Friedrich Hayek

"Hayek frequently argued that any failure to adequately mend our ways—abandon “our” supposed infatuation with “social justice” and other “high ideals”—would inexorably put us in the hands of the devil. Arguably, “we”—Obama and company clearly included—have yet to change our ways."

"Much as Hayek’s penchant for claiming that "bad" interventionist policy will ineluctably drive us along the road to serfdom—ultimately culminating in full-blown command planning and political tyranny— is clearly apparent in his 1940s writings, the very same sentiments pervade the third part of The Constitution of Liberty."

"Hayek was never blind to the potential difficulties inherent in this political synthesis, nor dismissive of the serious criticisms of capitalist society and liberal theory presented by thinkers of the left. He explicitly disavowed the ideal of laissez faire and distanced himself from the sort of free market utopianism common among more extreme libertarians. He thought it foolish to pretend that capitalism always rewards those who work the hardest or are otherwise deserving, advocated a minimal social safety net for those incapable of supporting themselves in the market, and had no objection to government taking on tasks far beyond those defining the "minimal state" of Nozick’s libertarianism, so long as this did not result in monopoly and private firms were allowed to compete with government for provision of the services in question. Like Marx, he believed that liberal capitalist society has a tendency to produce alienation, insofar as the impersonal rules of conduct upon which it rests necessarily eschew any reference to a common social end or purpose, and thus cannot satisfy the deepest human yearnings for solidarity. Unlike Marx, he also thought we nevertheless simply have no alternative to capitalism if we want to maintain the level of individual autonomy and material prosperity that are the most prized characteristics of modernity, and that it is naive and dangerous to pretend otherwise."

"What of Ronald Reagan and Margaret Thatcher and their battles against government control of the economy? Here Hayek surprises. He does not disapprove of Reagan and Thatcher, but he has no high opinion of modem politicians in general. He does, however, say that Reagan's and Thatcher's policies "are as reasonable as we can expect at this time. They are modest in their ambitions." Modesty. The capacity to understand that well-meaning politicians — and their advisers, the intellectuals — will only wreak mischief if they try to guide economic development: This antipolitical concept is at the heart of Hayek's theory of economic and social development."

"There was someone who is clearly very important who also was not a member of the scientific commission, but whose career and trajectory was ultimately very important for the definition of contemporary neo-liberalism. This is the Austrian von Hayek. He came from Austria and from neo-liberalism; he emigrated at the time of, or just before, the Anschluss. He went to England and also to the United States. He was very clearly one of the inspirations of contemporary American liberalism, or of American anarcho-capitalism if you like, and he returned to Germany in 1962 where he was appointed professor at Freiburg, thus closing the circle."

"I’ve always thought, incidentally, that many of us should welcome the fact that...a particular policy idea we hold does have this adverse effect on the opinions of other people. I think this is a very good thing, because it means that those of us who hold our views have to be better to get recognized than people who hold the other views. And in the long run, what matters is the quality of people who propose the ideas and not their number and not their position. It is because it is the quality of these ideas that matters so much that Hayek’s ideas have been so wide-spread and have had such an influence, and that you are now seeing the rise in the scientific as well as in the other parts of the world of more people of this particular kind of persuasion.... ... I am one of those who has learned a great deal from Hayek. I hope he is as effective as I think he will be in his teaching in Germany, but I also hope that we will see him back here very often indeed."

"Friedrich Hayek's influence has been tremendous. His work is incorporated in the body of technical economic theory; has had a major influence on economic history, political philosophy and political science; has affected students of the law, of scientific methodology, and even of psychology."

"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."

"In terms of his personal characteristics, Hayek was a very complicated personality. He was by no means a simple person. He was very outgoing in one sense but at the same time very private. He did not like criticism, but he never showed that he didn’t like criticism. His attitude under criticism, as I found, was to say: "Well, that’s a very interesting thing. At the moment, I’m busy, but I’ll write to you about it more later." And then he never would! On the other hand, he wasn’t like von Mises. He wasn’t intolerant at all. You cannot conceive of Hayek doing the kind of thing that Mises did, when, for example, he wouldn’t talk to Machlup for three years because Machlup had come out for floating exchange rates at a Mont Pelerin meeting. Hayek did not do that. That was, I believe, because of the influence of the London School on him. He was very much tempered by the London School."

"Let me emphasize. I am an enormous admirer of Hayek, but not for his economics. That, again, is subject to misunderstanding. It depends on what you mean by economics. I’m not talking about his understanding of economics, his application of economics to the real world, or anything like that, but his contributions to the science of economics, not to economic practice, not to anything else. I think Prices and Production was a very flawed book. I think his capital theory book is unreadable. I cannot say I’ve read it. [laughter] It’s very unreadable. On the other hand, The Road to Serfdom is one of the great books of our time. His writings in [political theory] are magnificent, and I have nothing but great admiration for them. I really believe that he found his right vocation—his right specialization—with The Road to Serfdom. His earlier works were intended to be part of the literature of technical economics as a science, and, indeed, it was that characteristic of them that impressed Lionel Robbins and led Lionel to bring him from Austria to London. I never could understand why they were so impressed [at the London School of Economics] with the lectures that ended up as Prices and Production, and I still can’t.... these very confused notions of periods of production, different orders of products, and so on."

"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."

"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."

"Sixty-two years ago I spent a year in what is known at Harvard as the other Cambridge. It was then in the high pulse of the Keynesian Revolution. Economic discussion was constant, intense, but London also called; once a week I came up to seminars here at the London School of Economics. A major attraction was Friedrich von Hayek, the noted conservative, author of A Road to Serfdom, his widely read analysis of the disastrous but emerging welfare state. He, however, was only slightly heard. The two hours were given over, all but exclusively, to telling him he was wrong. I found myself in support of this correction; it was education by the rebuke of error. (I trust that will not be the tendency on this pleasant and, for me, nostalgic occasion.) Over the years I’ve often presented myself to ardent conservatives as a student of von Hayek; it has added in an agreeable way to their normal confusion."

"Hayek's greatest failure is his neglect of the problem of private power. All his efforts go into the denunciation of state power, but he has little to say about private coercion."

"Hayek's attempt to delegitimize one side of the Western tradition is one of the most significant ideological closures in his work. It prevents him from seeing the close ties which exist between liberalism and socialism."

"Hayek’s lasting achievement was to focus attention on the limited and fragmented nature of knowledge in modern societies and the need for social and economic theorists to make that the cornerstone of their thinking. Yet in some ways he remained trapped in the rationalism he was so keen to reject. If our reason is so feeble, and if knowledge is necessarily imperfect and dispersed, how do we know this to be true? To make that claim Hayek has to take up the privileged status of observer that he is so critical of in constructivist rationalism. If he were not prepared to do so he could not justify his project of social and economic theory at all. Despite his denunciation of the ills of scientism and constructivism, Hayek is closer to the rationalism he criticizes than he might like to acknowledge."

"Hayek was an acute social theorist, but also an ideologue. He developed one of the most sophisticated theories of markets in social science, but he was also a market fundamentalist with a deep-rooted distrust of all forms of state regulation and state intervention, which tended to become more pronounced as he grew older. […] The paradox of Hayek's work however is that he stopped short of advocating either the kind of anarcho capitalism sought by some libertarians, or even the strict minimal state proposed by Robert Nozick. On the contrary he thought that the state needed to retain very strong powers to police the market order and prevent powerful interest groups such as trade unions from subverting it. But he fretted constantly about how this might be achieved, and how democratic governments could be persuaded to cease interfering with markets."

"Hayek's theory of knowledge is his greatest achievement, and offers insights that should be utilised by both right and left, but he failed to apply them to one of the central aspects of the modern era - the way science and technology are utilised in increasingly perverse ways by a deregulated neo-liberal market economy, which if not checked will have devastating consequences for the biosphere and the survival of the human species. It is an example of how his market fundamentalism blinds him to conclusions to which his own analysis of markets should have led him. If he had followed the logic of his own argument, he might have arrived at a rather different view of the appropriate balance between the state and the market, and provided a more searching account of the nature and limits of government action, or as Keynes would have put it, between the agenda and the non-agenda of government. The resources for doing so are there within Hayek's thought, which remains a seminal contribution to modern social theory, but he chose not to develop his ideas in this direction because of his ideological commitment to market fundamentalism. That should not prevent others from doing so. It is increasingly urgent that we should."

"Friedrich A. von Hayek, one of the strongest, and at times one of the few, economic voices advocating the reduction of government's role in the economy, is finally finding himself in the position of a Cassandra who suddenly that discovers people are listening."

"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."

"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."

"Conservative ideologues have used Smith's insight--that market exchange produces an order in human affairs that no one has designed--to defend their free-market policies. Chief among them was F.A. Hayek, the Nobel Prize-winning Austrian economist who became one of the gurus of the intellectual right in the '80s. Hayek argued that the market evolves as an unintended consequence of human activity, claiming that it embodies wisdom inaccessible to any single generation and insisting that it must therefore be accepted as the basis of society. In a devastating critique of Hayek's views, Rothschild dissects the multiple ambiguities of his notion of social order and shows how removed it is from anything in Smith. Hayek believed that we must submit to the unfathomable workings of the market, but this blinkered reverence for social process was unacceptable to Smith, who viewed the market as a human construction."

"I still see Hayek as the best critic of all forms of centralized economic planning. It is to his merit to have shown scientifically that centralized planning cannot work for an economy because complete knowledge of that economy is never available centrally. As nice as it would be to have one, there is no mastermind who knows and can control everything, and there never will be. This was Hayek's scientific argument for the superiority of the market economy. A planned economy is only a viable means where there is a clear overarching goal – during wartime. A war economy is always a planned economy. Supporters of central economic dreams should therefore hear it once and for all: centralized economic planning is not suitable during peacetime."

"He who states that markets cannot fail, that market failure is always the result of government intervention, is a dogmatist. How the hell would he know? Overall, Hayek was not a dogmatist, although in his writings there can be found traces of such a liberal utopianism. There we encounter the motto: "What is not supposed to be, must not be! And what must not be, is not!" To me, all isms are suspicious anyway. The sceptic in me asks: why should markets be more reasonable than other human institutions? And we can see it every day: markets are also imperfect, prone to error, and in need of repair, like everything else that man has created."

"Hayek watched the interwar collapse with horror, as Keynes did, and shared many of Keynes’s liberal values. What he failed to understand is that these values cannot be renewed by applying any formula or doctrine, or by trying to construct an ideal liberal regime in which freedom is insulated from the contingencies of politics."

"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."