Friedrich August von Hayek Introduction - Essay


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.

Biographical Information

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.

Major Works

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

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.