bibliography of Hayek's books, essays, pamphlets and other writings.
Butler, Eamonn. Hayek: His Contribution to the Political and Economic Thought of Our Time, pp. 1-14. New York: Universe Books, 1985.
Sketches Hayek's life and career highlights.
Buckley, William F. Jr. “The Road to Serfdom: The Intellectuals and Socialism.” In Essays on Hayek, edited by Fritz Machlup, pp. 95-106. New York: New York University Press, 1976.
Criticizes intellectuals on the political left for failing to understand and heed Hayek's warnings regarding the dangers of economic planning.
Francis, Mark. “The Austrian Mind in Exile: Kelsen, Schumpeter and Hayek.” In The Viennese Enlightenment, edited by Mark Francis, pp. 63-87. New York: St. Martin's Press, 1985.
Places Hayek's thought in Austrian historical and philosophical context.
Roche, George C. III. “The Relevance of Friedrich A. Hayek.” In Essays on Hayek, edited by Fritz Machlup, pp. 1-11. New York: New York University Press,...
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