Abstract
Hayek was born in Vienna, Austria, in the last year of the nineteenth century. His academic career would take him first to London, then to Chicago, Salzburg, and finally, Freiburg. In Vienna, he studied under Friedrich Wieser, one of the leading economists of his generation, and then began research under the direction of his intellectual mentor, Ludwig von Mises. Recruited in 1931 by the London School of Economics, he rapidly became a major academic and policy figure. During his time in London, Hayek became, alongside his colleague Lionel Robbins, engaged in debates in macroeconomics simultaneously with his debate on the problems of economic planning and economic calculation under socialism. Hayek’s vision of the price system and the liberal market order emerged from these debates, after which, for the rest of his career, he sought to rearticulate the epistemic role of institutions that underpin a liberal market order.
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Notes
- 1.
Kenneth Arrow is the most cited. Also see Boettke (1999, xiv–xv), where I compare the general citation pattern of Hayek with his peers and argue that his analytical impact in modern economics is less than what it should be. Though in this citation study, the pattern does show an increasing interest in Hayek from relative neglect in the 1970s (Social Science Citation Index (SSCI) citations less than 100 per year) to extreme interest in the late 1980s and 1990s (SSCI citations in the 200–300 range per year). But those citations are more likely in the broad social science journals rather than the main scientific journals of economics. See the appendix A, where an updated citation study is provided, and appendix B, where the list of the 20 most influential articles in the American Economic Review (AER) are listed and “The Use of Knowledge in Society ” is among those selected. Also see the Living Bibliography on Hayek that I collected in the process of researching this book with the assistance of my graduate students (Boettke 2018).
- 2.
It is important to realize that at this time, as Hayek has stressed, the Austrian school of economics was not at all understood in an ideological sense. The Menger /Böhm-Bawerk /Mises branch was well known for its liberalism, but that was not seen as essential to the scientific contributions of the school, which were not tied to any political philosophy, but were, instead, focused on marginal utility analysis. See Hayek’s preface to the 1981 edition of Socialism (Mises [1922] 1981) for its impact on him (and others of his generation). Lionel Robbins in the UK would be similarly impacted upon reading Mises ’s Socialism in 1923 and began efforts to secure the translation of Mises ’s work in to English at that time. See Lionel Robbins, Autobiography of an Economist (1971, 106) and Susan Howson’s Lionel Robbins (2011, 135) for a description of Robbins’s enthusiasm for this “revolutionary” work on the economic problems of socialism.
- 3.
It is probably important to note that Hayek believed that Keynes’s argument in The General Theory would not have any lasting impact on the economics profession because it was based on an assumption of abundance rather than scarcity, an assumption that causes “confusion among economists and even the wider public” ([1941] 2007, 341).
- 4.
In a letter to Fritz Machlup dated July 31, 1941, where Hayek is responding to a request by Machlup to comment on the early drafts of Monopoly and Competition: “Let me only say I was particularly pleased to see that your developments fit in so well with my methodological views and that in many ways border on views on competition which I hoped myself some time to develop. You more or less imply what I always stress, that competition is a process and not a state, and that if it were ever ‘perfect’ in the strict sense it would at the same time disappear.” Also see Mises’s Notes and Recollections ([1940] 2013), where he describes the Austrian approach as one focusing on the real-world dynamics of price formation and market coordination in opposition to the equilibrium theorizing of other branches of neoclassical economics. In a letter Mises wrote to Hayek in 1941 after attending the American Economic Association (AEA) meetings, he refers to “our” method of “process analysis.” The modern Austrian school (e.g. Kirzner ) mantra of methodological individualism, radical subjectivism, and market process analysis was evident from Menger to Mises and was understood as common knowledge among the Viennese students of the tradition. Also see Erwin Dekker, The Viennese Students of Civilization (2016) for a discussion of the core ideas in the Austrian tradition, and especially the intellectual community in the 1920s and 1930s.
- 5.
As Keynes famously commented on Hayek’s The Road to Serfdom in a letter dated June 28, 1944, “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.” Keynes goes further and states his disagreement, arguing for a “middle way” course, which Hayek found to be inherently unstable: “I come finally to what is really my only serious criticism of the book. You admit here and there that it is a question of knowing where to draw the line. You agree that the line has to be drawn somewhere [between free-enterprise and planning], and that the logical extreme is not possible. But you give us no guidance whatever as to where to draw it. In a sense this is shirking the practical issue. It is true that you and I would probably draw it in different places. I should guess that according to my ideas you greatly underestimate the practicability of the middle course. But as soon as you admit that the extreme is not possible, and that a line has to be drawn, you are, on your own argument, done for since you are trying to persuade us that as soon as one moves an inch in the planned direction you are necessarily launched on the slippery path which will lead you in due course over the precipice” Reprinted in John Maynard Keynes, Activities 1940–1946. Shaping the Post-War World: Employment and Commodities (1980, 385).
- 6.
Though beyond the scope of this book, the circumstances of this decision are worth noting here. Hayek married his first wife, Helen Berta Maria von Fristch, on August 4, 1926, with whom he had two children, Christine Maria Felicitas in 1929 and Laurence Joseph Heinrich in 1934 (Ebenstein 2003, 44). Hayek later recounted the circumstances of the marriage, his subsequent divorce, and remarriage: “I married on the rebound when the girl [Helen Bitterlich] I had loved, a cousin, married somebody else. She is now my present wife. But for 25 years I was married to the girl whom I married on the rebound, who was a very good wife to me, but I wasn’t happy in that marriage. She refused to give me a divorce, and finally I enforced it” (Hayek [1978] 1983, 395).
- 7.
In the University of California, Los Angeles (UCLA) oral history interviews, Hayek, in response to a question as to whether he consciously moved from technical economics to social philosophy, responded in the 1930s, “No, it came from my interest in the history of the ideas that had first led economics in the wrong direction. That’s what I did in the ‘counterrevolution of science ’ series of articles, which again sprung from my occupation with planning similar things, and it was these which led me to see connections between what happened in economics and what happened in the approach to the other social sciences. So I acquired gradually a philosophy, in the first instance, because I needed it for interpreting economic phenomena that were applicable to other phenomena. It’s an approach to social science very much opposed to the scientistic approach of sociology, but I find it appropriate to the specialized disciplines of the social sciences—essentially economics and linguistics, which are very similar in their problems” (Hayek [1978] 1983, 196).
- 8.
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Boettke, P.J. (2018). Hayek: An Overview of His Life and Work. In: F. A. Hayek. Great Thinkers in Economics. Palgrave Macmillan, London. https://doi.org/10.1057/978-1-137-41160-0_2
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