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Friedrich August von Hayek
Austrian economics
Birth 8 May 1899(1899-05-08)
Vienna, Austria-Hungary
Death 23 March 1992 (aged 92)
Freiburg, Germany
Nationality Austrian-British
Institution University of Freiburg (1962–1968)
University of Chicago (1950–1962)
London School of Economics (1931–1950)
Field Economics, Political science, Law, Philosophy, Psychology
Alma mater University of Vienna (Dr. jur. 1921, Dr. rer. pol 1923)
Influences Wieser · Menger · Mach · Böhm-Bawerk · Mises · Mandeville · Hume · Ferguson · Wittgenstein · Locke · Burke · Mill · Tocqueville · Acton · Popper · Peters
Opposed John Maynard Keynes
Influenced Popper · Thatcher · Hicks · Nozick · Kirzner · Reagan · Friedman · Novak · Sowell · Kemp · Harrod · Leoni · Sartori · Stigler · Yayla · Gray · Lerner · Alchian · Rothbard · Paul · Hurwicz · Nozick · Will · Schiff
Contributions Economic calculation problem, Catallaxy, Extended order, Dispersed knowledge, Price signal, Spontaneous order, Hebbian theory
Awards Nobel Memorial Prize in Economics (1974)
Presidential Medal of Freedom (1991)
Signature Friedrich von Hayek signature.gif

Friedrich August von Hayek CH (8 May 1899 – 23 March 1992), was an Austrian-born economist and philosopher known for his defence of classical liberalism and free-market capitalism against socialist and collectivist thought. He is considered by some 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] Hayek also wrote on the topics of 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 Nobel Memorial Prize in Economics for his "pioneering work in the theory of money and economic fluctuations and [his] 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. He spent most of his academic life at the LSE, the University of Chicago, and the University of Freiburg.


Early life

Hayek was born in Vienna (then capital of Austria-Hungary), 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 were 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. As a result of this family relationship, 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 specialist 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 shifted away from socialism and toward the classical liberalism of Carl Menger after reading Ludwig von Mises' book Socialism. It was sometime after reading 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. It was during this time that he also encountered and befriended noted political philosopher Eric Voegelin, with whom he retained a long-standing relationship.

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 ground-breaking work of John Hicks, Abba Lerner, and many other in the development of modern microeconomics.[9]

Economists who studied with Hayek at the LSE in the 1930s and 1940s 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 is "a war cry against central planning," it appears only a lukewarm supporter of a free market system and laissez-faire capitalism,[18] 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".[19] 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. Through analysis of this and many other of Hayek's works, Block asserts that: "in making the case against socialism, Hayek was led into making all sort of compromises with what otherwise appeared to be his own philosophical perspective—so much so, that if a system was erected on the basis of them, it would not differ too sharply from what this author explicitly opposed."[18]


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. Hayek's 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, where he began work on his next book, Law, Legislation and Liberty. Hayek regarded his years at Freiburg as "very fruitful".[24] Following his retirement, Hayek spent a year as a visiting professor of philosophy at the University of California, Los Angeles, where he continued work on Law, Legislation and Liberty, teaching a graduate seminar by the same name and another on the philosophy of social science. Primary drafts of the book were completed by 1970, but Hayek chose to re-work his drafts and finally brought the book to publication 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 Nobel Memorial Prize in Economics, 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 the 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 Augusto Pinochet. Asked about liberal, non-democratic rule by a Chilean interviewer, Hayek is translated from German to Spanish to English as having said: "Personally I prefer a liberal dictator to democratic government lacking liberalism. My personal impression — and this is valid for South America – is that in Chile, for example, we will witness a transition from a dictatorial government to a liberal government."[34][35] Hayek, of course, had lived his early life under the mostly liberal, but mostly non-democratic rule of the Austro-Hungarian Emperor, and Hayek had seen democracy descend into illiberal tyranny in a host of Central and Eastern European countries. By 1989, Chile had largely fulfilled Hayek's prediction by transitioning to a largely free state and replacing Pinochet by popular vote.

Hayek's words and actions concerning Chile under the Pinochet regime have drawn criticism from historian Greg Grandin, who claims that "Hayek glimpsed in Pinochet an avatar of true freedom, who would rule as a dictator only for a 'transitional period'", while also noting that "in a letter to the London Times he defended the junta, reporting that he had 'not been able to find a single person in much-maligned Chile who did not agree that personal freedom was much greater under Pinochet than it had been under Allende.' "of course," writes Grandin, "the thousands executed and tens of thousands tortured by Pinochet's regime weren't talking."[36] Hayek recommended economic reforms similar to Chile's under Pinochet for the Keynesian economy in the United Kingdom to Prime Minister Margaret Thatcher.[37]

In 1980, Hayek -- who was not Catholic -- was one of twelve Nobel laureates to meet with Pope John Paul II, "to dialogue, discuss views in their fields, communicate regarding the relationship between Catholicism and science, and 'bring to the Pontiff's attention the problems which the Nobel Prize Winners, in their respective fields of study, consider to be the most urgent for contemporary man.'"[38]

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 Institute of Economic Affairs. When, later that evening, Hayek was dropped off at the Reform Club, he commented: "I've just had the happiest day of my life".[39]

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.


The economic calculation problem

Hayek was one of the leading academic critics of collectivism in the 20th century. Hayek argued 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 argued that socialism required central economic planning and that such planning in turn leads towards totalitarianism. Hayek posited that a central planning authority would have to be endowed with powers that would impact and ultimately control social life, because the knowledge required for central planning an economy is inherently decentralized, and would need to be brought under control.

Building on the earlier work of Ludwig von 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. He examined 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."[40] 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 his work in areas of macroeconomics and that of most all other economists. Hayek's work on the macroeconomic subjects of central planning, trade cycle theory, the division of knowledge, and entrepreneurial adaptation especially, differ greatly from the opinions of 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.[41]

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[42], 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'[43] and argued that 'social justice is an empty phrase with no determinable content'[44]; 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.'[45] 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.[46]

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.'[47]

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, behavioural science, and evolutionary psychology.

Influence and recognition

Hayek's influence on the development of economics is widely 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 Nobel Laureates in economics – such as Vernon Smith and Herbert Simon – recognize Hayek as the greatest economist of the modern period. Another Nobel winner, Paul Samuelson -- ignoring Hayek's actual influence on the development of the history of economic thought -- believes that Hayek was worthy of his award but nevertheless claims 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".[48] Ironically, Samuelson spent the last 50 years of his life obsessed with the problems of capital theory identified by Hayek and Bohm-Bawerk, and Samuelson flatly judged Hayek to have been right and his own teacher Joseph Schumpeter to have been wrong on the central economic question of the 20th century -- the feasibility of socialist economic planning in a production goods dominated economy.[49]

Hayek is widely recognized for having introduced the time dimension to the equilibrium construction, and for his key role in helping inspire 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]

Hayek and conservatism

Hayek received 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.[54]

Hayek wrote an essay titled "Why I Am Not a Conservative"[55] (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".[56]

A common term in much of the world for what Hayek espoused is "neoliberalism". British scholar Samuel Brittan concluded in 2010 that, "Hayek's book [The Constitution of Liberty] is still probably the most comprehensive statement of the underlying ideas of the moderate free market philosophy espoused by neoliberals."[57] Brittan adds that although Plant (2009) comes out in the end against Hayek's doctrines, Plant gives The Constitution of Liberty a "more thorough and fair-minded analysis than it has received even from its professed adherents."[57]

Personal life

In August 1926, Hayek married Helen Berta Maria von Fritsch a secretary at the civil service office where Hayek worked. They had two children together, Christine Maira Felicitas in 1929 and Laurence Joseph Heinrich born 1934.[58] They divorced in July 1950 and he married Helene Bitterlich[59] just a few weeks later, moving to Arkansas in order to take advantage of permissive divorce laws.[60]

Legacy and honors

Even after his death, Hayek's intellectual presence is 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 have resulted, many posthumous.

Hayek's work on price theory has been central to the thinking of Jimmy Wales about how to manage the Wikipedia project.[62]

Selected bibliography

1) Rules and Order, 1973
2) The Mirage of Social Justice, 1976
3) The Political Order of a Free People, 1979

See also


  1. ^ Edward Feser (edt), The Cambridge Companion to Hayek, Cambridge University Press (2007), ISBN 0521849772, p.13
  2. ^ Skarbek, David (March 2009), "F. A. Hayek's Influence on Nobel Prize Winners", Review of Austrian Economics 22 (1), 
  3. ^ Bank of Sweden (1974). "The Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel 1974". 
  4. ^ George H. W. Bush (1991-11-18). "Remarks on Presenting the Presidential Medal of Freedom Awards". 
  5. ^ UCLA Oral History 1978 Interviews with Friedrich Hayek, pp. 32–38
  6. ^
  7. ^ "The Viennese Connection: Alfred Schutz and the Austrian School" by Peter Kurrild-Klitgaard.
  8. ^ UCLA Oral History 1978 Interviews with Friedrich Hayek
  9. ^ [1]
  10. ^ J. K. Galbraith, "Nicholas Kaldor Remembered," in Nicholas Kaldor and Mainstream Economics: Confrontation or Convergence?, New York: St. Martin's Press.
  11. ^ Sir Arthur Lewis Autobiography
  12. ^ Ebenstein, Alan (2001), Friedrich Hayek: a biography (1st ed.), Palgrave, New York: University Of Chicago Press, pp. 62, 248, 284, ISBN 978-0312233440 
  13. ^ Interview with David Rockefeller
  14. ^ Samuel Brittan, 'Hayek, Friedrich August (1899–1992)', Oxford Dictionary of National Biography, Oxford University Press, 2004, accessed 28 April 2009.
  15. ^ Ebenstein, p. 107.
  16. ^ Ebenstein, p. 116.
  17. ^ Ebenstein, p. 128.
  18. ^ a b Block, Walter (1996). "Hayek's Road to Serfdom". Journal of Libertarian Studies (Center for Libertarian Studies) 12 (2): 339–365. Retrieved 2010-02-17. 
  19. ^ Hayek, The Constitution of Liberty (University Chicago Press, 1960), pp. 502–3
  20. ^ F. A. Hayek, Hayek On Hayek: An Autobiographical Dialogue (Liberty Fund, 2008) p. 128.
  21. ^ Ebenstein, p. 195.
  22. ^ F. A. Hayek, The Constitution of Liberty (London: Routledge & Kegan Paul, 1960), p. 11.
  23. ^ Ebenstein, p. 203.
  24. ^ Ebenstein, p. 218.
  25. ^ Ebenstein, p. 254.
  26. ^ a b Ebenstein, p. 263.
  27. ^ Ebenstein, p. 261.
  28. ^ Richard Cockett, Thinking the Unthinkable. Think-Tanks and the Economic Counter-Revolution, 1931–1983 (Fontana, 1995), pp. 174–6.
  29. ^ John Ranelagh, Thatcher's People: An Insider's Account of the Politics, the Power, and the Personalities (Fontana, 1992), p. ix.
  30. ^ "Letters to the Editor: Liberal pact with Labour", The Times (31 March 1977), p. 15.
  31. ^ "Letters to the Editor: Liberal pact with Labour", The Times (2 April 1977), p. 15.
  32. ^ "Letters to the Editor: German socialist aims", The Times (13 April 1977), p. 13.
  33. ^ "Letters to the Editor: The dangers to personal liberty", The Times (11 July 1978), p. 15.
  34. ^ Friedrich von Hayek, Leader and Master of Liberalism Renée Sallas, "El Mercurio" (p. D8–D9), 12 April 1981, Santiago de Chile
  35. ^ 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.
  36. ^ Grandin, Greg. Empire's Workshop: Latin America, The United States, and the Rise of the New Imperialism, pp.172,173, Metropolitan,2006.
  37. ^ Naomi Klein, The Shock Doctrine: The Rise of Disaster Capitalism, pp. 164–169, Macmillan, 2008, ISBN 0312427999 .
  38. ^ Ebenstein, p. 301.
  39. ^ Ebenstein, p. 305.
  40. ^ The Pure Theory of Capital (pdf), Chicago: University of Chicago Press, 1941/2007 (Vol. 12 of the Collected Works): p. 90.
  41. ^ Hayek, Friedrich (1989). The Collected Works of F.A. Hayek. University of Chicago Press. p. 202. ISBN 978-0-226-32097-7. 
  42. ^ The Use of Knowledge in Society
  43. ^ [The Mirage of Social Justice, chap. 10]
  44. ^ [ibid. chap. 12]
  45. ^ [The Constitution of Liberty, chap. 6]
  46. ^ [ibid.]
  47. ^ [The Constitution of Liberty, chap. 19]
  48. ^ [2]
  49. ^ The collected scientific papers of Paul A. Samuelson, Volume 5, p. 315.
  50. ^ 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.
  51. ^ See Weimer and Palermo, 1982
  52. ^ See Birner, 2001, and for the mutual influence they had on each other's ideas on evolution, Birner 2009
  53. ^ e.g., Wolin 2004
  54. ^ Kenneth R. Hoover, Economics as Ideology: Keynes, Laski, Hayek, and the Creation of Contemporary Politics (2003), p. 213
  55. ^ Why I Am Not a Conservative
  56. ^ E. H. H. Green, Ideologies of Conservatism. Conservative Political Ideas in the Twentieth Century (Oxford: Oxford University Press, 2004), p. 259.
  57. ^ a b Samuel Brittan, "The many faces of liberalism," FT.COM Jan. 22, 2010
  58. ^ Ebenstein, p. 44.
  59. ^ Ebenstein, p. 169.
  60. ^ Ebenstein, p. 155.
  61. ^ Nobel Lectures, Economics 1969-1980, Singapore: World Scientific Publishing Co., 1992, 
  62. ^ Katherine Mangu-Ward: Wikipedia and Beyond. Jimmy Wales' sprawling vision, June 2007
  63. ^ Liberty - The Fatal Deceit


  • 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]. F. A. von Hayek and The Theory of Spontaneous Order. Professional Publishing 2004, Prague [4].
  • Plant, Raymond. The Neo-liberal State (2009) Oxford U.P 312 pages
  • Rosenof, Theodore. "Freedom, Planning, and Totalitarianism: The Reception of F. A. Hayek's Road to Serfdom," Canadian Review of American Studies (1974)
  • 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. The collected works of F. A. Hayek, ed. W. W. Bartley and others (1988–)
  • Hayek, Friedrich. Studies on the Abuse and Decline of Reason: Text and Documents edited by Bruce Caldwell (University of Chicago Press; 2010) 331 pages; essays in opposition to positivism.

External links


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Friedrich August von Hayek (8 May 189923 March 1992) was a Nobel laureate in economics, social scientist and political theorist.



  • Socialism has never and nowhere been at first a working-class movement. It is by no means an obvious remedy for the obvious evil which the interests of that class will necessarily demand. It is a construction of theorists, deriving from certain tendencies of abstract thought with which for a long time only the intellectuals were familiar; and it required long efforts by the intellectuals before the working classes could be persuaded to adopt it as their program.
    • The Intellectuals and Socialism (1949)
  • [Apartheid in South Africa] appears to be a clear and even extreme instance of that discrimination between different individuals which seems to me to be incompatible with the reign of liberty. The essence of what I said [in The Constitution of Liberty] was really the fact that the laws under which government can use coercion are equal for all responsible adult members of that society. Any kind of discrimination — be it on grounds of religion, political opinion, race, or whatever it is — seems to be incompatible with the idea of freedom under the law. Experience has shown that separate never is equal and cannot be equal.
    • "Conversation with Systematic Liberalism," Forum (September, 1961)
  • We must make the building of a free society once more an intellectual adventure, a deed of courage. What we lack is a liberal Utopia, a programme which seems neither a mere defence of things as they are nor a diluted kind of socialism, but a truly liberal radicalism which does not spare the susceptibilities of the mighty (including the trade unions), which is not too severely practical and which does not confine itself to what appears today as politically possible…Those who have concerned themselves exclusively with what seemed practicable in the existing state of opinion have constantly found that even this has rapidly become politically impossible as the result of changes in a public opinion which they have done nothing to guide. Unless we can make the philosophic foundations of a free society once more a living intellectual issue, and its implementation a task which challenges the ingenuity and imagination of our liveliest minds, the prospects of freedom are indeed dark. But if we can regain that belief in power of ideas which was the mark of liberalism at its best, the battle is not lost.
    • Studies in Philosophy, Politics and Economics (1967)
  • If the human intellect is allowed to impose a preconceived pattern on society, if our powers of reasoning are allowed to lay claim to a monopoly of creative effort… then we must not be surprised if society, as such, ceases to function as a creative force.
    • Studies in Philosophy, Politics and Economics (1967)
  • I am certain that nothing has done so much to destroy the juridical safeguards of individual freedom as the striving after this mirage of social justice.
    • Economic Freedom and Representative Government (1973)
  • I have arrived at the conviction that the neglect by economists to discuss seriously what is really the crucial problem of our time is due to a certain timidity about soiling their hands by going from purely scientific questions into value questions. This is a belief deliberately maintained by the other side because if they admitted that the issue is not a scientific question, they would have to admit that their science is antiquated and that, in academic circles, it occupies the position of astrology and not one that has any justification for serious consideration in scientific discussion. It seems to me that socialists today can preserve their position in academic economics merely by the pretense that the differences are entirely moral questions about which science cannot decide.
    • Conversation at the American Enterprise Institute for Public Policy Research, Washington, D.C. (9 February 1978); published in A Conversation with Friedrich A. Von Hayek: Science and Socialism (1979)
  • Nobody who has lived through the rise of the violent anti-Semitism which led to Hitler can refuse Mrs. Thatcher admiration for her courageous and outspoken warning. When I grew up in Vienna the established Jewish families were a generally respected group and all decent people would frown upon the occasional anti-Jewish outbursts of a few popular politicians. It was the sudden influx of large numbers of Galician and Polish Jews [during World War I]...which in a short period changed the attitude. They were too visibly different to be readily absorbed.
    • Letter to The Times after Thatcher claimed that British people were afraid of being "swamped" by people of a different culture. (11 February, 1978).
  • To discover the meaning of what is called 'social justice' has been one of my chief preoccupations for more than 10 years. I have failed in this endeavour — or rather, have reached the conclusion that, with reference to society of free men, the phrase has no meaning whatever.
    • New Studies in Philosophy Politics, Economics and the History of Ideas (1978)
  • Is it really likely that a National Planning Officer would have a better judgement of 'the number of cars, the number of generators, and the quantities of frozen foods we are likely to require in, say, five years,' than Ford or General Motors etc., and, even more important, would it even be desirable that various companies in an industry all act on the same guess?
    • New Studies in Philosophy Politics, Economics and the History of Ideas (1978)
  • It may indeed prove to be far the most difficult and not the least important task for human reason rationally to comprehend its own limitations. It is essential for the growth of reason that as individuals we should bow to forces and obey principles which we cannot hope fully to understand, yet on which the advance and even the preservation of civilization depend. Historically this has been achieved by the influence of the various religious creeds and by traditions and superstitions which made men submit to those forces by an appeal to his emotions rather than to his reason. The most dangerous stage in the growth of civilization may well be that in which man has come to regard all these beliefs as superstitions and refuses to accept or to submit to anything which he does not rationally understand. The rationalist whose reason is not sufficient to teach him those limitations of the powers of conscious reason, and who despises all the institutions and customs which have not been consciously designed, would thus become the destroyer of the civilization built upon them. This may well prove a hurdle which man will repeatedly reach, only to be thrown back into barbarism... Common acceptance of formal rules is indeed the only alternative to direction by a single will man has yet discovered.
    • "'Conscious Direction and the Growth of Reason" in The Counter-Revolution of Science: Studies on the Abuse of Reason (1980)
  • While the method of the natural sciences is... analytic, the method of the social sciences is better described as compositive or synthetic. It is the so-called wholes, the groups of elements which are structurally connected, which we learn to single out from the totality of observed phenomena... Insofar as we analyze individual thought in the social sciences the purpose is not to explain that thought, but merely to distinguish the possible types of elements with which we shall have to reckon in the construction of different patterns of social relationships. It is a mistake... to believe that their aim is to explain conscious action ... The problems which they try to answer arise only insofar as the conscious action of many men produce undesigned results... If social phenomena showed no order except insofar as they were consciously designed, there would indeed be no room for theoretical sciences of society and there would be, as is often argued, only problems of psychology. It is only insofar as some sort of order arises as a result of individual action but without being designed by any individual that a problem is raised which demands a theoretical explanation... people dominated by the scientistic prejudice are often inclined to deny the existence of any such order... it can be shown briefly and without any technical apparatus how the independent actions of individuals will produce an order which is no part of their intentions... The way in which footpaths are formed in a wild broken country is such an instance. At first everyone will seek for himself what seems to him the best path. But the fact that such a path has been used once is likely to make it easier to traverse and therefore more likely to be used again; and thus gradually more and more clearly defined tracks arise and come to be used to the exclusion of other possible ways. Human movements through the region come to conform to a definite pattern which, although the result of deliberate decision of many people, has yet not be consciously designed by anyone.
    • "The Individualist and Compositive Method." in The Counter-Revolution of Science: Studies on the Abuse of Reason (1980)
  • It is possible for a dictator to govern in a liberal way. And it is also possible for a democracy to govern with a total lack of liberalism. Personally I prefer a liberal dictator to democratic government lacking liberalism.
    • Interview in El Mercurio (1981)
  • To understand our civilisation, one must appreciate that the extended order resulted not from human design or intention but spontaneously: it arose from unintentionally conforming to certain traditional and largely moral practices, many of which men tend to dislike, whose significance they usually fail to understand, whose validity they cannot prove, and which have nonetheless fairly rapidly spread by means of an evolutionary selection — the comparative increase of population and wealth — of those groups that happened to follow them. The unwitting, reluctant, even painful adoption of these practices kept these groups together, increased their access to valuable information of all sorts, and enabled them to be 'fruitful, and multiply, and replenish the earth, and subdue it' (Genesis 1:28). This process is perhaps the least appreciated facet of human evolution.
    • The Fatal Conceit (1988)

The Road to Serfdom (1944)

  • Conservatism, though a necessary element in any stable society, is not a social program; in its paternalistic, nationalistic and power adoring tendencies it is often closer to socialism than true liberalism; and with its traditionalistic, anti-intellectual, and often mystical propensities it will never, except in short periods of disillusionment, appeal to the young and all those others who believe that some changes are desirable if this world is to become a better place.
  • Is there a greater tragedy imaginable than that, in our endeavour consciously to shape our future in accordance with high ideals, we should in fact unwittingly produce the very opposite of what we have been striving.
  • That democratic socialism, the great utopia of the last few generations, is not only unachievable, but that to strive for it produces something so utterly different that few of those who wish it would be prepared to accept the consequences, many will not believe until the connection has been laid bare in all its aspects.
  • The effect of the people's agreeing that there must be central planning, without agreeing on the ends, will be rather as if a group of people were to commit themselves to take a journey together without agreeing where they want to go; with the result that they may all have to make a journey which most of them do not want at all.
  • Economic control is not merely control of a sector of human life which can be separated from the rest; it is the control of the means for all our ends. And whoever has sole control of the means must also determine which ends are to be served, which values are to be rates higher and which lower, in short, what men should believe and strive for.
  • The first need is to free ourselves of that worst form of contemporary obscurantism which tries to persuade us that what we have done in the recent past was all either wise or unavoidable. We shall not grow wiser before we learn that much that we have done was very foolish.
  • The conception that government should be guided by majority opinion makes sense only if that opinion is independent of government. The ideal of democracy rests on the belief that the view which will direct government emerges from an independent and spontaneous process. It requires, therefore, the existence of a large sphere independent of majority control in which the opinions of the individuals are formed.
  • In no other field has the world yet paid so dearly for the abandonment of nineteenth-century liberalism as in the field where the retreat began: in international relations. Yet only a small part of the lesson which experience ought to have taught us has been learned.
    Perhaps even more than elsewhere current notions of what is desirable and practicable are here still of a kind which may well produce the opposite of what they promise.
  • That there is little hope of international order or lasting peace so long as every country is free to employ whatever measures it thinks desirable in its own immediate interest, however damaging they may be to others, needs little emphasis now.
  • It is neither necessary nor desirable that national boundaries should mark sharp differences in standards of living, that membership of a national group should entitle to a share in a cake altogether different from that in which members of other groups share.
  • If the resources of different nations are treated as exclusive properties of these nations as wholes, if international economic relations, instead of being relations between individuals, become increasingly relations between whole nations organized as trading bodies, they inevitably become the source of friction and envy between whole nations.
    It is one of the most fatal illusions that, by substituting negotiations between states or organized groups for competition for markets or for raw materials, international friction would be reduced. This would merely put a contest of force in the place of what can only metaphorically be called the "struggle" of competition and would transfer to powerful and armed states, subject to no superior law, the rivalries which between individuals had to be decided without recourse to force.
    Economic transactions between national bodies who are at the same time the supreme judges of their own behavior, who bow to no superior law, and whose representatives cannot be bound by any considerations but the immediate interest of their respective nations, must end in clashes of power.
  • If we were to make no better use of victory than to countenance existing trends in this direction, only too visible before 1939, we might indeed find that we have defeated National Socialism merely to create a world of many national socialisms, differing in detail, but all equally totalitarian, nationalistic, and in recurrent conflict with each other.
    The Germans would appear as the disturbers of peace, as they already do to some people, merely because they were the first to take the path along which all the others were ultimately to follow.
  • The problems raised by a conscious direction of economic affairs on a national scale inevitably assume even greater dimensions when the same is attempted internationally. The conflict between planning and freedom cannot but become more serious as the similarity of standards and values among those submitted to a unitary plan diminishes.
  • Who imagines that there exist any common ideals of distributive justice such as will make the Norwegian fisherman consent to forego the prospect of economic improvement in order to help his Portuguese fellow, or the Dutch worker to pay more for his bicycle to help the Coventry mechanic, or the French peasant to pay more taxes to assist the industrialization of Italy? If most people are not willing to see the difficulty, this is mainly because, consciously or unconsciously, they assume that it will be they who will settle these questions for the others, and because they are convinced of their own capacity to do this justly and equitably.
  • To undertake the direction of the economic life of people with widely divergent ideals and values is to assume responsibilities which commit one to the use of force; it is to assume a position where the best intentions cannot prevent one from being forced to act in a way which to some of those affected must appear highly immoral. This is true even if we assume the dominant power to be as idealistic and unselfish as we can possibly conceive. But how small is the likelihood that it will be unselfish, and how great are the temptations!
  • What we need and can hope to achieve is not more power in the hands of irresponsible international economic authorities but, on the contrary, a superior political power which can hold the economic interests in check, and in the conflict between them can truly hold the scales, because it is itself not mixed up in the economic game. The need is for an international political authority which, without power to direct the different people what they must do, must be able to restrain them from action which will damage others. The powers which must devolve on an international authority are not the new powers assumed by the states in recent times but that minimum of powers without which it is impossible to preserve peaceful relationships, i.e., essentially the powers of the ultra-liberal "laissez faire" state.
  • It is no accident that on the whole there was more beauty and decency to be found in the life of the small peoples, and that among the large ones there was more happiness and content in proportion as they had avoided the deadly blight of centralization.
    Least of all shall we preserve democracy or foster its growth if all the power and most of the important decisions rest with an organization far too big for the common man to survey or comprehend.
    Nowhere has democracy ever worked well without a great measure of local self-government, providing a school of political training for the people at large as much as for their future leaders.
  • As is true with respect to other great evils, the measures by which war might be made altogether impossible for the future may well be worse than even war itself.
    If we can reduce the risk of friction likely to lead to war, this is probably all we can reasonably hope to achieve.
  • The most effective way of making people accept the validity of the values they are to serve is to persuade them that they are really the same as those which they ... have always held, but which were not properly understood or recognized before. The people are made to transfer their allegiance from the old gods to the new under the pretense that the new gods really are what their sound instinct had always told them but what before they had only dimly seen. And the most effective way to this end is to use the old words but change their meaning.... Few traits of totalitarian regimes are at the same time so confusing to the superficial observer and yet so characteristic of the whole intellectual climate as the complete perversion of language, the change of meaning of the words by which the ideals of the new regimes are expressed.... If one has not one's self experienced this process, it is difficult to appreciate the magnitude of this change of the meaning of words, the confusion it causes, and the barriers to any rational discussion which it creates... And the confusion becomes worse because this change of meaning of words describing political ideals is not a single event but a continuous process, a technique employed consciously or unconsciously to direct the people. Gradually, as this process continues, the whole language becomes despoiled, and words become empty shells deprived of any definite meaning, as capable of denoting one thing as its opposite and used solely for the emotional associations which still adhere to them.
  • Where the sole employer is the State, opposition means death by slow starvation.
  • The more the state 'plans' the more difficult planning becomes for the individual.
  • What our generation has forgotten is that the system of private property is the most important guarantee of freedom, not only for those who own property, but scarcely less for those who do not. It is only because the control of the means of production is divided among many people acting independently that nobody has complete power over us, that we as individuals can decide what to do with ourselves.
  • We shall never prevent the abuse of power if we are not prepared to limit power in a way which occasionally may prevent its use for desirable purposes.
  • We shall all be the gainers if we can create a world fit for small states to live in.
  • Only where we ourselves are responsible for our own interests and are free to sacrifice them has our decision moral value. We are neither entitled to be unselfish at someone else's expense nor is there any merit in being unselfish if we have no choice. The members of a society who in all respects are made to do the good thing have no title to praise.

The Use of Knowledge in Society (1948)

  • The peculiar character of the problem of a rational economic order is determined precisely by the fact that the knowledge of the circumstances of which we must make use never exists in concentrated or integrated form but solely as the dispersed bits of incomplete and frequently contradictory knowledge which all the separate individuals possess. The economic problem of society is thus not merely a problem of how to allocate "given" resources--if "given" is taken to mean given to a single mind which deliberately solves the problem set by these "data." It is rather a problem of how to secure the best use of resources known to any of the members of society, for ends whose relative importance only these individuals know. Or, to put it briefly, it is a problem of the utilization of knowledge which is not given to anyone in its totality.

Individualism and Economic Order (1948)

  • There is all the difference in the world between treating people equally and attempting to make them equal. While the first is the condition of a free society, the second means as De Tocqueville describes it, 'a new form of servitude.'
  • We must face the act that the preservation of individual freedom is incompatible with a full satisfaction of our views of distributive justice.
  • This is not a dispute about whether planning is to be done or not. It is a dispute as to whether planning is to be done centrally, by one authority for the whole economic system, or is to be divided among many individuals.
  • In abbreviated form, by a kind of symbol, only the most essential information is passed on and passed on only to those concerned. It is more than a metaphor to describe the price system as a kind of machinery for registering change, or a system of telecommunications which enables individual producers to watch merely the movement of a few pointers, as an engineer might watch the hands of a few dials, in order to adjust their activities to changes of which they may never know more than is reflected in the price movement.
  • It would clearly not be an improvement to build all houses exactly alike in order to create a perfect market for houses, and the same is true of most other fields where differences between the individual products prevent competition from ever being perfect.
  • We can either have a free Parliament or a free people. Personal freedom requires that all authority is restrained by long-run principles which the opinion of the people approves.

The Constitution of Liberty (1960)

  • No human mind can comprehend all the knowledge which guides the actions of society.
  • The mind cannot foresee its own advance.
  • Our faith in freedom does not rest on the foreseeable results in particular circumstances, but on the belief that it will, on balance, release more forces for the good than for the bad...Freedom granted only when it is known beforehand that its effects will be beneficial is not freedom.
  • Perhaps the fact that we have seen millions voting themselves into complete dependence on a tyrant has made our generation understand that to choose one's government is not necessarily to secure freedom.
  • The Socratic maxim that the recognition of our ignorance is the beginning of wisdom has profound significance for our understanding of society. Most of the advantages of social life, especially in the more advanced forms that we call 'civilization' rest on the fact that the individual benefits from more knowledge than he is aware of. It might be said that civilization begins when the individual in the pursuit of his ends can make use of more knowledge than he has himself acquired and when he can transcend the boundaries of his ignorance by profiting from knowledge he does not himself possess.
  • It is largely because civilization enables us constantly to profit from knowledge which we individually do not possess and because each individual's use of his particular knowledge may serve to assist others unknown to him in achieving their ends that men as members of civilized society can pursue their individual ends so much more successfully than they could alone.
  • If we are to understand how society works, we must attempt to define the general nature and range of our ignorance concerning it.
    • Chapter 2
  • Ever since the beginning of modern science, the best minds have recognized that "the range of acknowledged ignorance will grow with the advance of science." "In science the more we know, the more extensive the contact with nescience." Unfortunately, the popular effect of this scientific advance has been a belief, seemingly shared by many scientists, that the range of our ignorance is steadily diminishing and that we can therefore aim at more comprehensive and deliberate control of all human activities. It is for this reason that those intoxicated by the advance of knowledge so often become the enemies of freedom...The more men know, the smaller the share of all that knowledge becomes that any one mind can absorb. The more civilized we become, the more relatively ignorant must each individual be of the facts on which the working of his civilization depends.
  • The case for individual freedom rests chiefly on the recognition of the inevitable and universal ignorance of all of us concerning a great many of the factors on which the achievement of our ends and welfare depend. It is because every individual knows so little and, in particular, because we rarely know which of us knows best that we trust the independent and competitive efforts of many to induce the emergence of what we shall want when we see it.
    Humiliating to human pride as it may be, we must recognize that the advance and even the preservation of civilization are dependent upon a maximum of opportunity for accidents to happen. These accidents occur in the combination of knowledge and attitudes, skills and habits, acquired by individual men and also when qualified men are confronted with the particular circumstances which they are equipped to deal with. Our necessary ignorance of so much means that we have to deal largely with probabilities and chances.
    Of course, it is true of social as of individual life that favorable accidents usually do not just happen. We must prepare for them.
  • Human reason can neither predict nor deliberately shape its own future. Its advances consist in finding out where it has been wrong.
  • Before we can try to remould society intelligently, we must understand its functioning; we must realise that, even when we believe that we understand it, we may be mistaken. What we must learn to understand is that human civilisation has a life of its own, that all our efforts to improve things must operate within a working whole which we cannot entirely control, and the operation of whose forces we can hope merely to facilitate and assist so far as we can understand them.
    • Chapter 4
  • However human, envy is certainly not one of the sources of discontent that a free society can eliminate. It is probably one of the essential conditions for the preservation of such a society that we do not countenance envy, not sanction its demands by camouflaging it as social justice, but treat it, in the words of John Stuart Mill, as "the most anti-social and evil of all passions.
  • Justice, like liberty and coercion, is a concept which, for the sake of clarity, ought to be confined to the deliberate treatment of men by other men.
  • Once wide coercive powers are given to governmental agencies for particular purposes, such powers cannot be effectively controlled by democratic assemblies.
  • The day may not be far off when authority, by adding appropriate drugs to our water supply or by some other similar device, will be able to elate or depress, stimulate or paralyze, the minds of whole populations for its own purposes.
  • The chief evil is unlimited government, and nobody is qualified to wield unlimited power.
  • It would scarcely be an exaggeration to say that the greatest danger to liberty today comes from the men who are most needed and most powerful in modern government, namely, the efficient expert administrators exclusively concerned with what they regards as the public good.
  • If this is the degree of inflation planned for in advance, the real outcome is indeed likely to be such that most of those who will retire at the end of the century will be dependent on the charity of the younger generation. And ultimately not morals but the fact that the young supply the police and the army will decide the issue: concentration camps for the aged unable to maintain themselves are likely to be the fate of an old generation whose income is entirely dependent on coercing the young.
  • Inflation is probably the most important single factor in that vicious circle wherein one kind of government action makes more and more government control necessary. For this reason all those who wish to stop the drift toward increasing government control should concentrate their effort on monetary policy.
  • To rest the case for equal treatment of national or racial minorities on the assumption that they do not differ from other men is implicitly to admit that factual inequality would justify unequal treatment, and the proof that some differences do, in fact, exist would not be long in forthcoming. It is of the essence of the demand for equality before the law that people should be treated alike in spite of the fact that they are different.
  • The great aim of the struggle for liberty has been equality before the law.
  • Liberty not only means that the individual has both the opportunity and the burden of choice; it also means that he must bear the consequences of his actions.... Liberty and responsibility are inseparable.
  • If one objects to the use of coercion in order to bring about a more even or more just distribution, this does not mean that one does not regard these as desirable. But if we wish to preserve a free society, it is essential that we recognize that the desirability of a particular object is not sufficient justification for the use of coercion.

Why I Am Not a Conservative

Full text online

  • At a time when most movements that are thought to be progressive advocate further encroachments on individual liberty, those who cherish freedom are likely to expend their energies in opposition. In this they find themselves much of the time on the same side as those who habitually resist change.
  • Conservatism proper is a legitimate, probably necessary, and certainly widespread attitude of opposition to drastic change. It has, since the French Revolution, for a century and a half played an important role in European politics. Until the rise of socialism its opposite was liberalism. There is nothing corresponding to this conflict in the history of the United States, because what in Europe was called "liberalism" was here the common tradition on which the American polity had been built: thus the defender of the American tradition was a liberal in the European sense. This already existing confusion was made worse by the recent attempt to transplant to America the European type of conservatism, which, being alien to the American tradition, has acquired a somewhat odd character. And some time before this, American radicals and socialists began calling themselves "liberals." I will nevertheless continue for the moment to describe as liberal the position which I hold and which I believe differs as much from true conservatism as from socialism.
  • Let me now state what seems to me the decisive objection to any conservatism which deserves to be called such. It is that by its very nature it cannot offer an alternative to the direction in which we are moving. It may succeed by its resistance to current tendencies in slowing down undesirable developments, but, since it does not indicate another direction, it cannot prevent their continuance. It has, for this reason, invariably been the fate of conservatism to be dragged along a path not of its own choosing. The tug of war between conservatives and progressives can only affect the speed, not the direction, of contemporary developments.
  • What the liberal must ask, first of all, is not how fast or how far we should move, but where we should move. In fact, he differs much more from the collectivist radical of today than does the conservative. While the last generally holds merely a mild and moderate version of the prejudices of his time, the liberal today must more positively oppose some of the basic conceptions which most conservatives share with the socialists.
  • The picture generally given of the relative position of the three parties does more to obscure than to elucidate their true relations. They are usually represented as different positions on a line, with the socialists on the left, the conservatives on the right, and the liberals somewhere in the middle. Nothing could be more misleading. If we want a diagram, it would be more appropriate to arrange them in a triangle with the conservatives occupying one corner, with the socialists pulling toward the second and the liberals toward the third.
  • The main point about liberalism is that it wants to go elsewhere, not to stand still. Though today the contrary impression may sometimes be caused by the fact that there was a time when liberalism was more widely accepted and some of its objectives closer to being achieved, it has never been a backward-looking doctrine. There has never been a time when liberal ideals were fully realized and when liberalism did not look forward to further improvement of institutions. Liberalism is not averse to evolution and change; and where spontaneous change has been smothered by government control, it wants a great deal of change of policy.
  • As has often been acknowledged by conservative writers, one of the fundamental traits of the conservative attitude is a fear of change, a timid distrust of the new as such, while the liberal position is based on courage and confidence, on a preparedness to let change run its course even if we cannot predict where it will lead. There would not be much to object to if the conservatives merely disliked too rapid change in institutions and public policy; here the case for caution and slow process is indeed strong. But the conservatives are inclined to use the powers of government to prevent change or to limit its rate to whatever appeals to the more timid mind. In looking forward, they lack the faith in the spontaneous forces of adjustment which makes the liberal accept changes without apprehension, even though he does not know how the necessary adaptations will be brought about
  • The conservative feels safe and content only if he is assured that some higher wisdom watches and supervises change, only if he knows that some authority is charged with keeping the change "orderly."
  • Order appears to the conservative as the result of the continuous attention of authority, which, for this purpose, must be allowed to do what is required by the particular circumstances and not be tied to rigid rule. A commitment to principles presupposes an understanding of the general forces by which the efforts of society are co-ordinated, but it is such a theory of society and especially of the economic mechanism that conservatism conspicuously lacks. So unproductive has conservatism been in producing a general conception of how a social order is maintained that its modern votaries, in trying to construct a theoretical foundation, invariably find themselves appealing almost exclusively to authors who regarded themselves as liberal.
  • In general, it can probably be said that the conservative does not object to coercion or arbitrary power so long as it is used for what he regards as the right purposes. He believes that if government is in the hands of decent men, it ought not to be too much restricted by rigid rules. Since he is essentially opportunist and lacks principles, his main hope must be that the wise and the good will rule — not merely by example, as we all must wish, but by authority given to them and enforced by them. Like the socialist, he is less concerned with the problem of how the powers of government should be limited than with that of who wields them; and, like the socialist, he regards himself as entitled to force the value he holds on other people.
  • When I say that the conservative lacks principles, I do not mean to suggest that he lacks moral conviction. The typical conservative is indeed usually a man of very strong moral convictions. What I mean is that he has no political principles which enable him to work with people whose moral values differ from his own for a political order in which both can obey their convictions. It is the recognition of such principles that permits the coexistence of different sets of values that makes it possible to build a peaceful society with a minimum of force. The acceptance of such principles means that we agree to tolerate much that we dislike. There are many values of the conservative which appeal to me more than those of the socialists; yet for a liberal the importance he personally attaches to specific goals is no sufficient justification for forcing others to serve them.
  • To live and work successfully with others requires more than faithfulness to one's concrete aims. It requires an intellectual commitment to a type of order in which, even on issues which to one are fundamental, others are allowed to pursue different ends.
    It is for this reason that to the liberal neither moral nor religious ideals are proper objects of coercion, while both conservatives and socialists recognize no such limits.
  • In the last resort, the conservative position rests on the belief that in any society there are recognizably superior persons whose inherited standards and values and position ought to be protected and who should have a greater influence on public affairs than others. The liberal, of course, does not deny that there are some superior people — he is not an egalitarian — but he denies that anyone has authority to decide who these superior people are. While the conservative inclines to defend a particular established hierarchy and wishes authority to protect the status of those whom he values, the liberal feels that no respect for established values can justify the resort to privilege or monopoly or any other coercive power of the state in order to shelter such people against the forces of economic change. Though he is fully aware of the important role that cultural and intellectual elites have played in the evolution of civilization, he also believes that these elites have to prove themselves by their capacity to maintain their position under the same rules that apply to all others.
  • Closely connected with this is the usual attitude of the conservative to democracy. I have made it clear earlier that I do not regard majority rule as an end but merely as a means, or perhaps even as the least evil of those forms of government from which we have to choose. But I believe that the conservatives deceive themselves when they blame the evils of our time on democracy. The chief evil is unlimited government, and nobody is qualified to wield unlimited power. The powers which modern democracy possesses would be even more intolerable in the hands of some small elite.
  • It is not democracy but unlimited government that is objectionable, and I do not see why the people should not learn to limit the scope of majority rule as well as that of any other form of government. At any rate, the advantages of democracy as a method of peaceful change and of political education seem to be so great compared with those of any other system that I can have no sympathy with the antidemocratic strain of conservatism. It is not who governs but what government is entitled to do that seems to me the essential problem.
  • That the conservative opposition to too much government control is not a matter of principle but is concerned with the particular aims of government is clearly shown in the economic sphere. Conservatives usually oppose collectivist and directivist measures in the industrial field, and here the liberals will often find allies in them. But at the same time conservatives are usually protectionists and have frequently supported socialist measures in agriculture. Indeed, though the restrictions which exist today in industry and commerce are mainly the result of socialist views, the equally important restrictions in agriculture were usually introduced by conservatives at an even earlier date.
  • Conservatives feel instinctively that it is new ideas more than anything else that cause change. But, from its point of view rightly, conservatism fears new ideas because it has no distinctive principles of its own to oppose them; and, by its distrust of theory and its lack of imagination concerning anything except that which experience has already proved, it deprives itself of the weapons needed in the struggle of ideas. Unlike liberalism, with its fundamental belief in the long-range power of ideas, conservatism is bound by the stock of ideas inherited at a given time. And since it does not really believe in the power of argument, its last resort is generally a claim to superior wisdom, based on some self-arrogated superior quality.
  • Without preferring the new merely because it is new, the liberal is aware that it is of the essence of human achievement that it produces something new; and he is prepared to come to terms with new knowledge, whether he likes its immediate effects or not.
  • Personally, I find that the most objectionable feature of the conservative attitude is its propensity to reject well-substantiated new knowledge because it dislikes some of the consequences which seem to follow from it — or, to put it bluntly, its obscurantism. I will not deny that scientists as much as others are given to fads and fashions and that we have much reason to be cautious in accepting the conclusions that they draw from their latest theories. But the reasons for our reluctance must themselves be rational and must be kept separate from our regret that the new theories upset our cherished beliefs. I can have little patience with those who oppose, for instance, the theory of evolution or what are called "mechanistic" explanations of the phenomena of life because of certain moral consequences which at first seem to follow from these theories, and still less with those who regard it as irrelevant or impious to ask certain questions at all. By refusing to face the facts, the conservative only weakens his own position. Frequently the conclusions which rationalist presumption draws from new scientific insights do not at all follow from them. But only by actively taking part in the elaboration of the consequences of new discoveries do we learn whether or not they fit into our world picture and, if so, how. Should our moral beliefs really prove to be dependent on factual assumptions shown to be incorrect, it would hardly be moral to defend them by refusing to acknowledge facts.
  • Connected with the conservative distrust if the new and the strange is its hostility to internationalism and its proneness to a strident nationalism. Here is another source of its weakness in the struggle of ideas. It cannot alter the fact that the ideas which are changing our civilization respect no boundaries. But refusal to acquaint one's self with new ideas merely deprives one of the power of effectively countering them when necessary. The growth of ideas is an international process, and only those who fully take part in the discussion will be able to exercise a significant influence. It is no real argument to say that an idea is un-American, or un-German, nor is a mistaken or vicious ideal better for having been conceived by one of our compatriots.
  • An aversion to nationalism is fully compatible with a deep attachment to national traditions. But the fact that I prefer and feel reverence for some of the traditions of my society need not be the cause of hostility to what is strange and different.
  • Only at first does it seem paradoxical that the anti-internationalism of conservatism is so frequently associated with imperialism. But the more a person dislikes the strange and thinks his own ways superior, the more he tends to regard it as his mission to "civilize" other — not by the voluntary and unhampered intercourse which the liberal favors, but by bringing them the blessings of efficient government. It is significant that here again we frequently find the conservatives joining hands with the socialists against the liberals...
  • What I have described as the liberal position shares with conservatism a distrust of reason to the extent that the liberal is very much aware that we do not know all the answers and that he is not sure that the answers he has are certainly the rights ones or even that we can find all the answers. He also does not disdain to seek assistance from whatever non-rational institutions or habits have proved their worth. The liberal differs from the conservative in his willingness to face this ignorance and to admit how little we know, without claiming the authority of supernatural forces of knowledge where his reason fails him. It has to be admitted that in some respects the liberal is fundamentally a skeptic — but it seems to require a certain degree of diffidence to let others seek their happiness in their own fashion and to adhere consistently to that tolerance which is an essential characteristic of liberalism.
  • What distinguishes the liberal from the conservative here is that, however profound his own spiritual beliefs, he will never regard himself as entitled to impose them on others and that for him the spiritual and the temporal are different sphere which ought not to be confused.
  • In the United States, where it has become almost impossible to use "liberal" in the sense in which I have used it, the term "libertarian" has been used instead. It may be the answer; but for my part I find it singularly unattractive. For my taste it carries too much the flavor of a manufactured term and of a substitute. What I should want is a word which describes the party of life, the party that favors free growth and spontaneous evolution. But I have racked my brain unsuccessfully to find a descriptive term which commends itself.
  • The more I learn about the evolution of ideas, the more I have become aware that I am simply an unrepentant Old Whig — with the stress on the "old."
  • Even when men approve of the same arrangements, it must be asked whether they approve of them because they exist or because they are desirable in themselves. The common resistance to the collectivist tide should not be allowed to obscure the fact that the belief in integral freedom is based on an essentially forward-looking attitude and not on any nostalgic longing for the past or a romantic admiration for what has been.
  • The conservatives have already accepted a large part of the collectivist creed — a creed that has governed policy for so long that many of its institutions have come to be accepted as a matter of course and have become a source of pride to "conservative" parties who created them. Here the believer in freedom cannot but conflict with the conservative and take an essentially radical position, directed against popular prejudices, entrenched positions, and firmly established privileges. Follies and abuses are no better for having long been established principles of folly.
  • Though quieta non movere may at times be a wise maxim for the statesman it cannot satisfy the political philosopher. He may wish policy to proceed gingerly and not before public opinion is prepared to support it, but he cannot accept arrangements merely because current opinion sanctions them. In a world where the chief need is once more, as it was at the beginning of the nineteenth century, to free the process of spontaneous growth from the obstacles and encumbrances that human folly has erected, his hopes must rest on persuading and gaining the support of those who by disposition are "progressives," those who, though they may now be seeking change in the wrong direction, are at least willing to examine critically the existing and to change it wherever necessary.
  • The task of the political philosopher can only be to influence public opinion, not to organize people for action. He will do so effectively only if he is not concerned with what is now politically possible but consistently defends the "general principles which are always the same." In this sense I doubt whether there can be such a thing as a conservative political philosophy. Conservatism may often be a useful practical maxim, but it does not give us any guiding principles which can influence long-range developments.

Nobel Banquet Speech (1974)

Speech at the Nobel Banquet (10 December 1974) Full text online

  • I must confess that if I had been consulted whether to establish a Nobel Prize in economics, I should have decidedly advised against it.
  • I feared that such a prize, as I believe is true of the activities of some of the great scientific foundations, would tend to accentuate the swings of scientific fashion. This apprehension the selection committee has brilliantly refuted by awarding the prize to one whose views are as unfashionable as mine are.
  • The Nobel Prize confers on an individual an authority which in economics no man ought to possess.
    This does not matter in the natural sciences. Here the influence exercised by an individual is chiefly an influence on his fellow experts; and they will soon cut him down to size if he exceeds his competence.
    But the influence of the economist that mainly matters is an influence over laymen: politicians, journalists, civil servants and the public generally.
    There is no reason why a man who has made a distinctive contribution to economic science should be omnicompetent on all problems of society — as the press tends to treat him till in the end he may himself be persuaded to believe.
Cultivate a growth by providing the appropriate environment, in the manner in which the gardener does this for his plants...

The Pretence of Knowledge (1974)

Nobel Prize lecture (11 December 1974) Full text online

  • On the other hand, the economists are at this moment called upon to say how to extricate the free world from the serious threat of accelerating inflation which, it must be admitted, has been brought about by policies which the majority of economists recommended and even urged governments to pursue. We have indeed at the moment little cause for pride: as a profession we have made a mess of things.
  • It seems to me that this failure of the economists to guide policy more successfully is closely connected with their propensity to imitate as closely as possible the procedures of the brilliantly successful physical sciences — an attempt which in our field may lead to outright error. It is an approach which has come to be described as the "scientistic" attitude — an attitude which, as I defined it some thirty years ago, "is decidedly unscientific in the true sense of the word, since it involves a mechanical and uncritical application of habits of thought to fields different from those in which they have been formed."
  • Unlike the position that exists in the physical sciences, in economics and other disciplines that deal with essentially complex phenomena, the aspects of the events to be accounted for about which we can get quantitative data are necessarily limited and may not include the important ones. While in the physical sciences it is generally assumed, probably with good reason, that any important factor which determines the observed events will itself be directly observable and measurable, in the study of such complex phenomena as the market, which depend on the actions of many individuals, all the circumstances which will determine the outcome of a process, for reasons which I shall explain later, will hardly ever be fully known or measurable.
  • While in the physical sciences the investigator will be able to measure what, on the basis of a prima facie theory, he thinks important, in the social sciences often that is treated as important which happens to be accessible to measurement. This is sometimes carried to the point where it is demanded that our theories must be formulated in such terms that they refer only to measurable magnitudes.
  • There may thus well exist better "scientific" evidence for a false theory, which will be accepted because it is more "scientific", than for a valid explanation, which is rejected because there is no sufficient quantitative evidence for it.
  • The social sciences, like much of biology but unlike most fields of the physical sciences, have to deal with structures of essential complexity, i.e. with structures whose characteristic properties can be exhibited only by models made up of relatively large numbers of variables. Competition, for instance, is a process which will produce certain results only if it proceeds among a fairly large number of acting persons.
  • There may be few instances in which the superstition that only measurable magnitudes can be important has done positive harm in the economic field: but the present inflation and employment problems are a very serious one.
  • I confess that I prefer true but imperfect knowledge, even if it leaves much indetermined and unpredictable, to a pretence of exact knowledge that is likely to be false. The credit which the apparent conformity with recognized scientific standards can gain for seemingly simple but false theories may, as the present instance shows, have grave consequences.
  • To entrust to science — or to deliberate control according to scientific principles — more than scientific method can achieve may have deplorable effects. The progress of the natural sciences in modern times has of course so much exceeded all expectations that any suggestion that there may be some limits to it is bound to arouse suspicion. Especially all those will resist such an insight who have hoped that our increasing power of prediction and control, generally regarded as the characteristic result of scientific advance, applied to the processes of society, would soon enable us to mould society entirely to our liking.
  • Allow me to define more specifically the inherent limitations of our numerical knowledge which are so often overlooked. I want to do this to avoid giving the impression that I generally reject the mathematical method in economics. I regard it in fact as the great advantage of the mathematical technique that it allows us to describe, by means of algebraic equations, the general character of a pattern even where we are ignorant of the numerical values which will determine its particular manifestation. We could scarcely have achieved that comprehensive picture of the mutual interdependencies of the different events in a market without this algebraic technique. It has led to the illusion, however, that we can use this technique for the determination and prediction of the numerical values of those magnitudes; and this has led to a vain search for quantitative or numerical constants.
  • The confidence in the unlimited power of science is only too often based on a false belief that the scientific method consists in the application of a ready-made technique, or in imitating the form rather than the substance of scientific procedure, as if one needed only to follow some cooking recipes to solve all social problems. It sometimes almost seems as if the techniques of science were more easily learnt than the thinking that shows us what the problems are and how to approach them.
  • The conflict between what in its present mood the public expects science to achieve in satisfaction of popular hopes and what is really in its power is a serious matter because, even if the true scientists should all recognize the limitations of what they can do in the field of human affairs, so long as the public expects more there will always be some who will pretend, and perhaps honestly believe, that they can do more to meet popular demands than is really in their power. It is often difficult enough for the expert, and certainly in many instances impossible for the layman, to distinguish between legitimate and illegitimate claims advanced in the name of science.
  • If I am not mistaken, psychology, psychiatry and some branches of sociology, not to speak about the so-called philosophy of history, are even more affected by what I have called the scientistic prejudice, and by specious claims of what science can achieve.
  • The chief point we must remember is that the great and rapid advance of the physical sciences took place in fields where it proved that explanation and prediction could be based on laws which accounted for the observed phenomena as functions of comparatively few variables — either particular facts or relative frequencies of events.
  • As we advance we find more and more frequently that we can in fact ascertain only some but not all the particular circumstances which determine the outcome of a given process; and in consequence we are able to predict only some but not all the properties of the result we have to expect. Often all that we shall be able to predict will be some abstract characteristic of the pattern that will appear — relations between kinds of elements about which individually we know very little. Yet, as I am anxious to repeat, we will still achieve predictions which can be falsified and which therefore are of empirical significance.
    Of course, compared with the precise predictions we have learnt to expect in the physical sciences, this sort of mere pattern predictions is a second best with which one does not like to have to be content. Yet the danger of which I want to warn is precisely the belief that in order to have a claim to be accepted as scientific it is necessary to achieve more. This way lies charlatanism and worse. To act on the belief that we possess the knowledge and the power which enable us to shape the processes of society entirely to our liking, knowledge which in fact we do not possess, is likely to make us do much harm.
  • In the physical sciences there may be little objection to trying to do the impossible; one might even feel that one ought not to discourage the over-confident because their experiments may after all produce some new insights. But in the social field the erroneous belief that the exercise of some power would have beneficial consequences is likely to lead to a new power to coerce other men being conferred on some authority. Even if such power is not in itself bad, its exercise is likely to impede the functioning of those spontaneous ordering forces by which, without understanding them, man is in fact so largely assisted in the pursuit of his aims.
  • We are only beginning to understand on how subtle a communication system the functioning of an advanced industrial society is based — a communications system which we call the market and which turns out to be a more efficient mechanism for digesting dispersed information than any that man has deliberately designed.
  • If man is not to do more harm than good in his efforts to improve the social order, he will have to learn that in this, as in all other fields where essential complexity of an organized kind prevails, he cannot acquire the full knowledge which would make mastery of the events possible. He will therefore have to use what knowledge he can achieve, not to shape the results as the craftsman shapes his handiwork, but rather to cultivate a growth by providing the appropriate environment, in the manner in which the gardener does this for his plants.
  • The recognition of the insuperable limits to his knowledge ought indeed to teach the student of society a lesson of humility which should guard him against becoming an accomplice in men's fatal striving to control society — a striving which makes him not only a tyrant over his fellows, but which may well make him the destroyer of a civilization which no brain has designed but which has grown from the free efforts of millions of individuals.

Law, Legislation and Liberty

Vol. 1 : Rules and Order (1973)

  • There are two ways of looking at the pattern of human activities which lead to very different conclusions concerning both its explanation and the possibilities of deliberately altering it. Of these one is based on conceptions which are demonstrably false, yet are so pleasing to human vanity that they have gained great influence and are constantly employed even by people who know that they rest on a fiction, but believe that fiction to be innocuous. The other, although few people will question its basic contentions if they are stated abstractly, leads in some respects to conclusions so unwelcome that few are willing to follow through to the end.
    The first gives us a sense of unlimited power to realize our wishes, while the second leads to the insight that there are limitations to what we can deliberately bring about, and to the recognition that some of our present hopes are delusions. Yet the effect of allowing ourselves to be deluded by the first view has always been that man has actually limited the scope of what he can achieve. For it has always been the recognition of the limits of the possible which has enabled man to make full use of his powers.
    • Ch 1 "Reason and Evolution" First lines

Vol. 2 : The Mirage of Social Justice (1976)

  • When we ask what ought to be the relative remunerations of a nurse or a butcher, or a coal miner and a judge at a high court, of the deep sea diver of the cleaner of sewers, of the organiser of a new industry and a jockey, of the inspector of taxes and the inventor of a life-saving drug, of the jet-pilot or the professor of mathematics, the appeal to 'social justice' does not give us the slightest help in deciding…
  • In the Small group the individual can know the effects of his actions on his several fellows, and the rules may effectively forbid him to harm them in any manner and even require him to assist them in specific ways. In the Great Society many of the effects of a person's actions on various fellows must be unknown to him. It can, therefore, not be the specific effects in the particular case, but only rules which define kinds of actions prohibited or required, which must serve as guides to the individual.
  • I have come to feel strongly that the greatest service I can still render to my fellow men would be that I could make the speakers and writers among them thoroughly ashamed ever again to employ the term 'social justice'.
  • The manufacturer does not produce shoes because he knows that Jones needs them. He produces because he knows that dozens of traders will buy certain numbers at various prices because they (or rather the retailer they serve) know that thousands of Joneses, whom the manufacturer does not know, want to buy them.
  • Socialism is simply a re-assertion of that tribal ethics whose gradual weakening had made an approach to the Great Society possible.

Vol. 3 : The Political Order of a Free People (1979)

  • We must shed the illusion that we can deliberately 'create the future of mankind'…This is the final conclusion of the forty years which I have now devoted to the study of these problems…
  • There exists no third principle for the organisation of the economics process which can be rationally chosen to achieve any desirable ends, in addition to either a functioning market in which nobody can conclusively determine how well-off particular groups or individuals will be, or a central direction where a group organised for power determines it.
  • Nobody with open eyes can any longer doubt that the danger to personal freedom comes chiefly from the left.
    • Ch. 18 "The Containment of Power and the Dethronement of Politics Section : "Limited and Unlimited Power"


  • A claim for equality of material position can be met only by a government with totalitarian powers.
  • A policy of freedom for the individual is the only truly progressive policy.
  • A society that does not recognise that each individual has values of his own which he is entitled to follow can have no respect for the dignity of the individual and cannot really know freedom.
  • All political theories assume, of course, that most individuals are very ignorant. Those who plead for liberty differ from the rest in that they include among the ignorant themselves as well as the wisest.
  • Compared with the totality of knowledge which is continually utilized in the evolution of a dynamic civilization, the difference between the knowledge that the wisest and that which the most ignorant individual can deliberately employ is comparatively insignificant.
  • 'Emergencies' have always been the pretext on which the safeguards of individual liberty have been eroded.
  • Equality of the general rules of law and conduct, however, is the only kind of equality conducive to liberty and the only equality which we can secure without destroying liberty. Not only has liberty nothing to do with any other sort of equality, but it is even bound to produce inequality in many respects. This is the necessary result and part of the justification of individual liberty: If the result of individual liberty did not demonstrate that some manners of living are more successful than others, much of the case for it would vanish.
  • Even more significant of the inherent weakness of the collectivist theories is the extraordinary paradox that from the assertion that society is in some sense more than merely the aggregate of all individuals their adherents regularly pass by a sort of intellectual somersault to the thesis that in order that the coherence of this larger entity be safeguarded it must be subjected to conscious control, that is, to the control of what in the last resort must be an individual mind. It thus comes about that in practice it is regularly the theoretical collectivist who extols individual reason and demands that all forces of society be made subject to the direction of a single mastermind, while it is the individualist who recognizes the limitations of the powers of individual reason and consequently advocates freedom as a means for the fullest development of the powers of the interindividual process.
  • Even the striving for equality by means of a directed economy can result only in an officially enforced inequality — an authoritarian determination of the status of each individual in the new hierarchical order.
  • Every change in conditions will make necessary some change in the use of resources, in the direction and kind of human activities, in habits and practices. And each change in the actions of those affected in the first instance will require further adjustments that will gradually extend through the whole of society. Every change thus in a sense creates a "problem" for society, even though no single individual perceives it as such; it is gradually "solved" by the establishment of a new overall adjustment.
  • From the fact that people are very different it follows that, if we treat them equally, the result must be inequality in their actual position, and that the only way to place them in an equal position would be to treat them differently. Equality before the law and material equality are therefore not only different but are in conflict which each other; and we can achieve either one or the other, but not both at the same time.
  • From the saintly and single-minded idealist to the fanatic is often but a step.
  • I do not think it is an exaggeration to say history is largely a history of inflation, usually inflations engineered by governments for the gain of governments.
  • In government, the scum rises to the top.
  • It is always from a minority acting in ways different from what the majority would prescribe that the majority in the end learns to do better.
  • It is indeed probable that more harm and misery have been caused by men determined to use coercion to stamp out a moral evil than by men intent on doing evil.
  • It is only because the majority opinion will always be opposed by some that our knowledge and understanding progress. In the process by which opinion is formed, it is very probable that, by the time any view becomes a majority view, it is no longer the best view: somebody will already have advanced beyond the point which the majority have reached. It is because we do not yet which of the many competing new opinions will prove itself the best that we wait until it has gained sufficient support.
  • It used to be the boast of free men that, so long as they kept within the bounds of the known law, there was no need to ask anybody's permission or to obey anybody's orders. It is doubtful whether any of us can make this claim today.
  • Justice, like liberty and coercion, is a concept which, for the sake of clarity, ought to be confined to the deliberate treatment of men by other men.
  • Liberty is an opportunity for doing good, but this is only so when it is also an opportunity for doing wrong.
  • Many of the greatest things man has achieved are not the result of consciously directed thought, and still less the product of a deliberately coordinated effort of many individuals, but of a process in which the individual plays a part which he can never fully understand.
  • Once politics become a tug-of-war for shares in the income pie, decent government is impossible.
  • Our moral traditions developed concurrently with our reason, not as its product.
  • Should our moral beliefs really prove to be dependent on factual assumptions shown to be incorrect, it would be hardly moral to defend them by refusing to acknowledge the facts.
  • The argument for liberty is not an argument against organization, which is one of the most powerful tools human reason can employ, but an argument against all exclusive, privileged, monopolistic organization, against the use of coercion to prevent others from doing better.
  • The discussions of every age are filled with the issues on which its leading schools of thought differ. But the general intellectual atmosphere of the time is always determined by the views on which the opposing schools agree. They become the unspoken presuppositions of all thought, and common and unquestioningly accepted foundations on which all discussion proceeds.
  • The part of our social order which can or ought to be made a conscious product of human reason is only a small part of all the forces of society.
  • The power which a multiple millionaire, who may be my neighbour and perhaps my employer, has over me is very much less that which the smallest functionaire possess who wield the coercive power of the state, and on whose discretion it depends whether and how I am able to be allowed to live or work.
  • The successful politician owes his power to the fact that he moves within the accepted framework of thought, that he thinks and talks conventionally. It would be almost a contradiction in terms for a politician to be a leader in the field of ideas. His task in a democracy is to find out what the opinions held by the largest number are, not to give currency to new opinions which may become the majority view in some distant future.
  • The ultimate decision about what is accepted as right and wrong will be made not by individual human wisdom but by the disappearance of the groups that have adhered to the "wrong" beliefs.
  • There is, in a competitive society, nobody who can exercise even a fraction of the power which a socialist planning board would possess.
  • To be controlled in our economic pursuits means to be... controlled in everything.
  • Unlike proportionality, progression provides no principle which tells us what the relative burden of different persons ought to be the argument based on the presumed justice of progression provides no limitation, as has often been admitted by its supporters, before all incomes above a certain figure are confiscated, and those below left untaxed.
  • What a free society offers to the individual is much more than what he would be able to do if only he were free.
  • Whenever it is necessary that one of several conflicting opinions should prevail and when one would have to be made to prevail by force if need be, it is less wasteful to determine which has the stronger support by counting numbers than by fighting. Democracy is the only method of peaceful change that man has yet been discovered.

Quotes about Hayek

  • No one has characterized market mechanisms better than Friedrich von Hayek.
    • Herbert Simon in "The Sciences of the Artificial", 2nd Edition, Cambridge: The MIT Press, 1981, p. 41
  • 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.
    • Lawrence Summers 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.
  • Hayek, in my view, is the leading economic thinker of the 20th century.
    • Vernon Smith, "Reflections on Human Action after 50 years", Cato Journal. Vol. 9, No. 2. Fall, 1999.
  • One of the most original and most important ideas advanced by Hayek is the role of the 'division of knowledge' in economic society . . [But if] I had to single out the area in which Hayek's contributions were the most fundamental and pathbreaking, I would cast my vote for the theory of capital. As I said before, when I reviewed Hayek's book on The Pure Theory of Capital, it is 'my sincere conviction that this work contains some of the most penetrating thoughts on the subject that have ever been published.' If two achievements may be named, I would add Hayek's contributions to the the theory of economic planning. Most of what has been written on systems analysis, computerized data processing, simulation of market processes, and other techniques of decision-making without the aid of competitive markets, appears shallow and superficial in the light of Hayek's analysis of the 'division of knowledge', its dispersion among masses of people. Information in the minds of millions of people is not available to any central body or any group of decision-makers who have to determine prices, employment, production, and investment but do not have the signals provided by a competitive market mechanism. Most plans for economic reform in the socialist countries seem to be coming closer to the realization that increasing decentralization of decision-making is needed to solve the problems of rational economic planning.
    • Fritz Machlup, "Hayek's Contribution to Economics", Swedish Journal of Economics, Vol. 76, Dec. 1974.
  • F. A. Hayek [is] arguably the most influential economist of this century.
    • Tom Peters
  • I must say that I have been deeply gratified by reading a book [Hayek's "The Sensory Order"] of which I had not been aware when I wrote my little essay on group selection theory . . I was deeply impressed . . I recommend this book to your attention [i.e. The American Academy of Arts and Sciences], as an exercise in profound thinking by a man who simply considers knowledge for its own sake. What impressed me most is his understanding that the key to the problem of perception is to comprehend the nature of classification. Taxonomists have struggled with this problem many times, but I think von Hayek considered this problem in a broader sense.
    • Gerald Edelman, "Through a Computer Darkly: Group Selection and Higher Brain Function", Bulletin -- The American Academy of Arts and Sciences, Vol. XXXVI, No. 1, Oct. 1982, p. 24.
  • [Hayek] made a quite fruitful suggestion, made contemporaneously by the psychologist Donald Hebb, that whatever kind of encounter the sensory system has with the world, a corresponding event between a particular cell in the brain and some other cell carrying the information from the outside word must result in reinforcement of the connection between those cells. These day, this is known as a Hebbian synapse, but von Hayek quite independently came upon the idea. I think the essence of his analysis still remains with us.
    • Gerald Edelman "Through a Computer Darkly: Group Selection and Higher Brain Function", Bulletin -- The American Academy of Arts and Sciences, Vol. XXXVI, No. 1, Oct. 1982, p. 25.
  • Half the time I read [Hayek's The Sensory Order] with amazement at the extent of his reading and comprehension . . he is right . . most of the time.
    • Edwin Boring, "Elementist Going Up", The Scientific Monthly, March, 1953, p. 183.
  • I feel sure that no one has done this particular kind of job [i.e. a physicalistic system of psychology, mind, and consciousness] nearly so well.
    • Edwin Boring, "Elementist Going Up", The Scientific Monthly, March, 1953, p. 183.
  • I do not for a moment believe it is the last word on this matter [i.e. a physicalistic system of psychology, mind and consciousness], but it is . the best word I have ever heard spoken from this platform.
    • Edwin Boring, "Elementist Going Up", The Scientific Monthly, March, 1953, p. 183.
  • The first proponent of cortical memory networks on a major scale was neither a neuroscientist nor a computer scientist but .. a Viennes economist: Friedrich von Hayek (1899-1992). A man of exceptionally broad knowledge and profound insight into the operation of complex systems, Hayek applied such insight with remarkable success to economics (Nobel Prize, 1974), sociology, political science, jurisprudence, evolutionary theory, psychology, and brain science (Hayek, 1952)."
    • Joaquin Fuster, Memory in the Cerebral Cortex: An Empirical Approach to Neural Networks in the Human and Nonhuman Primate. Cambridge: MIT Press, 1995, p. 87.
  • Most theoretical work since the proposals of Hebb (1949) and Hayek (1952) has relied upon particular forms of dependent synaptic rules in which either pre- or postsynaptic change is contingent upon closely occurring events in both neurons taking part in the synapse.
    • Gerald Edelman, Neural Darwinism, 1987, p. 181.
  • Since [the idea that modification of synaptic function can provide a basis for memory arose shortly after the first anatomical description of the synapse] a number of models (Hebb 1949 . . Hayek 1952 . . Kendel 1981) have been proposed in which various cognitive activities are represented by combinations of the firing patterns of individual neurons.
    • Gerald Edelman, Neural Darwinism, 1987, p. 179.
  • [Hebb] place the Law of Effect at the synaptic level by proposing a correlation model of synaptic modification similar to that of Hayek (1952). This work was seminal in providing a basis for many subsequent theoretical studies.
    • Gerald Edelman, Neural Darwinism, 1987, p. 12.
  • The main reasons for dwelling .. on Hayek's model is simply that it has certain properties, absent from most others, that conform exceptionally well to recent neurobiological evidence on memory and that make it particularly suited to the current discourse."
    • Joaquin Fuster, "Memory in the Cerebral Cortex: An Empirical Approach to Neural Networks in the Human and Nonhuman Primate". Cambridge: MIT Press, 1995, p. 89.
  • The first proponent of cortical memory networks on a major scale was neither a neuroscientist nor a computer scientist but .. a Viennes economist: Friedrich von Hayek (1899-1992). A man of exceptionally broad knowledge and profound insight into the operation of complex systems, Hayek applied such insight with remarkable success to economics (Nobel Prize, 1974), sociology, political science, jurisprudence, evolutionary theory, psychology, and brain science (Hayek, 1952).
    • Joaquin Fuster, "Memory in the Cerebral Cortex: An Empirical Approach to Neural Networks in the Human and Nonhuman Primate". Cambridge: MIT Press, 1995, p. 87.
  • It is truly amazing that, with much less neuroscientific knowledge available, Hayek's model comes closer, in some respects, to being neurophysiologically verifiable than those models developed 50 to 60 years after his."
    • Joaquin Fuster, "Memory in the Cerebral Cortex: An Empirical Approach to Neural Networks in the Human and Nonhuman Primate". Cambridge: MIT Press, 1995, p. 89.
  • Friedrich Hayek .. seems to have been the first to postulate what is the core of this paper, namely, the idea of memory and perception represented in widely distributed networks of interconnected cortical cells. Subsequently this idea has received theoretical support, however tangential, from the fields of cognitive psychology, connectionism and artificial intelligence. Empirically, it is well supported by the physiological study and neuroimaging of working memory.
    • Joaquin Fuster, "Network Memory", _Trends in Neuroscience_, 1997. Vol. 20, No. 10. (Oct .): 451-459.
  • I think that I have learned more from you than from any other living thinker, except perhaps Alfred Tarski .. but not even excepting Russell.
    • Kark Popper, letter to Friedrich Hayek, 1944.
  • The investigation of this problem -- How is spontaneous order possible? -- is sometimes referred to as the 'Hayek programme'. (Footnote 7 -- See notably Hayek (1978), vol. 1-3. For comments, see Gray (1986) and Vanberg (1986).) The present analysis differs in two ways from most other attempts to implement the programme. (Footnote 8 -- Attempt to implement the Hayek programme include those of Nozick (1974), Ullman-Margalit (1977), Schotter (1981), Hardin (1982), Axelrod (1984), Sugden (1986) and M. Taylor (1987).)"
    • John Elster, "The Cement of Society: A Study of Social Order", 1989, p. 250.
  • [Hayek's] equilibrium theory offered a wealth of suggestions that were to be taken up in the literature of the 1940s and 1950s. The ideas of intertemporal equilibrium, which was to be precisely defined in axiomatic terms by Arrow and Debreu, took shape in his writings of the 1920s and 1930s.
    • B. Ingrao & G. Israel, 1990, p. 233.
  • Information costs are reduced by the existence of large numbers of buyers and sellers. Under these conditions, prices embody the same information that would require large search costs by individual buyers and sellers in the absence of an organized market. (footnote 4: The original contributions were those of Hayek (1937 and 1945)).
    • Douglass North, "Structure and Change in Economic History", New York: Norton, 1981, p. 36.
  • Many economists have professed to analyze information; relatively few have considered carefully the problems of knowledge. Among those who have, Hayek is pre-eminent.
    • Brian Loasby, "The Mind and Method of the Economist", London: Edward Elgar, p. 38.
  • [Hayek] became [in his later years] the dominant intellectual influence of the last quarter of the twentieth century.
  • [Hayek's The Fatal Conceit] fully supports the recent characterization of Hayek by the Economist that he is our time's preeminent social philosopher.
  • Friedrich Hayek, who died on March 23, 1992 at age 92, was arguably the greatest social scientist of the twentieth century. By the time of his death, his fundamental way of thought had supplanted the system of John Maynard Keynes -- his chief intellectual rival of the century -- in the battle since the 1930s for the minds of economists and the policies of governments."
    • Julian Simon, Hayek's Road Comes to an End, April 3, 1992.

Douglass North* (Washington U., Economics)

  • Regarding social order, [Francis] Fukuyama writes, "The systematic study of how order, and thus social capital, can emerge in spontaneous and decentralized fashion is one of the most important intellectual developments of the late twentieth century." He correctly attributes the modern origins of this argument to F. A. Hayek, whose pioneering contributions to cognitive science, the study of cultural evolution, and the dynamics of social change put him in the forefront of the most creative scholars of the 20th century.
    • Douglass North
  • Friedrich Hayek is the twentieth-century social theorist who, probably more than any other, found himself vindicated by events -- if not wholly, then at least in his central contention. He is also the one who, more than any other, himself exercised a significant political influence.
    • Michael Lessnoff, "Political Philosophers of the Twentieth Century". New York: Blackwell. 1999. p. 146.
  • If the central contest of the twentieth century has pitted capitalism against socialism, then F. A. Hayek has been its central figure. He helped us to understand why capitalism won by a knockout. It was Hayek who elaborated the basic argument demonstrating that central planning was nothing else but an impoverishing fantasy.
    • Kenneth Minogue, "Giants Refreshed II: The Escape from Serfdom: Friedrich von Hayek and the Restoration of Liberty". TLS: Times Literary Supplement. Jan 14, 2000, p. 11)
  • I think the Adam Smith role was played in this cycle [i.e. the late twentieth century collapse of socialism in which the idea of free-markets succeeded first, and then special events catalyzed a complete change of socio-political policy in countries around the world] by Friedrich Hayek's The Road to Serfdom.
  • Over the years, I have again and again asked fellow believers in a free society how they managed to escape the contagion of their collectivist intellectual environment. No name has been mentioned more often as the source of enlightenment and understanding than Friedrich Hayek's . . I, like the others, owe him a great debt . . his powerful mind . . his lucid and always principled exposition have helped to broaden and deepen my understanding of the meaning and the requisites of a free society.
  • Underlying all this has been a fundamental shift in ideas .. The dramatic redefinition of state and marketplace over the last two decades demonstrates anew the truth of Keynes' axiom about the overwhelming power of ideas. For concepts and notions that were decidedly outside the mainstream have now moved, with some rapidity, to center stage and are reshaping economies in every corner of the world. Even Keynes himself has been done in by his own dictum. During the bombing of London in World War II, he arranged for a transplanted Austrian economist, Friedrich von Hayek, to be temporarily housed in a college at Cambridge University. It was a generous gesture; after all, Keynes was the leading economist of his time, and Hayek, his rather obscure critic. In the postwar years, Keynes' theories of government management of the economy appeared unassailable. But a half century later, it is Keynes who has been toppled and Hayek, the fierce advocate of free markets, who is preeminent.
    • Daniel Yergin & Joseph Stanislaw, "The Commanding Heights: The Battle Between Government and the Marketplace that Is Remaking the Modern World". New York: Simon & Schuster. 1998. pp. 14-15)
  • The most intelligent defender of capitalism [in the modern period has been Friedrich Hayek] .. Hayek .. has as fine and as powerful a mind as is to be found anywhere.
    • Irving Kristol
  • It is in good part because of Professor Hayek's work [on 'social engineering' and 'scientism'], and also because of his profound insights -- most notably in The Constitution of Liberty -- into the connection between a free market, the rule of law, and individual liberty, that you don't hear professors saying today, as they used so glibly to say, that 'we are all socialists now'.
    • Irving Kristol
  • As a result of the efforts of Hayek .. and the many others who share [his] general outlook, the idea of a centrally planned and centrally administered economy, so popular in the 1930s and early 1940s, has been discredited.
    • Irving Kristol
  • The 20th Century looked for many decades as if it were going to be the century of collectivism .. Anyone who would have predicted the reversal of this trend .. would have been considered mad just a dozen years ago. Innumerable factors led to [the reversal of the rise of collectivism], not the least of which was the bitter experience of seeing 'rational planning' degenerate into economic chaos and Utopian dreams turn into police-state nightmares. Still, it takes a vision to beat a vision .. An alternative vision had to become viable before the reversal of the collectivist tide could begin with Margaret Thatcher in Britain and Ronald Reagan in the United States. That vision came from many sources, but if one point in time could mark the beginning of the intellectual turning of the tide which made later political changes possible, it was the publication of The Road to Serfdom by Friedrich A. Hayek.
  • The most powerful critique of socialist planning and the socialist state which I read at this time [the late 1940's], and to which I have returned so often since [is] F. A. Hayek's The Road to Serfdom.
  • Our inspiration was less Rab Butler's Industrial Charter than books like Colm Brogan's anti-socialist satire, Our New Masters . . and Hayek's powerful Road to Serfdom, dedicated to 'the socialists of all parties'. Such books not only provided crisp, clear analytical arguments against socialism, demonstrating how its economic theories were connected to the then depressing shortages of our daily lives; but by their wonderful mockery of socialist follies, they also gave us the feeling that the other side simply could not win in the end. That is a vital feeling in politics; it eradicates past defeats and builds future victories. It left a permanent mark on my own political character, making me a long-term optimist for free enterprise and liberty.
    • Margaret Thatcher, "The Downing Street Years", New York: Harper Collins, 1993, pp. 12-13.)
  • John Ranelagh writes of Margaret Thatcher's remark at a key Conservative Party meeting in the late 1970's, "Another colleague had also prepared a paper arguing that the middle way was the pragmatic path for the Conservative party to take .. Before he had finished speaking to his paper, the new Party Leader [Margaret Thatcher] reached into her briefcase and took out a book. It was Friedrich von Hayek's "The Constitution of Liberty". Interrupting [the speaker], 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."
    • John Ranelagh, Thatcher's People: An Insider's Account of the Politics, the Power, and the Personalities. London: HarperCollins, 1991.)
  • For Dicey, writing in 1885, and for me reading him some seventy years later, the rule of law still had a very English, or at least Anglo-Saxon, feel to it. It was later, through Hayek's masterpieces "The Constitution of Liberty" and "Law, Legislation and Liberty" that I really came to think this principle as having wider application."
    • Margaret Thatcher, The Path to Power, New York: Harper Collins, 1995, pp. 84-85.)
  • All the general propositions favouring freedom I had .. imbibed at my father's knee or acquired by candle-end reading of Burke and Hayek ..".
  • Adam Smith, the greatest exponent of free enterprise economics till Hayek and Friedman.
    • Margaret Thatcher, "The Downing Street Years", New York: Harper Collins, 1993, p. 618)
  • "Rowland Evans: "What philosophical thinkers or writers most influenced your conduct as a leader, as a person?" Ronald Reagan: "Well .. I've always been a voracious reader -- I have read the economic views of von Mises and Hayek, and .. Bastiat .. I know about Cobden and Bright in England -- and the elimination of the corn laws and so forth, the great burst of economy or prosperity for England that followed."
    • Ronald Reagan interviewed by Rowland Evan, Rowland Evans & Robert Novak, "The Reagan Revolution", New York: E. P. Dutton, 1981, p. 229.
  • The most important player on Ronald Reagan's economic team is Ronald Reagan. The person most responsible for creating the economic program that came to be known as Reaganomics is Reagan himself. For over twenty years he observed the American economy, read and studied the writings of some of the best economists in the world, including the giants of the free market economy -- Ludwig von Mises, Friedrich Hayek and Milton Friedman -- and he spoke and wrote on the economy, going through the rigorous mental discipline of explaining his thoughts to others. Over the years he made all the key decisions on the economic strategies he finally embraced. He always felt comfortable with his knowledge of the field and he was in command all the way."
    • Martin Anderson, "Revolution", New York: Harcourt Brace Jovanovich, 1988, p. 164.)
  • My interest in public policy and political philosophy was rather casual before I joined the faculty of the University of Chicago. Informal discussions with colleagues and friends stimulated a greater interest, which was reinforced by Friedrich Hayek's powerful book The Road to Serfdom, by my attendance at the first meeting of the Mont Pelerin Society in 1947, and by discussions with Hayek after he joined the university faculty in 1950. In addition, Hayek attracted an exceptionally able group of students who were dedicated to a libertarian ideology. They started a student publication, The New Individualist Review, which was the outstanding libertarian journal of opinion for some years. I served as an adviser to the journal and published a number of articles in it.
    • Milton Friedman writing in Milton & Rose Friedman, "Two Lucky People: Memoirs", Chicago: U. of Chicago Press, 1998. p. 333).
  • The most interesting among the courageous dissenters of the 1980s were the classical liberals, disciples of F. A. Hayek, from whom they had learned about the crucial importance of economic freedom and about the often-ignored conceptual difference between liberalism and democracy.
    • Andrzy Walicki, "Liberalism in Poland", Critical Review, Winter, 1988, p. 9.
  • [Estonian Prime Minister] Mart Laar came to my office the other day to recount his country's remarkable transformation. He described a nation of people wh are harder-working, more virtuous -- yes, more virtuous, because the market punishes immorality -- and more hopeful about the future than they've ever been in their history. I asked Mr. Laar where his government got the idea for these reforms. Do you know what he replied? He said, 'We read Milton Friedman and F. A. Hayek'.
    • Dick Armey, "Address at the Dedication of the Hayek Auditorium", Cato Institution, Washington, D.C., May, 9, 1995.)
  • I was 25 years old and pursuing my doctorate in economics when I was allowed to spend six months of post-graduate studies in Naples, Italy. I read the Western economic textbooks and also the more general work of people like Hayek. By the time I returned to Czechoslovakia, I had an understanding of the principles of the market. In 1968, I was glad at the political liberalism of the Dubcek Prague Spring, but was very critical of the Third Way they pursued in economics.
    • Vaclav Klaus, "No Third Way Out: Creating a Capitalist Czechoslovakia", Reason, 1990, (June): 28-31).
  • There is no figure who had more of an influence, no person had more of an influence on the intellectuals behind the Iron Curtain than Friedrich Hayek. His books were translated and published by the underground and black market editions, read widely, and undoubtedly influenced the climate of opinion that ultimately brought about the collapse of the Soviet Union.
    • Milton Friedman
  • ALCHIAN: Two things you [Hayek] wrote that had a personal influence on me, after your Prices and Production, were 'Individualism and Economic Order' [sic -- Alchian certainly has in mind Hayek's 'Economics and Knowledge'] and 'The Use of Knowledge in Society.' These I would regard as your two best articles, best in terms of their influence on me. HAYEK: 'Economics and Knowledge' -- the '37 one -- which is reprinted in the volume, is the one which marks the new look at things in my way. ALCHIAN: It was new to you, too, then? Was it a change in your own thinking? HAYEK: Yes, it was really the beginning of my looking at things in a new light . .. I was aware that I was putting down things which were fairly well known in a new form, and perhaps it was the most exciting moment in my career when I saw it [i.e. 'Economics and Knowledge'] in print. ALCHIAN: Well, I'm delighted to hear you say that, because I had that copy typed up to mimeograph for my students in the first course I gave here [i.e. UCLA]. And Allan Wallace . . came through town one day, and I said, 'Allan, I've got a great article!" He looked at it, started to laugh, and said, "I've seen it too; it's just phenomenal!' I'm just delighted to hear you say that it was exciting, because it was to me, too . . that was a very influential article, I must say.
    • Armen Alchian, interviewing Friedrich Hayek in 1978.
  • In fact, a large part of what we think of as economic activity is designed to accomplish what high transaction costs would otherwise prevent or to reduce transaction costs so that individuals can negotiate freely and we can take advantage of that diffused knowledge of which Friedrich Hayek has told us.
    • Ronald Coase, Nobel Memorial Prize Lecture, "The Institutional Structure of Production", Essays on Economics and Economists, Chicago: U. of Chicago Press, 1994, p. 9)
  • It is not so well known that it [Keynes's and my own move from thinking in terms of price-levels and the rate of interest to thinking in terms of inputs and outputs] is matched by a movement from Hayek to Harrod. I once asked Harrod what had put him on to the construction of his so-call 'dynamic' theory; he said, to my surprise, that it was thinking about Hayek.
    • John Hicks, 1982, pp. 340-341.
  • I can date my own personal 'revolution' rather exactly to May or June 1933. It was like this. It began . . with Hayek. His Prices and Production is one of the influences that can be detected in The Theory of Wages; it could not have been otherwise, for 1931 was a Prices and Production year at the London School of Economics . . I did not in fact find it all easy to fit in with my own ideas. What started me off in 1933 was an earlier work of Hayek's, his paper on 'Intertemporal Equilibrium', an idea which I found easier to reduce to my preferred (Paretian or Wicksellian) pattern.
    • John Hicks, "The Theory of Wages", 2nd Edition,1963, p. 307)
  • It was from Hayek that I began [the breakthrough essay "Equilibrium and the Cycle" (1933), the original beginnings of Hick's influential work on the topics of intertemporal equilibrium, monetary theory, and trade cycle phenomena].
    • John Hicks, Money, Interest and Wages, Cambridge: Harvard U. Press, 1982, p. 28).
  • There were four years, 1931-1935, when I was myself a member of [Hayek's] seminar in London; it has left a deep mark on my thinking.
    • John Hicks, "Classics and Moderns", New York: Basil Blackwell, 1983, p. 97).
  • Hicks elaborated the concept of temporary equilibrium, perhaps the most original contribution of Value and Capital, following the path laid down by Hayek and the Swedish school.
    • B. Ingrao & G. Israel, 1990, p. 239.
  • Hayek was making us think of the productive process as a process in time, inputs coming before outputs.
    • John Hicks, "Classics and Moderns", New York: Basil Blackwell, 1983, p. 359.
  • I did not begin from Keynes: I began from Pareto, and Hayek (footnote 10: There is evidence for this, in the paper 'Equilibrium and the Cycle')
    • John Hicks, "Classics and Moderns", New York: Basil Blackwell, 1983, p. 359).
  • I am in complete sympathy with [Kirzner's] point of departure, namely, the emphasis on the dispersion of information among economic decision-making units (called by him, 'Hayek's knowledge problem') and the consequent problem of transmission of information among those units. Much of my own research work since the 1950s has been focused on issued in welfare economics viewed from an informational perspective. The ideas of Hayek (whose classes at the London School of Economics I attended during the academic year 1938-39) have played a major role in influencing my thinking and have been so acknowledged."
    • Leonid Hurwicz, 1984, p. 419)
  • Keynes was shortly to develop his own approach to the general task identified by Hayek [.e.g the task of monetary theory], under the rubric of 'A Monetary Theory of Production' ** A. Cottrell, 1994, p. 199.
  • I am in full agreement, also, with Dr. Hayek's rebuttal of John Stuart Mill's well-known dictum that 'there cannot, in short, be intrinsically a more insignificant thing, in the economy of society, than money,' [when Hayek writes]: "it means also that the task of monetary theory is a much wider one than is commonly assumed; that its task is nothing less than to cover a second time the whole field which is treated by pure theory under the assumption of barter, and to investigate what changes in the conclusions of pure theory are made necessary by the introduction of indirect exchange. The first step towards a solution of this problem is to release monetary theory from the bonds which a too narrow conception of its task has created.'
    • John Maynard Keynes, "The Pure Theory of Money: A Reply to Dr. Hayek", Economica, Nov. 1931, pp. 395-396
  • Although he is very probably unaware of this book and of my work in general, I want to express a very belated thanks to Friedrich A. Hayek. His work had much more of an influence on me than I realized during the writing of the First Edition [of "The End of Liberalism"] I neither began nor ended as a Hayekist but instead found myself confirming, by process of elimination and discovery, many of his fears about the modern liberal state.
    • Theodore Lowi, 'Preface to the Second Edition', in "The End of Liberalism", 2nd Edition, New York: W. W. Norton, 1979, p. xiv.
  • While in graduate school I encountered the writings of Friedrich Hayek and Ludwig von Mises, which shook me out of my then socialist beliefs. There was Hayek's book of essays, Individualism and Economic Order, and Mises's wide-ranging and unsettling Socialism, which showed me I had not thought through any details -- economic, social or cultural -- of how socialism would work. One of their arguments in particular, about the impossibility of rational economic calculation under socialism, dumbfounded me. Whether or not the argument was ultimately judged to be correct, it was amazing, something I never would have thought of in a million years.
    • Robert Nozick, "Robert Nozick", The Harvard Guide to Influential Books: 113 Distinguished Harvard Professors Discuss the Books That Have Helped to Shape Their Thinking, New York: Harper & Row, 1986, p. 187.
  • If one writing contributed more than any other to the framework in which this work [Sowell's "Knowledge and Decisions"] developed, it would be an essay entitled 'The Use of Knowledge in Society,' published in the American Economic Review of September 1945, and written by F. A. Hayek . . In this plain and apparently simple essay was a deeply penetrating insight into the way societies function and malfunction, and clues as to why they are so often and so profoundly misunderstood.
    • Thomas Sowell, "Knowledge and Decisions", New York: Basic Books, 1980, p. ix)
  • During the following decade [of the 1950's] modern economic history took a dramatic swing away from the liberal-left consensus established by the Hammonds, Tawney and the Webbs. The seminal text for this change of direction was the 1954 collection of essays compiled by F. A. Hayek, "Capitalism and the Historians".
    • Miles Taylor, "The Beginnings of Modern British Social History?" History Workshop Journal. 1997. Vol. 43. Spring: 163.
  • [I] think that permanence and stability are the cardinal virtues of the legal rules that make private innovation and public progress possible. To my mind there is no doubt that a legal regime that embraced private property and freedom of contract is the only one that in practice can offer that permanence and stability .. In reaching this conclusion, I have been heavily influenced by the work of Friedrich Hayek.
    • Richard Epstein, "Simple Rules for a Complex World", Cambridge: Harvard U. Press.
  • I can testify from personal experience to the immense stimulus and direction which Hayek's migration to this country [Great Britain] gave to economic research in the 1930s, not only in London and economics faculties throughout the United Kingdom, but also in the international world of scholarship.
    • Arnold Plant, "A Tribute to Hayek -- the Rational Persuader", Economic Age, Jan.-Feb., 1970)
  • I will be discussing what happened in economics in England, but these were times when, to a very considerable extent, this was what happened in economics. The first episode I will discuss is local, but the economists involved were among the best in the world. In February 1931, Friedrich Hayek gave a series of public lectures entitled 'Prices and Production' at the London School of Economics . . They were undoubtably the most successful set of public lectures given at LSE during my time there, even surpassing the brilliant lectures Jacob Viner gave on international trade theory. The audience, notwithstanding the difficulties of understanding Hayek, was enthralled. What was said seemed to us of great importance and made us see things of which we had previously been unaware. After hearing these lectures, we knew why there was a depression. Most students of economics at LSE and many members of the staff became Hayekians or, at any rate, incorporated elements of Hayek's approach in their own thinking. With the arrogance of youth, I myself expounded the Hayekian analysis to the faculty and students at Columbia University in the fall of 1931.
    • Ronald Coase, "How Should Economists Choose?", Essays on Economics and Economists, Chicago: U. of Chicago Press, 1994, p. 19.
  • The [seminar in economic theory conducted by Hayek at the L.S.E. in the 1930s] was attended, it came to seem, by all of the economists of my generation -- Nicky [Kaldor], Thomas Balogh, L. K. Jah, Paul Rosenstein-Rodan, the list could be indefinitely extended. The urge to participate (and correct Hayek) was ruthlessly competitive."
    • G. K. Galbraith, "Nicholas Kaldor Remembered", in "Nicholas Kaldor and Mainstream Economics: Confrontation or Convergence?", New York: St. Martin's Press).
  • The key importance of the amount of information available and the frequent lack of relevant information have been dealt with only in the last decades. L. von Mises and F. A. von Hayek can rightly be regarded as pioneers in this connection.
    • Jan Tinbergen
  • The dilemma of a socialized system is that the information flow overwhelms a centralized system if it is open to new ideas and data, that closing the system and forcing the plan to work forecloses alternatives and risks unhedged mistakes, and that decentralizing without real markets poses the problems discussed by Hayek. These information problems permeate virtually all economic processes.
    • Richard Nelson & Sidney Winter, "An Evolutionary Theory of Economic Change", Cambridge: Harvard U. Press, 1982, p. 365)

"* Right after we published our first findings [on the implications of path dependence and complexity theory for economics], we started getting letters from all over the country saying, 'You know, all you guys have done is rediscover Austrian economics' .. I admit I wasn't familiar with Hayek and von Mises as the time. But now that I've read them, I can see that this is essentially true.

    • Brian Arthur
  • Hayek made a suggestion that was to be of great importance in the theory's [i.e. General Equilibrium Theory or 'GET'] subsequent history, that the same goods available at two different moments of time should be treated as distinct goods whose relations of exchange were to be examined, although they might, 'technically speaking,' be one and the same product.
    • Bruna Ingrao & Giorgio Israel, "The Invisible Hand: Economic Equilibrium in the History of Science", 1990, p. 232)
  • [Hayek] did contribute toward an important conceptual development in his reflections on the problems raised by extending the analysis of equilibrium in time. In a key article of 1928 published in the 'Weltwirtschafliches Archiv,' he observed that it was not possible to ignore the element of time in the simultaneous determination of prices if analysis was to be extended to monetary phenomena. {quotes Hayek} Hayek defined the problem concisely as one of an intertemporal system of prices. {quotes Hayek}.
    • Bruna Ingrao & Giorgio Israel, The Invisible Hand: Economic Equilibrium in the History of Science, 1990, p. 232.
  • [Hayek's] equilibrium theory offered a wealth of suggestions that were to be taken up in the literature of the 1940s and 1950s. The idea of intertemporal equilibrium, which was to be precisely defined in axiomatic terms by Arrow and Debreu, took shape in his writings of the 1920s and 1930s.
    • Bruna Ingrao & Giorgio Israel, The Invisible Hand: Economic Equilibrium in the History of Science, 1990, p. 233.
  • All of this, of course, establishes Hayek's primacy over Hicks in the origin of the notion of intertemporal equilibrium.
    • Murry Milgate, 1982, p. 22)
  • It is likely that many modern economists would have no difficulty accepting Hayek's statement of the problem [of macroeconomics] as roughly equivalent to their own. Whether or not this is so, I wish .. to argue that it should be so, or that the most rapid progress toward a coherent and useful aggregate economic theory will result from the acceptance of the problem statement as advanced by [Hayek].
    • Robert Lucas, Jr., "Understanding Business Cycles", in "Studies in Business-Cycle Theory", 1981, p. 216. Cambridge: The MIT Press.
  • It may not be amiss to seen in my calculations of comparative productivity [between entrepreneurial economics and communist economies] verification of a prescient forecast [made by Hayek in 1935 in his essay "The Present State of the Debate".].
    • Abram Bergson, "Communist Economic Efficiency Revisited", AEA Papers and Proceedings, Vol. 82, No. 2, May, 1992, p. 30.
  • Hayek's adversaries -- Oskar Lange and company -- argued that a market system had to be inferior to a centrally-planned system: at the very least, a centrally-planned economy could set up internal decision-making procedures that would mimic the market, and the central planners could also adjust things to increase social welfare and account for external effects in a way that a market system could never do. Hayek, in response, argued that the functionaries of a central-planning board could never succeed, because they could never create both the incentives and the flexibility for the people-on-the-spot to exercise what Scott calls metis. Today all economists -- even those who are very hostile to Hayek's other arguments .. agree that Hayek and company hit this particular nail squarely on the head. Looking back at the seventy-year trajectory of Communism, it seems very clear that Hayek .. [is] right: that its principal flaw is its attempt to concentrate knowledge, authority, and decision-making power at the center rather than pushing the power to act, the freedom to do so, and the incentive to act productively out to the periphery where the people-on-the-spot have the local knowledge to act effectively.
    • J. Bradford De Long
  • The dilemma of a socialized system is that the information flow overwhelms a centralized system if it is open to new ideas and data, that closing the system and forcing the plan to work forecloses alternatives and risks unhedged mistakes, and that decentralizing without real markets poses the problems discussed by Hayek. These information problems permeate virtually all economic processes.
    • Richard Nelson & Sidney Winter, "An Evolutionary Theory of Economic Change", Cambridge: Harvard U. Press, 1982, p. 365)
  • Hayek's criticisms of market socialism .. are for the most part on the mark.
    • John Roemer, "A Future for Socialism", Cambridge: Harvard U. Press, pp. 1-2)
  • Roemer is recognized as a leading authority from the left on the economics of socialism.
  • If the central contest of the twentieth century has pitted capitalism against socialism, then F. A. Hayek has been its central figure. He helped us to understand why capitalism won by a knockout. It was Hayek who elaborated the basic argument demonstrating that central planning was nothing else but an impoverishing fantasy.
    • Kenneth Minogue, "Giants Refreshed II: The Escape from Serfdom: Friedrich von Hayek and the Restoration of Liberty". TLS: Times Literary Supplement. Jan 14, 2000, p. 11)
  • I will be discussing what happened in economics in England, but these were times when, to a very considerable extent, this was what happened in economics. The first episode I will discuss is local, but the economists involved were among the best in the world. In February 1931, Friedrich Hayek gave a series of public lectures entitled 'Prices and Production' at the London School of Economics . . They were undoubtably the most successful set of public lectures given at LSE during my time there, even surpassing the brilliant lectures Jacob Viner gave on international trade theory. The audience, notwithstanding the difficulties of understanding Hayek, was enthralled. What was said seemed to us of great importance and made us see things of which we had previously been unaware. After hearing these lectures, we knew why there was a depression. Most students of economics at LSE and many members of the staff became Hayekians or, at any rate, incorporated elements of Hayek's approach in their own thinking. With the arrogance of youth, I myself expounded the Hayekian analysis to the faculty and students at Columbia University in the fall of 1931.
    • Ronald Coase, "How Should Economists Choose?", Essays on Economics and Economists, Chicago: U. of Chicago Press, 1994, p. 19).
  • Q. [McCallum] .. are there other economists who have had a really major influence on your thinking? A. [Melzer] Well I mentioned Hayek. There are two ways. One is because of my interest in political economy. The other way is that Hayek was a pioneer in the use of information in economics. One of the papers that Karl and I wrote together that I continue to like was a paper called "The Uses of Money". In that paper we tried to incorporate information and the cost of information to explain why people use money. One of Hayek's most basic ideas is that institutions are a way of reducing uncertainty. Man struggles to find institutional arrangements which on average make life a bit more predictable. Our "Uses of Money" is not so much about money as we conventionally think about it, it's about the idea of a medium of exchange, the function of an institution called the medium of exchange and how the medium of exchange as an institution resolves a part of peoples uncertainty about the future.
    • Allan Meltzer
  • It was from Hayek that I began ["Equilibrium and the Cycle" (1933), the early beginnings of Hick's influential work on the topics of intertemporal equilibrium, monetary theory, and trade cycle phenomena].
    • John Hicks, "Money, Interest and Wages", Cambridge: Harvard U. Press, 1982, p. 28).
  • There were four years, 1931-1935, when I was myself a member of [Hayek's] seminar in London; it has left a deep mark on my thinking.
    • John Hicks, "Classics and Moderns", New York: Basil Blackwell, 1983, p. 97).
  • At the end of the discussions in that seminar [Hayek's L.S.E seminar] .. we were, I believe, on the point of taking what now seems to me to be a decisive step. I was, at least, on the point of taking it myself. There is evidence for that in my "Value and Capital", much of the groundwork for which was done before I left London.
    • John Hicks, "Classics and Moderns", New York: Basil Blackwell, 1983, p. 97).
  • I remember Robbins asking me if I could turn the Hayek model into mathematics .. it began to dawn on me that .. the model must be better specified. It was claimed that, if there were no monetary disturbance, the system would remain in 'equilibrium'. What could such an equilibrium mean? This, as it turned out, was a very deep question; I could do no more, in 1932, than make a start at answering it. I began by looking at what had been said by .. Pareto and Wicksell. Their equilibrium was a static equilibrium, in which neither prices nor outputs were changing .. That, clearly, would not do for Hayek. His 'equilibrium' must be progressive equilibrium, in which real wages, in particular, would be rising, so relative prices could not remain unchange .. The next step in my thinking, was .. equilibrium with perfect foresight. Investment of capital, to yield its fruit in the future, must be based on expectations, of opportunities in the future. When I put this to Hayek, he told me that this was indeed the direction in which he had been thinking. Hayek gave me a copy of a paper on 'intertemporal equilibrium', which he had written some years before his arrival in London; the conditions for a perfect foresight equilibrium were there set out in a very sophisticated manner.
    • John Hicks, "Money, Interest and Wages", Cambridge: Harvard U. Press, 1982, pp. 6-7).
  • "I can date my own personal 'revolution' rather exactly to May or June 1933. It was like this. It began . . with Hayek. His "Prices and Production" is one of the influences that can be detected in The Theory of Wages; it could not have been otherwise, for 1931 was a Prices and Production year at the London School of Economics . . I did not in fact find it all easy to fit in whith my own ideas. What started me off in 1933 was an earlier work of Hayek's, his paper on 'Intertemporal Equilibrium', an idea which I found easier to reduce to my preferred (Paretian or Wicksellian) pattern.
    • John Hicks, "The Theory of Wages", 2nd Edition,1963, p. 307.
  • Hicks elaborated the concept of temporary equilibrium, perhaps the most original contribution of "Value and Capital", following the path laid down by Hayek and the Swedish school.
    • B. Ingrao & G. Israel, 1990, p. 239.
  • F. A. Hayek [is] probably the most prominent advocate of capitalism in the present period.
    • Peter Berger
  • No-one who knows Hayek's work can doubt that his attempt to restate liberal principles in a form appropriate to the circumstances and temper of the twentieth century has yielded a body of insights wholly comparable in profundity and power with those of his forebears in the classical liberal tradition.
    • John Gray
  • Hayek's work composes a system of ideas, fully as ambitious as the systems of Mill and Marx, but far less vulnerable to criticism than theirs because it is grounded on a philosophically defensible view of the scope and limits of human reason.
    • John Gray
  • At the time of his death, F. A. Hayek was unquestionably the world's preeminent spokesman for classical liberalism and its most important thinker.
    • Ronald Hamowy, "F. A. Hayek, on the Occasion of the Centenary of his Birth", Cato Journal. Vol. 9, No. 2. Fall, 1999).
  • The publication of two books .. helped to galvanize the concerns that were beginning to emerge among intellectuals (and many others) about the implications of totalitarianism. One was James Burnham's The Managerial Revolution .. [A second] Friedrich A. Hayek's The Road to Serfdom .. was far more controversial -- and influential. Even more than Burnham, Hayek forced into public discourse the question of the compatibility of democracy and statism .. In responding to Burnham and Hayek .. liberals [in the statist sense of this term as used by some in the United States] were in fact responding to a powerful strain of Jeffersonian anti-statism in American political culture .. The result was a subtle but important shift in liberal [i.e. American statist] thinking.
    • Alan Brinkley
  • The publication of Friedrich A. von Hayek's The Road to Serfdom in 1944 [is rightly seen] as the first shot in the intellectual battle that was to turn the tide in favor of conservatism [i.e. non-statist liberalism].
    • E. J. Dionne, Jr.
  • Hayek has as fine and as powerful a mind as is to be found anywhere, and [his] "Constitution of Liberty" is one of the most thoughtful works of the last decades.
    • Irving Kristol
  • It is in good part because of Professor Hayek's work [on the topic of social engineering], and also because of his profound insights -- most notably in "The Constitution of Liberty" -- into the connection between a free market, the rule of law, and individual liberty, that you don't hear professors saying today, as they used so glibly to say, that 'we are all socialists now.
    • Irving Kristol
  • The book, as it stands, seems to me to be one of the most frightful muddles I have ever read, with scarcely a sound proposition in it beginning with page 45, and yet it remains a book of some interest, which is likely to leave its mark on the mind of the reader. It is an extraordinary example of how, starting with a mistake, a remorseless logician can end up in bedlam.
    • John Maynard Keynes, in Collected Works, vol. XII on Hayek's Prices and Production (1931); Hayek provided historical background up to page 45, after that came his theoretical model.
  • In my opinion it is a grand book... Morally and philosophically I find myself in agreement with virtually the whole of it: and not only in agreement with it, but in deeply moved agreement.
  • Nearly two decades ago, during dinner with the late Nobel laureate Friedrich Hayek, I asked him if he had the power to write one law that would get government out of our lives, what would that law be? Hayek replied he'd write a law that read: Whatever Congress does for one American it must do for all Americans. He elaborated: If Congress makes payments to one American for not raising pigs, every American not raising pigs should also receive payments. Obviously, were there to be such a law, there would be reduced capacity for privilege-granting by Congress and less influence-peddling.
  • My eventual aim [in Neural Darwinism] is to show the bearing of this [structural] diversity [of individual nervous systems] upon the problem of generalization and upon phenomena that point up the difference between the sensory and the physical orders (Hayek 1952).
    • Gerald Edelman, "Neural Darwinism", 1987, p. 33).
  • Consider the two lines in the Wudt-Hering illusion . . This rather banal exercise serves to demonstrate that there is only a rough correspondence between what has been called the sensory order (Hayek 1952) and the physical order. Furthermore it bears upon point . . that the perceptual world is a world of adaptation rather than a world of complete veridicality.
    • Gerald Edelman, Neural Darwinism, 1987, p. 28).

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