Economists From The United Kingdom

"Hayek’s Road to Serfdom (1944), also written during the war, was too pessimistic, I believe, about the capability of present-day capitalism in most Western countries to adjust to maladjustments in the structure of production without causing intolerable unemployment. Excessive pessimism also appears in Hayek’s later writings. In Full Employment at Any Price? (1975), for example, he refers to the inflationary excesses of the 1970s as “the present crisis,” I do not wish to minimize the dangers of inflation. However, the experience of the 1980s bothin the United States and Europe shows that inflation can be stopped without producing more than relatively mild recessions."

"At the time of his death, F.A. Hayek (1899–1992) was unquestionably the world’s preeminent spokesman for classical liberalism and its most important thinker. He led an immensely productive life, over the course of which he made significant contributions to a variety of disciplines, among them economics, political and social theory, psychology, and the history of ideas."

"There were two explanations, and one is that in Hayek and Friedman you had an absolutely marvelous cast—two people, one very bouncy and saucy and cheeky and outspoken, vigorous. This is Friedman. He was always bouncing out with ideas; sometimes they were a bit farfetched. Then you had Hayek, this very correct and rather serious, portly, gracious, slow, rather ponderous-speaking, sometimes thinking what his next sentence is going to be. And they were men unruled by any ambition, not trying to create a party, to get elected, to win votes—any of that. It was an amazing success of upright men of integrity, intellectual brilliance, not flashy, but very impressive to watch them performing over a wide range of topics."

"It was from Hayek that I began."

"Hayek was making us think of the productive process as a process in time, inputs coming before outputs."

"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')"

"If Hayek believes that the spending of newly-printed currency on employment and consumption will worsen our current terrible depression, then Hayek is a nut."

"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."

"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," which he expresses admirably in the following passage from his last lecture: "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.""

"Hayek's mature appreciation of a society built on the foundations of individual rights, the rule of law, and limited government can thus be traced directly to his own extension of the subjectivism of the Austrian tradition in economics. It must be emphasized that the economic understanding of markets which emerges from the Austrian tradition differs sharply from the understanding of markets which informs the minimal-statist position of many mainstream economists."

"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."

"Hayek was one of the most significant intellectuals of the twentieth century, but though he was extremely important for people in Western countries, he was not sufficiently appreciated and recognized there. I remember being in "his" Austria in November 1989, one day before the Velvet Revolution in my country, and hearing at the University of Linz that "Hayek is dead in Austria." I reacted by saying that we would bring him back to life in Prague again. I dare argue that Hayek was more important for us in the East than for people in the West. Westerners did see a real danger in Communism, but did not see that they were beginning the path down their own Hayekian "slippery road." They often considered his views overplayed and exaggerated. For us, Hayek was our guru, our teacher, our lighthouse, our compass in the depressing era of Communism. It was easier for Hayek to capture our hearts... Two decades after Hayek´s death history is on the move again. State interventionism is back and growing, the Reagan-Thatcher era long forgotten, as is the Communist era. State paternalism, regulation and control, social and environmental blocking of the functioning of markets, constructivism and dirigism are here again and, especially in Europe, are stronger than ever. We must get back to Hayek’s teachings. We must once again take his books into our hands and try to spread his thoughts all over the world, because now they are as relevant as in the past."

"Hayek’s quarrels with Aristotle are of the same character as his conversations with Sir Karl Popper and Milton Friedman: the welcome criticism of peers, those who can recognise the same premisses needed to define a given problem, however they may come to differ over their conclusions. Only now do we begin to realise that something valuable may have been driven from the world when the continuity and tradition of Western civilisation was shattered in the same blows that destroyed unwanted empires. Now in Eastern Europe there is nostalgic talk of the good old days under the Hapsburg empire. The evolution of knowledge is inseparable from the evolution of language, and something invaluable is lost when 'sound bytes' replace the human voice, heard in face-to-face discussion of mutual concerns. Inflection counts for much, and what is not said can only be recognised when allusion and irony are possible. So Vienna waltzes."

"The most intelligent defender of capitalism today … who has as fine and as powerful a mind as is to be found anywhere."

"As a result of the efforts of Hayek, Friedman, and the many others who share their general outlook, the idea of a centrally planned and centrally administered economy, so popular in the 1930s and early 1940s, has been discredited."

"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."

"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."

"But the Hayek thing is almost entirely about politics rather than economics. Without The Road To Serfdom — and the way that book was used by vested interests to oppose the welfare state — nobody would be talking about his business cycle ideas."

"Marxist theory and over-capitalisation theories overlap. The true heir to this theory is an arch-conservative, von Hayek, who paradoxically and honestly recognised Marx's paternity... The essential point is not to be found in von Hayek's conservative conclusions, but in his analysis of the causes of the boom and depression, which, as he himself admits, strongly resembles the Marxian one."

"The central dilemma of Hayek's political philosophy is, given his view of the limited role reason can play in social life, how is it possible to mount a systematic defence of liberalism without falling victim to the very kinds of rationalism he criticises? This difficulty stays unresolved in Hayek’s political thought because it is informed by two incompatible assumptions about what reason can achieve."

"This tension in Hayek's thought, between the rationalist advocacy of liberal reform and the anti-rationalist critique of all social reconstruction, has inclined one commentator to describe his political theory as 'Utopian non-engineering'. While the word 'Utopian' might exaggerate a little the rationalist character of his thought, this term captures well the unstable nature of the Hayekian system of ideas. For, in the end, a Humean scepticism about the powers of reason is incompatible with a Kantian insistence on the priority of rationally justifiable principles. Hayek has tried to cast himself in the image of that most improbable of creatures: the principled sceptic."

"Hayek’s views should be considered because, in addressing institutional questions, he has not made the mistake of confining the problems of liberalism within national boundaries."

"Hayek should be taken seriously because he has correctly identified as the most serious problems confronting civilization in the twentieth century the problems of nationalism and totalitarianism. Even with the dereliction of European communism at the end of the twentieth century, the problems which remain or are reemerging in the shape of ethnic conflict, separatist national movements, and regional trading blocs stem from practices and ideas which the liberal tradition has consistently criticized: ideas hostile to individualist, universalist, and egalitarian moral principles. While thinkers like Hannah Arendt have also recognized the threat and moral danger posed by totalitarianism, it is in Hayek’s work that we have the most thorough attempt to understand the logic of its institutional alternative."

"Roughly speaking, Lundberg argued that Gunnar Myrdal's work has been enormously important, and noted that there was local pressure on the Nobel Prize Committee to recognize him, but wondered how it would be received abroad if this was done. (Remember that the Prize was then rather new, and Lundberg had to be careful about its reputation.) Giersch's reply was that the quality of the work surely merited the award, but maybe the politics of it would be easier if there was a joint recipient who was neither Swedish nor shared Myrdal's views – what about Hayek? That's it – is this where Hayek's prize came from, or was he already high on the list, or what?"

"Hayek is by no means as rational and irrefutable as the right would have it. Indeed, he is often eccentric. He is a romantic, a serious deficit in a social theorist. Many of his arguments rest on a reductionist idea of socialism, and his conception of the sources of law can only be called mystical. But Hayek is not merely an eccentric mystic. In Road [to Serfdom], first published in 1944, he makes a powerful and far-ranging critique of state control of economic life. At least as far as he takes the argument in this book, there isn’t much that thoughtful modern liberals or even democratic socialists who understand the power of markets would necessarily object to—although they might feel that there is more to the story than Hayek acknowledges."

"Hayek doesn’t seem to grasp that human beings can exist both as individuals and as members of a society, without necessarily subordinating them to the needs of an imposed social plan (although he acknowledges that the state can legitimately serve social needs, he contradictorily views collective benefits as incompatible with individual freedom). He rejects the very concept of social justice, for much the same reasons that he rejects the arbitrary valuation of labor: in Hayek’s view there is no way to put an objective value on a grievance or to weigh it against other claims. And because he locates all responsibility and agency only at the level of the individual, he sees no way in which any claim can be generalized to society. Hayek’s political philosophy recognizes only negative rights. Positive fulfillment beyond the most basic needs is a matter of individual striving."

"In the 20th century, three world wars facilitated a Communist revolution, a Fascist backlash and the subsequent collapse of both. The weakness of bureaucratic information flows (relative to market-based competitors) undermined Communist economies – a point emphasized by Frederick Hayek, the co-leader (with Murray Rothbard) of the fourth generation Austrian School of Economics. Flows of information and disinformation played pivotal roles in the First, Second and Third (that is, Cold) World Wars."

"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."

"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."

"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]."

"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 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."

"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."

"All of this, of course, establishes Hayek's primacy over Hicks in the origin of the notion of intertemporal equilibrium."

"Although the democratic left is unlikely to find his views very palatable, at least one lesson can be learned by contemplating Hayek’s life. He shows us what can sometimes be achieved by sticking doggedly to your guns, ignoring intellectual fashion, and waiting until your moment comes. Hayek had only one tune to play, the virtues of the free-market economy as opposed to central planning, but he played it with panache, could improvise longer or shorter versions as the occasion demanded, and above all never gave up practicing."

"He relapsed into a crude identification of socialism with Soviet-style central planning, even though, in the West at any rate, there were very few actual socialists who continued to accept that equation."

"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."

"Friedrich A. von Hayek, winner of the Nobel Memorial Prize in Economic Science, says that on the whole he approves of the economic policy of the Reagan Administration. Yet, when he discusses particulars, Professor von Hayek - a conservative who is best known as an unrelenting opponent of Socialism and lesser forms of economic interventionism -sounds less than approving. He applauds the determination in Washington and London to stop inflation but laments that both Governments seek gradual progress. "You have to do it rapidly and drastically," he says."

"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))."

"I was very flattered when I once got a note from Hayek saying that he would like to come and talk with me. He had read The Rise of the Western World, and he thought it was a very interesting book. He came to Seattle and spent two days with me. We had a good time and I really enjoyed him. But I wish I had known then what I have learned since, so that I could have appreciated his visit more appropriately. I had never read his stuff on cognitive science in those days. He still seems to me the greatest economist of the twentieth century, and by a long way. If you look for people who really want to try and understand the world, Hayek came closer to that ideal than anybody who has ever lived."

"Arguably the most influential economist of this century."

"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."

"I think that I have learned more from you than from any other living thinker, except perhaps Alfred Tarski … but not even excepting Russell."

"Our intellectual productivity is declining. Still, yours is admirable. You can still lecture (I cannot)....I know that you feel that you cannot do the work you used to do, and although you have told me and others about it, you kept it hidden from your observant friends—even though you complain to them of it, and draw their attention to it.... But apart from the field of intellectual production, you have done so much for others. There are many former students you have encouraged and helped on their way. And there are many who, like myself, have been helped by you in the most critical stages of their development."

"You will never know how much you have done for me. When I was in New Zealand, out of the world and buried by all my philosophical colleagues, you remembered me. It was through you that I came back into the world. It was through you (and Ernst Gombrich) that The Open Society was published, after a period (before you interfered) which led...me almost to despair. And when I came to the LSE [London School of Economics], through you, you gave me so much encouragement and help....There cannot be, ever, equality or reciprocity between you and me. I never could do anything for you, and it is extremely unlikely that I ever shall."

"I have created myself a kind of generational gulf between you and myself. Although you were only 3 years old when I was born, you became, as I now realize, a kind of father figure....[E]ven now, when I am 82, and we have been friends for so many years, you still are! And, strangely enough, you yourself...described your feelings towards me as those towards a young man who has made good."

"I should like to mention that I did not know Hayek’s book (The Road to Serfdom) when I wrote mine; in fact, my book was finished about six months before his. All I knew was a little pamphlet “Freedom and the Economic System,” in which he advocates “Planning for Freedom.”...The acknowledgement in my book refers to his practical help rather than to his influence; but since I wrote my book, I have read Hayek’s book (and several excellent articles), and I can only say that I have learned a very great deal from it. A few leftists here in England are in the same position ....Hayek, who I had seen only four or five times before, has been really wonderful to me in his many repeated approaches to various publishers, and I understand from the people here in the School [the London School of Economics] that he is always so. His interest in my book was mainly due to the fact that he too is hoping for a common basis of discussion for socialists and liberals."

"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."

"As someone who came to Fredrick von Hayek comparatively late in life, I’m still catching up with him…Indeed, many of the insights I thought I had discovered in my own readings and writings on the frontier of evolutionary biology and economics it turns out Hayek had long before me…The field of anthropology and archaeology needs Hayek quite badly."

"What distinguishes the theoretical men of the right from their counterparts on the left, Anderson writes, is that their voices were “heard in the chancelleries.” Yet whose voice has been more listened to, across decades and continents, than Hayek’s? Schmitt and Strauss have attracted readers from all points of the political spectrum as writers of dazzling if disturbing genius, but the two projects with which they are most associated—European fascism and American neoconservatism—have never generated the global traction or gathering energy that neoliberalism has now sustained for more than four decades. It would be a mistake to draw too sharp a line between the marginal children of Nietzsche—with political man on one branch of the family tree, economic man on the other. Hayek, at times, could sound the most Schmittian notes. At the height of Augusto Pinochet’s power in Chile, Hayek told a Chilean interviewer that when any “government is in a situation of rupture, and there are no recognized rules, rules have to be created.” The sort of situation he had in mind was not anarchy or civil war but Allende-style social democracy, where the government pursues “the mirage of social justice” through administrative and increasingly discretionary means. Even in The Constitution of Liberty, an extended paean to the notion of a “spontaneous order” that slowly evolves over time, we get a brief glimpse of “the lawgiver” whose “task” it is “to create conditions in which an orderly arrangement can establish and ever renew itself.” (“Of the modern German writings” on the rule of law, Hayek also says, Schmitt’s “are still among the most learned and perceptive.”) Current events seemed to supply Hayek with an endless parade of candidates. Two years after its publication in 1960, he sent The Constitution of Liberty to Portuguese strongman António Salazar, with a cover note professing his hope that it might assist the dictator “in his endeavour to design a constitution which is proof against the abuses of democracy.” Pinochet’s Constitution of 1980 is named after the 1960 text. Still, it’s difficult to escape the conclusion that though Nietzschean politics may have fought the battles, Nietzschean economics won the war. Is there any better reminder of that victory than the Detlev-Rohwedder-Haus in Berlin? Built to house the Luftwaffe during World War II, it is now the headquarters of the German Ministry of Finance."

"Here’s where things get interesting. Though Hayek abandoned formal economics for social theory after the 1930s, his social theory remained dedicated to elaborating what he saw as the essential problem of economics: how to allocate finite resources between different purposes when society cannot agree on its basic ends. With its emphasis on the irreconcilability of our moral ends—the fact that members of a modern society do not and cannot agree on a scale of values—Hayek’s point was fundamentally political, the sort of insight that has agitated everyone from Thomas Hobbes to John Rawls and Jürgen Habermas. Hayek was unique, however, in arguing that the political point was best addressed—indeed, could only be addressed—in the realm of the economic. No other discourse— not moral philosophy, political theory, psychology, or theology— understood so well that our ultimate moral values and political purposes get expressed and revealed only under conditions of radical economic constraint—when one is forced to assign a limited set of resources to ends that favor different sectors of society."