Web Quotableonline.com Frasescelebres.org Greatbookscollection.org

Friedrich August von Hayek (May 8, 1899 in Vienna
– March 23, 1992 in Freiburg) was an
Economics|economist and social sciences|social
scientist of the Austrian School, noted for his
defense of liberal democracy and free
market|free-market capitalism against a rising
tide of socialism|socialist and
collectivism|collectivist thought in the mid-20th
century.  He also made important contributions to
the fields of jurisprudence and cognitive science.
 He shared the 1974 Bank of Sweden Prize in
Economic Sciences in Memory of Alfred Nobel|Nobel
Memorial Prize in Economics with ideological rival
Gunnar Myrdal.

== Life ==

Libertarianism

Hayek was born in Vienna to a family of prominent
intellectuals.  At the University of Vienna, where
he received doctorates in 1921 and 1923, he
studied law, psychology, and economics.  Initially
sympathetic to socialism, Hayek's economic
thinking was transformed during his student years
in Vienna by his exposure to the work of Ludwig
von Mises.

Hayek worked as a research assistant to Prof.
Jeremiah Jenks of New York University from 1923 to
1924.  He then served as director of the Austrian
Institute of Economic Research before joining the
faculty of the London School of Economics in 1931.
 Unwilling to return to Austria after its
annexation to Nazi Germany, Hayek became a
Britain|British citizen in 1938.

In the early 1940s, Hayek enjoyed a considerable
reputation as a leading economic theorist.   But
after the end of World War II, Hayek's
laissez-faire doctrines were challenged by John
Maynard Keynes|J. M. Keynes and others who argued
for active government intervention in economic
affairs. The debate between the two schools of
thought remains unresolved today with Hayek's
position gaining currency since the late 1970s. 
Unable to find employment in any of the major
university departments of economics, Hayek became
a professor in the Committee on Social Thought at
the University of Chicago.  He remained there from
1950 to 1962.  From 1962 until his retirement in
1968, he was a professor at the University of
Freiburg.  Later he was a visiting professor at
the University of Salzburg. Hayek died in 1992 in
Freiburg, Germany.

== Work ==

===The economic calculation problem===

Hayek was one of the leading academic critics of
collectivism in the 20th century. Hayek believed
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
claimed that socialism would require central
planning, and such planning in turn had a strong
probability of leading towards totalitarianism,
because, in his view, it could not be restricted
to the economic sector and would eventually affect
social life as well. Building on the earlier work
of Mises and others, Hayek also contended that in
centrally-planned economies an individual or a
select group of individuals must determine the
allocation of resources, but that 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 coined the term
catallaxy to describe a "self-organizing system of
voluntary co-operation."

===Spontaneous order===

Hayek viewed the price mechanism, 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 human action
but not of human design". Thus, Hayek put the
price mechanism on the same level as, for example,
language. Such thinking led him to speculate on
how the human brain could accommodate this evolved
behavior.  In The Sensory Order (1952), he
proposed, independently of Donald Olding
Hebb|Donald Hebb, the connectionism|connectionist
hypothesis that forms the basis of the technology
of neural networks and of much of modern
neurophysiology.  

In an typically bold insight, Hayek attributed the
birth of civilization to private property in his
book The Fatal Conceit (1988). According to him,
price signals are the only possible way to let
each economic decision maker communicate tacit
knowledge or dispersed knowledge to each other, in
order to solve the economic calculation problem.

===The business cycle===

Hayek's writings on capital (economics)|capital,
money, and the business cycle are widely regarded
as his most important contributions to economics.
Ludwig von Mises|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 become known as the
"Austrian business cycle theory". 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.

The "Austrian business cycle theory" has been
criticized by advocates of rational expectations
and other components of neoclassical economics,
who point to the neutrality of money and to the
real business cycle theory as providing a sounder
understanding of the phenomenon.  Hayek, in his
1939 book Profits, Interest and Investment,
distanced himself from other theorists of the
Austrian School, such as Mises and Murray
Rothbard|Rothbard, in beginning to shun the wholly
monetary theory of the business cycle in favor of
a more eccentric understanding based more on
profits than on interest rates. Hayek explicitly
notes that most of the more accurate explanations
of the business cycle place more emphasis on real
instead of nominal variables. He also notes that
this more eccentric explanation model of the
business cycle which he proposes cannot be wholly
reconciled with any specific Austrian theory.

=== Social and political philosophy===

While known more as an economist than a
philosopher, in the latter half of his career
Hayek made a number of contributions to social
philosophy|social and political philosophy,
derived largely from his views on the limits of
human knowledge, and the role played by his
spontaneous order in social institutions. His
arguments in favor of a society organized around a
market order (in which the apparatus of state is
employed solely to secure the peace necessary for
a market of free individuals to function) were
informed by a moral philosophy derived from
epistemology|epistemological concerns regarding
the inherent limits of human knowledge. In his
philosophy of science, Hayek was highly critical
of what he termed scientism—abuses of the
methods of science in the attempt to justify
inherently unknowable propositions, particularly
in the fields of social science, economics and
economic history (see The Counter-Revolution of
Science: Studies in the Abuse of Reason, 1952). In
The Sensory Order: An Inquiry into the Foundations
of Theoretical Psychology (1952), he develops his
social theory of spontaneous order into a bold
philosophy of mind which has recently become the
focus of a renewed level of interest within the
fields of cognitive science and evolutionary
psychology.

== Hayek and conservatism ==

An academic outcast for much of his career, Hayek
attracted new attention in the 1980s and 1990s
with the rise of conservative governments in the
United States and the United Kingdom.  Margaret
Thatcher, the Conservative Party (UK)|Conservative
British prime minister from 1979 to 1990, was an
outspoken devotée of Hayek's writings.  Shortly
after Thatcher became Leader of the Conservative
Party (UK)|Conservative Party, she "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.)

Hayek wrote an essay entitled Why I Am Not a
Conservative
http://www.geocities.com/ecocorner/intelarea/fah1.
html, (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.  His criticism was aimed primarily at the
European-style conservatism, which has often
opposed capitalism as a threat to social stability
and traditional values. Hayek identified himself
as a classical liberal, but noted that in the
United States it had become almost impossible to
use "liberal" in the older sense that he gave to
the term.  In the U.S., Hayek is usually described
as a "libertarianism|libertarian", but the
denomination that he preferred was "Old Whig" (a
phrase borrowed from Edmund Burke).

== Influence and recognition ==

By 1947, Hayek was the chief organizer of the Mont
Pelerin Society, a group of classical liberals who
sought to oppose what they saw as "socialism" in
various areas. For many years their efforts
remained on the intellectual fringes, but they
have received increasing attention over the past
30 years.

In his speech at the 1974 Nobel Prize banquet,
Hayek, whose work emphasized the fallibility of
individual knowledge about economic and social
arrangements, expressed his misgivings about
promoting the perception of economics as a strict
science on par with physics, chemistry, or
medicine (the academic disciplines recognized by
the original Nobel Prizes).

While there is some dispute as to the matter of
influence, Hayek had a long standing and close
friendship with philosopher of science Karl
Popper, also from Vienna. Each found support and
similarities in each other's work and cited each
other often, though not without qualification. 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." (See Weimer and Palermo, 1982). 
Popper was also a participant at the 1947
inaugural meeting of the Mont Pelerin Society,
organized by Hayek.

Even after his death, Hayek maintained a
significant intellectual presence in the
universities where he had taught:  the London
School of Economics, the University of Chicago,
and the University of Freiburg.  A student-run
group, the LSE Hayek Society, was established in
his honor.  The Cato Institute, one of Washington,
D.C.'s leading think tanks, named its lower level
auditorium after Hayek, who had been a
Distinguished Senior Fellow at Cato during his
later years.

==Quotations==
From The Political Order of a Free People: Limited
and Unlimited Power:
:Nobody with open eyes can any longer doubt that
the danger to personal freedom comes chiefly from
leftism|the left.

From A Conversation with Friedrich A. von Hayek,
AEI, Washington D.C., 1979:

: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.

==References==
* Hacohen, M. Karl Popper: The Formative Years,
1902 – 1945. Cambridge: Cambridge University
Press, 2000.
* Weimer, W., Palermo, D., eds. Cognition and the
Symbolic Processes. Hillsdale, NJ: Lawrence
Erlbaum Associates. 1982. See Hayek's essay, "The
Sensory Order after 25 Years", and "Discussion".
wefdsfsdf

==See also==
*List of Austrian Scientists
*List of Austrians
*Austrian School|Austrian School of economics

==External links==

* http://www.mises.org/hayekbio.asp Bio from the
Ludwig von Mises Institute
* http://www.hayekcenter.org The Hayek Scholar's
Page
* http://www.friesian.com/hayek.htm Hayek's
influence on Friesian philosophy
*
http://www.nobel-winners.com/Economics/friedrich_v
on_hayek.html Friedrich Hayek
*
http://www.econlib.org/library/Enc/bios/Hayek.html
Bio and online works on Econlib
*
http://dmoz.org/Science/Social_Sciences/Economics/
Schools_of_Thought/Austrian_School/People/Hayek,_F
._A/ Hayek, F. A Directory of links on Hayek from
the Open Source Directory
* http://www.adamsmith.org/hayek/ F A Hayek on the
http://www.adamsmith.org/ Adam Smith Institute
website
* http://www.hayek.de/frames/biographie.html Hayek
Bio at hayeck.de
*
http://www.reason.com/0406/fe.jr.objections.shtml
Reason magazine's article on what Hayek might
think of gay marriage (describes the conservatism
vs. liberalism dispute)
* http://reality.gn.apc.org/econ/hayek.htm Marxist
critique of Hayek
*
http://www.freescholars.org/default_zone/fr/html/p
age1043.html Bibliography of Friedrich Hayek
* http://werdet.atspace.com/bin/hayek-lecture.html
Text of 1974 Nobel Prize lecture