公 法 评 论 http://www.gongfa.com/

Friedrich A. Hayek (1899-1992)

by Peter J. Boettke

Friedrich A. Hayek, who died on March 23, 1992, at the age of
92, was probably the most prodigious classical liberal scholar
of the 20th century. Though his 1974 Nobel prize was in
Economic Science, his scholarly endeavors extended well beyond
economics. He published 130 articles and 25 books ranging from
technical economics to theoretical psychology, from political
philosophy to legal anthropology, and from the philosophy of
science to the history of ideas. Hayek was no mere dabbler; he
was an accomplished scholar in each of these fields of
inquiry. He made major contributions to our understanding in
at least three different areas -- government intervention,
economic calculation under socialism, and development of the
social structure. It is unlikely that we will see the likes of
such a wide-ranging scholar of the human sciences again.
Hayek was born into a family of intellectuals in Vienna on
May 8,1899. He earned doctorates from the University of Vienna
(1921 and 1923). During the early years of the 20th century
the theories of the Austrian School of Economics, sparked by
Menger's Principles of Economics (1871), were gradually being
formulated and refined by Eugen Boehm-Bawerk, his
brother-in-law, Friedrich Wieser, and Ludwig von Mises. When
Hayek attended the University of Vienna, he sat in on one of
Mises' classes, but found Mises' anti-socialist position too
strong for his liking. Wieser was a Fabian socialist whose
approach was more attractive to Hayek at the time, and Hayek
became his pupil. Yet, ironically it was Mises, through his
devastating critique of socialism published in 1922, who turned
Hayek away from Fabian socialism.
The best way to understand Hayek's vast contributions to
economics and classical liberalism is to view them in light
of the program for the study of social cooperation laid out by
Mises. Mises, the great system builder, provided Hayek with
the research program. Hayek became the great dissecter and
analyzer. His life's work can best be appreciated as an
attempt to make explicit what Mises had left implicit, to
refine what Mises had outlined, and to answer questions Mises
had left unanswered. Of Mises, Hayek stated: "There is no
single man to whom I owe more intellectually." The Misesian
connection is most evident in Hayek's work on the problems with
socialism. But the insights derived from the analysis of
socialism permeate the entire corpus of his work, from business
cycles to the origin of social cooperation.
Hayek did not meet Mises when he was attending the University
of Vienna. He was introduced to Mises after he graduated
through a letter from his teacher, Wieser. The Hayek-Mises
collaboration then began. For five years, Hayek worked under
Mises in a government office. In 1927, he became the Director
of the Institute for Business Cycle Research which he and Mises
had set up together. The Institute was devoted to theoretical
and empirical examinations of business cycles.
Building on Mises' The Theory of Money and Credit (1912),
Hayek refined both the technical understanding of capital
coordination and the institutional details of credit policy.
Seminal studies in monetary theory and the trade cycle
followed. Hayek's first book, Monetary Theory and the Trade
Cycle (1929), analyzed the effects of credit expansion on the
capital structure of an economy.
Publication of that book prompted an invitation from Lionel
Robbins for Hayek to lecture at the London School of
Economics. His lectures there were published in a second book
on the "Austrian Theory of the Trade Cycle," Prices and
Production (1931), which was cited by the Nobel Prize Committee
in 1974.
Hayek's 1930-1931 lectures at the London School were received
with such great acclaim that he was called back to the
prestigious University of London and appointed Tooke Professor
of Economic Science and Statistics. At age 32, Hayek had
reached the pinnacle of the economics profession.
The Mises-Hayek theory of the trade cycle explained the
"cluster of errors" that characterizes the cycle. Credit
expansion, made possible by the artificial lowering of interest
rates, misleads businessmen; they are led to engage in ventures
that would not otherwise have appeared profitable. The false
signal generated by credit expansion leads to malcoordination
of the production and consumption plans of economic actors.
This malcoordination first manifests itself in a "boom," and
then, later, in the "bust" as the time pattern of production
adjusts to the real pattern of savings and consumption in the
economy.

Hayek versus Keynes

Soon after Hayek's arrival in London he crossed swords with
John Maynard Keynes. Keynes, a prominent member of the British
civil service then serving on the governmental Committee on
Finance and Industry, was credited by the academic community as
the author of serious books on economics. The Hayek-Keynes
debate was perhaps the most fundamental debate in monetary
economics in the 20th century. Beginning with his essay, "The
End of Laissez Faire" (1926), Keynes presented his
interventionist pleas in the language of pragmatic classical
liberalism. As a result, Keynes was heralded as the "savior of
capitalism," rather than being recognized as the advocate of
inflation and government intervention that he was.
Hayek pinpointed the fundamental problem with Keynes's
economics -- his failure to understand the role that interest
rates and capital structure play in a market economy. Because
of Keynes's unfortunate habit of using aggregate (collective)
concepts, he failed to address these issues adequately in A
Treatise on Money (1930). Hayek pointed out that Keynes's
aggregation tended to redirect the analytical focus of the
economist away from examining how the industrial structure of
the economy emerged from the economic choices of individuals.
Keynes did not take kindly to Hayek's criticism. He
responded at first by attacking Hayek's Prices and Production.
Then Keynes claimed that he no longer believed what he had
written in A Treatise on Money, and turned his attention to
writing another book, The General Theory of Employment,
Interest, and Money (1936), which in time became the most
influential book on economic policy in the 20th century.
Rather than attempting to criticize directly what Keynes
presented in his General Theory, Hayek turned his considerable
talents to refining capital theory. Hayek was convinced that
the essential point to convey to Keynes and the rest of the
economics profession concerning monetary policy lay in capital
theory. Thus Hayek proceeded to set forth his thesis in The
Pure Theory of Capital (1941). However correct his assessment
may have been, this book, Hayek's most technical, was his least
influential. By the end of the 1930s, Keynes's brand of
economics was on the rise. In the eyes of the public Keynes
had defeated Hayek. Hayek lost standing in the profession and
with students.
During this time, Hayek was also involved in another grand
debate in economic policy -- the socialist calculation debate,
triggered by a 1920 article by Mises which stated that
socialism was technically impossible because it would lack
market prices. Mises had refined this argument in 1922 in
Socialism: An Economic and Sociological Analysis, the book
which had profoundly impressed the young Hayek when it
appeared. Hayek developed Mises' argument further in several
articles during the 1930s. In 1935, he collected and edited a
series of essays on the problems of socialist economic
organization: Collectivist Economic Planning. Additional Hayek
essays on the problems of socialism, and specifically the model
of "market socialism" developed by Oskar Lange and Abba Lerner
in their attempt to answer Mises and Hayek, were later
collected in Individualism and Economic Order (1948).
Again, the economics profession and the intellectual
community in general did not appreciate Hayek's criticism.
Had not modern science given man the ability to control and
design society according to moral rules of his own choosing?
The planned society envisioned under socialism was supposed to
be not only as efficient as capitalism (especially in view of
the chaos capitalism was said to generate with its business
cycles and monopoly power), but socialism, with its promise of
social justice, was expected to be fairer. Moreover, it was
considered the wave of the future. Only a reactionary, it was
argued, could resist the inevitable tide of history. Not only
had Hayek appeared to lose the technical economic debate with
Keynes and the Keynesians concerning the causes of business
cycles but, in view of the rising tide of socialism throughout
the world, his general philosophical perspective was
increasingly labeled as a primitive version of liberalism.

The Road to Serfdom

Hayek, however, kept on refining the argument for the liberal
society. The problems of socialism that he had observed in
Nazi Germany and that he saw beginning in Britain led him to
write The Road to Serfdom (1944). This book forced advocates
of socialism to confront an additional problem, over and beyond
the technical economic one. If socialism required the
replacement of the market with a central plan, then, Hayek
pointed out, an institution must be established that would be
responsible for formulating this plan. Hayek called this
institution the Central Planning Bureau. To implement the plan
and to control the flow of resources, the Bureau would have to
exercise broad discretionary power in economic affairs. Yet
the Central Planning Bureau in a socialist society would have
no market prices to serve as guides. It would have no means of
knowing which production possibilities were economically
feasible. The absence of a pricing system, Hayek said, would
prove to be socialism's fatal flaw.
In The Road to Serfdom Hayek also argued that there was good
reason to suspect that those who would rise to the top in a
socialistic regime would be those who had a comparative
advantage in exercising discretionary power and were willing to
make unpleasant decisions. And it was inevitable that these
powerful men would run the system to their own personal
advantage.
Hayek was right on both counts, of course -- on the economic
as well as the political problem of socialism. The 20th
century is replete with the blood of the innocent victims of
socialist experiments. Stalin, Hitler, Mao, Pol Pot, and a
host of lesser tyrants have committed heinous crimes against
humanity in the name of one or another variant of socialism.
Totalitarianism is not an historical accident that emerges
solely because of a poor choice of leaders under a socialist
regime. Totalitarianism, Hayek shows, is the logical outcome
of the institutional order of socialist planning.
After the defeat in the public forum of his critique of
Keynes and the controversy that arose over the debate on
economic calculation under socialism, Hayek turned his
attention away from technical economics and concentrated on
restating the principles of classical liberalism. Hayek had
pointed out the need for market prices as conveyors of
dispersed economic information. He showed that attempts to
replace or control the market lead to a knowledge problem.
Hayek also described the totalitarian problem associated with
placing discretionary power in the hands of a few. This led
him to examine the intellectual prejudices which blind men from
seeing the problems of government economic planning.
During the 1940s, Hayek published a series of essays in
professional journals examining the dominant philosophical
trends that prejudiced intellectuals in a way that did not
allow them to recognize the systemic problems that economic
planners would confront. These essays were later collected and
published as The Counter-Revolution of Science (1952). The
Counter-Revolution, perhaps Hayek's best book, provides a
detailed intellectual history of "rational constructivism" and
the problems of "scientism" in the social sciences. It is in
this work that Hayek articulates his version of the Scottish
Enlightenment project of David Hume and Adam Smith of using
reason to whittle down the claims of reason. Modern
civilization was not threatened by irrational zealots hell-bent
on destroying the world, but rather it was the abuse of reason
by rational constructivists trying to consciously design the
modern world that had placed mankind in chains of his own
making.
In 1950, Hayek moved to the University of Chicago, where he
taught until 1962 in the Committee on Social Thought. While
there, he wrote The Constitution of Liberty (1960). This work
represented Hayek's first systemic treatise on classical
liberal political economy.
In 1962, Hayek moved to Germany, where he had obtained a
position at the University of Freiburg. He then increasingly
centered his efforts on examining and elaborating the
"spontaneous" ordering of economic and social activity. Hayek
set about to reconstruct liberal social theory and to provide a
vision of social cooperation among free individuals.
With his three-volume study, Law, Legislation and Liberty
(1973-1979) and The Fatal Conceit (1988), Hayek extended his
analysis of society to an examination of the "spontaneous"
emergence of legal and moral rules. His political and legal
theory emphasized that the rule of law was the necessary
foundation for peaceful co-existence. He contrasted the
tradition of the common law with that of statute law, i.e.,
legislative decrees. He showed how the common law emerges,
case by case, as judges apply to particular cases general rules
which are themselves products of cultural evolution. Thus, he
explained that embedded within the common law is knowledge
gained through a long history of trial and error. This insight
led Hayek to the conclusion that law, like the market, is a
"spontaneous" order -- the result of human action, but not of
human design.
Hayek's work in technical economics, political and legal
philosophy, and methodology of the social sciences has
attracted great interest among scholars of at least two
generations, and interest in his work is growing. His
contributions to economic and classical liberalism are vast and
will live on in the progressive research program he has
bequeathed to future generations of scholars.
Friedrich Hayek lived a long and fruitful life. He had to
endure the curse of achieving fame at a young age and then
having that fame turn to ridicule as the Keynesians and
socialists gained popularity and the intellectual and political
world moved away from his ideas. Fortunately he lived long
enough to see his towering intellect recognized again. Both
Keynesians and socialists were eventually defeated soundly by
the tide of events and the truth of his teachings. Classical
liberalism is once again a vibrant body of thought. Austrian
economics has re-emerged as a major school of economic thought,
and younger scholars in law, history, economics, politics, and
philosophy are pursuing Hayekian themes. We may mourn the loss
of this great champion of liberalism, but at the same time we
can rejoice that F. A. Hayek left us such a brilliant gift.
A great scholar is defined not so much by the answers he
provides as by the questions he asks. Successive generations
of scholars, intellectuals, and political activists throughout
the world will long be pursuing questions that Hayek has
posed.



Peter J. Boettke is a professor of economics at New York
University and the author of The Political Economy of Soviet
Socialism and Why Perestroika Failed.



______________________________________
公法评论
http://gongfa.yeah.net
http://www.gongfa.com

email to:
[email protected]