Early lifeFriedrich August von Hayek was born in to and Felicitas Hayek (''née'' von Juraschek). His father, born in 1871 also in Vienna, was a medical doctor employed by the municipal ministry of health. August was a part-time botany lecturer at the . Friedrich was the oldest of three brothers, Heinrich (1900–1969) and Erich (1904–1986), who were one-and-a-half and five years younger than he was. His father's career as a university professor influenced Hayek's goals later in life. Both of his grandfathers, who lived long enough for Hayek to know them, were scholars. Franz von Juraschek was a leading economist in and a close friend of , one of the founders of the of Economics. Hayek's paternal grandfather, Gustav Edler von Hayek, taught natural sciences at the Imperial ''Realobergymnasium'' (secondary school) in Vienna. He wrote works in the field of biological systematics, some of which are relatively well known. On his mother's side, Hayek was second cousin to the philosopher . His mother often played with Wittgenstein's sisters and had known him well. As a result of their family relationship, Hayek became one of the first to read Wittgenstein's '' '' when the book was published in its original German edition in 1921. Although he met Wittgenstein on only a few occasions, Hayek said that Wittgenstein's philosophy and methods of analysis had a profound influence on his own life and thought. In his later years, Hayek recalled a discussion of philosophy with Wittgenstein when both were officers during World War I. After Wittgenstein's death, Hayek had intended to write a biography of Wittgenstein and worked on collecting family materials and later assisted biographers of Wittgenstein. He was related to Wittgenstein on the non-Jewish side of the Wittgenstein family. Since his youth, Hayek frequently socialized with Jewish intellectuals and he mentions that people often speculated whether he was also of Jewish ancestry. That made him curious, so he spent some time researching his ancestors and found out that he has no Jewish ancestors within five generations. The surname uses the German spelling of the Czech surname . Hayek traced his ancestry to an ancestor with the surname “Hagek” who came from . Hayek displayed an intellectual and academic bent from a very young age and read fluently and frequently before going to school. However, he did quite poorly at school, due to lack of interest and problems with teachers. He was at the bottom of his class in most subjects, and once received three failing grades, in Latin, Greek and mathematics. He was very interested in theater, even attempting to write some tragedies, and , regularly helping his father with his botanical work. At his father's suggestion, as a teenager he read the genetic and evolutionary works of and and the philosophical works of . He noted as the greatest early intellectual influence. In school, Hayek was much taken by one instructor's lectures on Aristotle's ethics. In his unpublished autobiographical notes, Hayek recalled a division between him and his younger brothers who were only a few years younger than him, but he believed that they were somehow of a different generation. He preferred to associate with adults. In 1917, Hayek joined an artillery regiment in the and fought on the . Hayek suffered damage to his hearing in his left ear during the war and was decorated for bravery. During this time, Hayek also survived the . Hayek then decided to pursue an academic career, determined to help avoid the mistakes that had led to the war. Hayek said of his experience: "The decisive influence was really . It's bound to draw your attention to the problems of political organization". He vowed to work for a better world.
EducationAt the , Hayek initially studied mostly philosophy, psychology and economics. The University allowed students to choose their subjects freely and there wasn't much obligatory written work, or tests except main exams at the end of the study. By the end of his studies Hayek became more interested in economics, mostly for financial and career reasons; he planned to combine law and economics to start a career in diplomatic service. He earned doctorates in law and political science in 1921 and 1923 respectively. For a short time, when the University of Vienna closed he studied in 's Institute of Brain Anatomy, where Hayek spent much of his time brain cells.''Some Reflection on Hayek's The Sensory Order'', Caldwell, 2004 Hayek's time in Monakow's lab and his deep interest in the work of inspired his first intellectual project, eventually published as ''The Sensory Order'' (1952). It located connective learning at the physical and neurological levels, rejecting the "sense data" associationism of the and . The Sensory Order (1952) on learning * * Hayek presented his work to the private seminar he had created with Herbert Furth called the Geistkreis. During Hayek's years at the University of Vienna, 's work on the explanatory strategy of social science and 's commanding presence in the classroom left a lasting influence on him. Upon the completion of his examinations, Hayek was hired by Treaty of Saint-Germain-en-Laye. Between 1923 and 1924, Hayek worked as a research assistant to Professor of , compiling macroeconomic data on the American economy and the operations of the . He was influenced by and started a doctoral program on problems of monetary stabilization but didn't finish it. His time in America wasn't especially happy. He had very limited social contacts, missed the cultural life of Vienna, and was troubled by his poverty. His family's financial situation deteriorated significantly after the War. Initially sympathetic to Wieser's he found rigid and unattractive, and his mild socialist phase lasted until he was about 23. Hayek's economic thinking shifted away from socialism and toward the of Carl Menger after reading von Mises' book '' ''. It was sometime after reading ''Socialism'' that Hayek began attending von Mises' private seminars, joining several of his university friends, including , , Felix Kaufmann and , who were also participating in Hayek's own more general and private seminar. It was during this time that he also encountered and befriended noted political philosopher , with whom he retained a long-standing relationship.
LondonWith the help of Mises, in the late 1920s he founded and served as director of the Austrian Institute for Business Cycle Research before joining the faculty of the (LSE) in 1931 at the behest of . Upon his arrival in London, Hayek was quickly recognised as one of the leading economic theorists in the world and his development of the economics of processes in time and the co-ordination function of prices inspired the ground-breaking work of , and many others in the development of modern microeconomics. In 1932, Hayek suggested that private investment in the public markets was a better road to wealth and economic co-ordination in Britain than government spending programs as argued in an exchange of letters with , co-signed with Lionel Robbins and others in '' .'' The nearly decade long ary depression in Britain dating from 's decision in 1925 to return Britain to the at the old pre-war and pre-inflationary par was the public policy backdrop for Hayek's dissenting engagement with Keynes over British monetary and fiscal policy. Keynes called Hayek's book ''Prices and Production'' "one of the most frightful muddles I have ever read", famously adding: "It is an extraordinary example of how, starting with a mistake, a remorseless logician can end in Bedlam". Notable economists who studied with Hayek at the LSE in the 1930s and 1940s include Arthur Lewis, , , , , , , George Shackle, , L. K. Jha, Arthur Seldon, and . Some were supportive and some were critical of his ideas. Hayek also taught or tutored many other LSE students, including . Unwilling to return to Austria after the '' '' brought it under the control of in 1938, Hayek remained in Britain. Hayek and his children became s in 1938. He held this status for the remainder of his life, but he did not live in Great Britain after 1950. He lived in the United States from 1950 to 1962 and then mostly in Germany, but also briefly in Austria. In 1947, Hayek was elected a Fellow of the Econometric Society.
''The Road to Serfdom''Hayek was concerned about the general view in Britain's academia that fascism was a capitalist reaction to socialism and ''The Road to Serfdom'' arose from those concerns. The title was inspired by the French classical liberal thinker 's writings on the "road to servitude". It was first published in Britain by in March 1944 and was quite popular, leading Hayek to call it "that unobtainable book" also due in part to wartime paper rationing. When it was published in the United States by the University of Chicago in September of that year, it achieved greater popularity than in Britain. At the instigation of editor , the American magazine '' '' also published an abridged version in April 1945, enabling ''The Road to Serfdom'' to reach a far wider audience than academics. The book is widely popular among those advocating and .
ChicagoIn 1950, Hayek left the London School of Economics. After spending the 1949–1950 academic year as a visiting professor at the , Hayek was conferred professorship by the University of Chicago, where he became a professor in the . Hayek's salary was funded not by the university, but by an outside foundation, the . Hayek had made contact with many at the University of Chicago in the 1940s, with Hayek's ''The Road to Serfdom'' playing a seminal role in transforming how Milton Friedman and others understood how society works. Hayek conducted a number of influential faculty seminars while at the University of Chicago and a number of academics worked on research projects sympathetic to some of Hayek's own, such as Aaron Director, who was active in the Chicago school of economics, Chicago School in helping to fund and establish what became the "Law and Society" program in the University of Chicago Law School. Hayek, Frank Knight, Friedman and George Stigler worked together in forming the Mont Pèlerin Society, an international forum for neoliberals. Hayek and Friedman cooperated in support of the Intercollegiate Society of Individualists, later renamed the Intercollegiate Studies Institute, an American student organisation devoted to libertarian ideas. Although they shared most political beliefs, disagreeing primarily on question of monetary policy, Hayek and Friedman worked in separate university departments with different research interests and never developed a close working relationship. According to Alan O. Ebenstein, who wrote biographies of both of them, Hayek probably had a closer friendship with Keynes than with Friedman. Hayek received a Guggenheim Fellowship in 1954. Another influential political philosopher and German-speaking exile at the University of Chicago at the time was Leo Strauss, but according to his student Joseph Cropsey who also knew Hayek, there was no contact between the two of them. After editing a book on John Stuart Mill's letters he planned to publish two books on the liberal order, ''The Constitution of Liberty'' and "The Creative Powers of a Free Civilization" (eventually the title for the second chapter of ''The Constitution of Liberty''). He completed ''The Constitution of Liberty'' in May 1959, with publication in February 1960. Hayek was concerned that "with that condition of men in which coercion of some by others is reduced as much as is possible in society".F.A. Hayek, ''The Constitution of Liberty'' (London: Routledge & Kegan Paul, 1960) Hayek was disappointed that the book did not receive the same enthusiastic general reception as ''The Road to Serfdom'' had sixteen years before. He left Chicago mostly because of financial reasons, being concerned about his pension provisions. His primary source of income was his salary and he received some additional money from book royalties, but avoided other lucrative sources of income for academics such as writing textbooks. He spent a lot on his frequent travels. He regularly spent summers in Austrian Alps, usually in the Tyrolean village Obergurgl where he enjoyed mountain climbing, and also visited Japan four times with additional trips to Tahiti, Fiji, Indonesia, Australia, New Caledonia and Ceylon. After his divorce, his financial situation worsened.
Freiburg and SalzburgFrom 1962 until his retirement in 1968, he was a professor at the Albert Ludwigs University of Freiburg, University of Freiburg, West Germany, where he began work on his next book, ''Law, Legislation and Liberty''. Hayek regarded his years at Freiburg as "very fruitful". Following his retirement, Hayek spent a year as a visiting professor of philosophy at the University of California, Los Angeles, where he continued work on ''Law, Legislation and Liberty'', teaching a graduate seminar by the same name and another on the philosophy of social science. Preliminary drafts of the book were completed by 1970, but Hayek chose to rework his drafts and finally brought the book to publication in three volumes in 1973, 1976 and 1979. Hayek became a professor at the University of Salzburg from 1969 to 1977 and then returned to Freiburg. When Hayek left Salzburg in 1977, he wrote: "I made a mistake in moving to Salzburg". The economics department was small and the library facilities were inadequate. Although Hayek's health suffered, and he fell into a depressionary bout, he continued to work on his Masterpiece, magnum opus, ''Law, Legislation and Liberty'' in periods when he was feeling better.
Nobel Memorial PrizeOn 9 October 1974, it was announced that Hayek would be awarded the Nobel Memorial Prize in Economics with Swedish economist , with the reasons for selection being listed in a press release. He was surprised at being given the award and believed that he was given it with Myrdal to balance the award with someone from the opposite side of the political spectrum.Ebenstein, p. 263. The Sveriges-Riksbank Nobel Prize in Economics was established in 1968, and Hayek was the first non-Keynesian economist to win it. Among the reasons given, the committee stated, Hayek "was one of the few economists who gave warning of the possibility of a major economic crisis before the great crash came in the autumn of 1929." The following year, Hayek further confirmed his original prediction. An interviewer asked, "We understand that you were one of the only economists to forecast that America was headed for a depression, is that true?" Hayek responded, "Yes." However, no textual evidence has emerged of "a prediction". Indeed, Hayek wrote in October 26, 1929, three days before the crash, "at present there is no reason to expect a sudden crash of the New York stock exchange. ... The credit possibilities/conditions are, at any rate, currently very great, and therefore it appears assured that an outright crisis-like destruction of the present high [price] level should not be feared." During the Nobel ceremony in December 1974, Hayek met the Russian dissident Aleksandr Solzhenitsyn. Hayek later sent him a Russian translation of ''The Road to Serfdom''. He spoke with apprehension at his award speech about the danger the authority of the prize would lend to an economist, but the prize brought much greater public awareness to the then controversial ideas of Hayek and was described by his biographer as "the great rejuvenating event in his life".
British politicsIn February 1975, Margaret Thatcher was elected leader of the Conservative Party (UK), British Conservative Party. The Institute of Economic Affairs arranged a meeting between Hayek and Thatcher in London soon after. During Thatcher's only visit to the Conservative Research Department in the summer of 1975, a speaker had prepared a paper on why the "middle way" was the pragmatic path the Conservative Party should take, avoiding the extremes of left and right. Before he had finished, Thatcher "reached into her briefcase and took out a book. It was Hayek's ''The Constitution of Liberty''. Interrupting our pragmatist, 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". Despite the media depictions of him as Thatcher's guru and power behind the throne, the communication between him and the Prime Minister was not very regular, they were in contact only once or twice a year. Besides Thatcher, Hayek also made a significant influence on Enoch Powell, Keith Joseph, Nigel Lawson, Geoffrey Howe and John Biffen. Hayek gained some controversy in 1978 by praising Thatcher's Opposition to immigration, anti-immigration policy proposal in an article which ignited numerous accusations of anti-Semitism and racism because of his reflections on the inability of assimilation of Eastern European Jews in the Vienna of his youth. He defended himself by explaining that he made no racial judgements, only highlighted the problems of acculturation. In 1977, Hayek was critical of the Lib–Lab pact#1977, Lib–Lab pact in which the Liberal Party (UK), British Liberal Party agreed to keep the Labour Party (UK), British Labour government in office. Writing to ''The Times'', Hayek said: "May one who has devoted a large part of his life to the study of the history and the principles of liberalism point out that a party that keeps a socialist government in power has lost all title to the name 'Liberal'. Certainly no liberal can in future vote 'Liberal'". Hayek was criticised by Liberal politicians Gladwyn Jebb and Andrew Phillips, Baron Phillips of Sudbury, Andrew Phillips, who both claimed that the purpose of the pact was to discourage socialist legislation. Lord Gladwyn pointed out that the Free Democratic Party (Germany), German Free Democrats were in coalition with the Social Democratic Party of Germany, German Social Democrats. Hayek was defended by Professor Antony Flew, who stated that—unlike the British Labour Party—the German Social Democrats had since the late 1950s abandoned public ownership of the means of production, distribution and exchange and had instead embraced the social market economy. In 1978, Hayek came into conflict with Liberal Party leader David Steel, who claimed that liberty was possible only with "social justice and an equitable distribution of wealth and power, which in turn require a degree of active government intervention" and that the Conservative Party were more concerned with the connection between liberty and private enterprise than between liberty and democracy. Hayek claimed that a limited democracy might be better than other forms of limited government at protecting liberty, but that an unlimited democracy was worse than other forms of unlimited government because "its government loses the power even to do what it thinks right if any group on which its majority depends thinks otherwise". Hayek stated that if the Conservative leader had said "that free choice is to be exercised more in the market place than in the ballot box, she has merely uttered the truism that the first is indispensable for individual freedom while the second is not: free choice can at least exist under a dictatorship that can limit itself but not under the government of an unlimited democracy which cannot". Hayek supported Britain in the Falklands War, writing that it would be justified to attack Argentinian territory instead of just defending the islands, which earned him a lot of criticism in Argentina, a country which he also visited several times. He was also displeased by the weak response of the United States to the Iran hostage crisis, claiming that an ultimatum should be issued and Iran bombed if they do not comply. He supported Ronald Reagan's decision to keep high defence spending, believing that a strong US military is a guarantee of world peace and necessary to keep the Soviet Union under control. President Ronald Reagan, Reagan listed Hayek as among the two or three people who most influenced his philosophy and welcomed him to the White House as a special guest. Senator Barry Goldwater listed Hayek as his favourite political philosopher and congressman Jack Kemp named him an inspiration for his political career.
RecognitionIn 1980, Hayek was one of twelve Nobel laureates to meet with Pope John Paul II "to dialogue, discuss views in their fields, communicate regarding the relationship between Catholicism and science, and 'bring to the Pontiff's attention the problems which the Nobel Prize Winners, in their respective fields of study, consider to be the most urgent for contemporary man'" Hayek was appointed a (CH) in the 1984 Birthday Honours by Elizabeth II on the advice of British Prime Minister Margaret Thatcher for his "services to the study of economics". Hayek had hoped to receive a baronetcy and after being awarded the CH sent a letter to his friends requesting that he be called the English version of Friedrich (i.e. Frederick) from now on. After his twenty-minute audience with the Queen, he was "absolutely besotted" with her according to his daughter-in-law Esca Hayek. Hayek said a year later that he was "amazed by her. That ease and skill, as if she'd known me all my life". The audience with the Queen was followed by a dinner with family and friends at the Institute of Economic Affairs. When later that evening Hayek was dropped off at the Reform Club, he commented: "I've just had the happiest day of my life". In 1991, President George H.W. Bush awarded Hayek the , one of the two highest civilian awards in the United States, for a "lifetime of looking beyond the horizon".
DeathHayek died on 23 March 1992, aged 92, in Freiburg, Germany and was buried on 4 April in the Neustift am Walde cemetery in the northern outskirts of Vienna according to the Catholic rite. In 2011, his article " " was selected as one of the top 20 articles published in ''The American Economic Review'' during its first 100 years. The New York University School of Law, New York University ''Journal of Law and Liberty'' holds an annual lecture in his honor.
Business cyclehad earlier applied the concept of marginal utility to the value of money in his ''Theory of Money and Credit'' (1912) in which he also proposed an explanation for "industrial fluctuations" based on the ideas of the old British Currency School and of Swedish economist Knut Wicksell. Hayek used this body of work as a starting point for his own interpretation of the business cycle, elaborating what later became known as the Austrian business cycle theory, Austrian theory of the business cycle. Hayek spelled out the Austrian approach in more detail in his book, published in 1929, an English translation of which appeared in 1933 as ''Monetary Theory and the Trade Cycle''. There, Hayek argued for a monetary approach to the origins of the cycle. In his ''Prices and Production'' (1931), Hayek argued that the business cycle resulted from the central bank's inflationary Credit cycle, credit expansion and its transmission over time, leading to a capital misallocation caused by the artificially low interest rates. Hayek claimed that "the past instability of the market economy is the consequence of the exclusion of the most important regulator of the market mechanism, money, from itself being regulated by the market process". Hayek's analysis was based on Eugen Böhm von Bawerk's concept of the "average period of production" and on the effects that monetary policy could have upon it. In accordance with the reasoning later outlined in his essay "The Use of Knowledge in Society" (1945), Hayek argued that a monopolistic governmental agency like a central bank can neither possess the relevant information which should govern supply of money, nor have the ability to use it correctly. In 1929, Lionel Robbins assumed the helm of the (LSE). Eager to promote alternatives to what he regarded as the narrow approach of the school of economic thought that then dominated the English-speaking academic world (centered at the University of Cambridge and deriving largely from the work of Alfred Marshall), Robbins invited Hayek to join the faculty at LSE, which he did in 1931. According to Nicholas Kaldor, Hayek's theory of the time-structure of capital and of the business cycle initially "fascinated the academic world" and appeared to offer a less "facile and superficial" understanding of macroeconomics than the Cambridge school's. Also in 1931, Hayek crititicized 's ''A Treatise on Money, Treatise on Money'' (1930) in his "Reflections on the pure theory of Mr. J.M. Keynes" and published his lectures at the LSE in book form as ''Prices and Production''. For Keynes, unemployment and idle resources are caused by a lack of effective demand, but for Hayek they stem from a previous unsustainable episode of easy money and artificially low interest rates. Keynes asked his friend Piero Sraffa to respond. Sraffa elaborated on the effect of inflation-induced "forced savings" on the capital sector and about the definition of a "natural" interest rate in a growing economy (see Sraffa–Hayek debate). Others who responded negatively to Hayek's work on the business cycle included , Frank Knight and , who, later on, would share the Nobel Memorial Prize in Economic Sciences, Sveriges-Riksbank Prize in Economics with him.Bruce Caldwell, ''Hayek's Challenge: An Intellectual Biography of F.A. Hayek'' (Chicago: University of Chicago Press, 2004), p. 179. Kaldor later wrote that Hayek's ''Prices and Production'' had produced "a remarkable crop of critics" and that the total number of pages in British and American journals dedicated to the resulting debate "could rarely have been equalled in the economic controversies of the past". Hayek's work, throughout the 1940s, was largely ignored, except for scathing critiques by Nicholas Kaldor. Lionel Robbins himself, who had embraced the Austrian theory of the business cycle in ''The Great Depression'' (1934), later regretted having written the book and accepted many of the Keynesian counter-arguments.Roger Garrison, R. W. Garrison
Economic calculation problemBuilding on the earlier work of Mises and others, Hayek also argued that while in centrally planned economies an individual or a select group of individuals must determine the distribution of resources, these planners will never have enough information to carry out this allocation reliably. This argument, first proposed by Max Weber and , says that the efficient exchange and use of resources can be maintained only through the price mechanism in free markets (see economic calculation problem). In 1935, Hayek published ''Collectivist Economic Planning'', a collection of essays from an earlier debate that had been initiated by Mises. Hayek included Mises's essay in which Mises argued that rational planning was impossible under socialism. Socialist responded by invoking general equilibrium theory, which they argued disproved Mises's thesis. They noted that the difference between a planned and a free market system lay in who was responsible for solving the equations. They argued that if some of the prices chosen by socialist managers were wrong, gluts or shortages would appear, signalling them to adjust the prices up or down, just as in a free market. Through such a trial and error, a socialist economy could mimic the efficiency of a free market system while avoiding its many problems. Hayek challenged this vision in a series of contributions. In "Economics and Knowledge" (1937), he pointed out that the standard equilibrium theory assumed that all agents have full and correct information, and how, in his mind, in the real world different individuals have different bits of knowledge and furthermore some of what they believe is wrong. In " " (1945), Hayek argued that the price mechanism serves to share and synchronise local and personal knowledge, allowing society's members to achieve diverse and complicated ends through a principle of spontaneous self-organization. He contrasted the use of the price mechanism with central planning, arguing that the former allows for more rapid adaptation to changes in particular circumstances of time and place. Thus, Hayek set the stage for Oliver E. Williamson, Oliver Williamson's later contrast between markets and hierarchies as alternative co-ordination mechanisms for economic transactions. He used the term catallaxy to describe a "self-organizing system of voluntary co-operation". Hayek's research into this argument was specifically cited by the Nobel Committee in its press release awarding Hayek the Nobel prize.
Criticism of collectivismHayek was one of the leading academic critics of collectivism in the 20th century. In Hayek's view, the central role of the state should be to maintain the rule of law, with as little arbitrary intervention as possible. In his popular book '' '' (1944) and in subsequent academic works, Hayek argued that socialism required central economic planning and that such planning in turn leads towards totalitarianism. In ''The Road to Serfdom'', Hayek wrote: Hayek posited that a central planning authority would have to be endowed with powers that would impact and ultimately control social life because the knowledge required for centrally planning an economy is inherently decentralised, and would need to be brought under control. Though Hayek did argue that the state should provide law centrally, others have pointed out that this contradicts his arguments about the role of judges in "discovering" the law, suggesting that Hayek would have supported decentralized provision of legal services. Hayek also wrote that the state can play a role in the economy, specifically in creating a safety net, saying:
There is no reason why, in a society which has reached the general level of wealth ours has, the first kind of security should not be guaranteed to all without endangering general freedom; that is: some minimum of food, shelter and clothing, sufficient to preserve health. Nor is there any reason why the state should not help to organize a comprehensive system of social insurance in providing for those common hazards of life against which few can make adequate provision."The Denationalization of Money" is one of his literary works, in which he advocated the establishment of competitions in issuing moneys.
Investment and choiceHayek made breakthroughs in the Choice theory (economics), choice theory, and examined the inter-relations between non-permanent production goods and "latent" or potentially economic permanent resources, building on the choice theoretical insight that "processes that take more time will evidently not be adopted unless they yield a greater return than those that take less time".
Philosophy of scienceDuring World War II, Hayek began the Abuse of Reason project. His goal was to show how a number of then-popular doctrines and beliefs had a common origin in some fundamental misconceptions about the social science.Caldwell, Bruce. "Hayek, Friedrich August von (1899–1992)." The New Palgrave Dictionary of Economics. Third Edition. Eds. Steven N. Durlauf and Lawrence E. Blume. Palgrave Macmillan, 2018. Ideas were developed in ''The Counter-Revolution of Science'' in 1952 and in some of Hayek's later essays in the philosophy of science such as "Degrees of Explanation" (1955) and "The Theory of Complex Phenomena" (1964). In ''Counter-Revolution'', for example, Hayek observed that the hard sciences attempt to remove the "human factor" to obtain objective and strictly controlled results: Meanwhile, the soft sciences are attempting to measure human action itself: He notes that these are mutually exclusive and that social sciences should not attempt to impose positivist methodology, nor to claim objective or definite results:
PsychologyHayek's first academic essay was a psychological work titled 'Contributions to the Theory of the Development of Consciousness' (''Beiträge zur Theorie der Entwicklung des Bewußtseins'') In ''The Sensory Order: An Inquiry into the Foundations of Theoretical Psychology'' (1952), Hayek independently developed a "Hebbian learning" model of learning and memory—an idea he first conceived in 1920 prior to his study of economics. Hayek's expansion of the "Hebbian synapse" construction into a global brain theory received attention in neuroscience, cognitive science, computer science, and evolutionary psychology by scientists such as Gerald Edelman, Vittorio Guidano and Joaquin Fuster. ''The Sensory Order'' can be viewed as a development of his attack on scientism. Hayek posited two orders, namely the sensory order that we experience and the natural order that natural science revealed. Hayek thought that the sensory order actually is a product of the brain. He described the brain as a very complex yet self-ordering hierarchical classification system, a huge network of connections. Because of the nature of the classifier system, richness of our sensory experience can exist. Hayek's description posed problems to behaviorism, whose proponents took the sensory order as fundamental.
Social and political philosophyIn the latter half of his career, Hayek made a number of contributions to social philosophy, social and political philosophy which he based on his views on the limits of human knowledge and the idea of spontaneous order in social institutions. He argues in favour of a society organised around a market order in which the apparatus of state is employed almost (though not entirely) exclusively to enforce the legal order (consisting of abstract rules and not particular commands) necessary for a market of free individuals to function. These ideas were informed by a moral philosophy derived from epistemological concerns regarding the inherent limits of human knowledge. Hayek argued that his ideal individualistic and free-market polity would be self-regulating to such a degree that it would be "a society which does not depend for its functioning on our finding good men for running it". Although Hayek believed in a society governed by laws, he disapproved of the notion of "social justice". He compared the market to a game in which "there is no point in calling the outcome just or unjust" and argued that "social justice is an empty phrase with no determinable content".''The Mirage of Social Justice'', chap. 12 Likewise, "the results of the individual's efforts are necessarily unpredictable, and the question as to whether the resulting distribution of incomes is just has no meaning". He generally regarded government redistribution of income or capital as an unacceptable intrusion upon individual freedom, saying that "the principle of distributive justice, once introduced, would not be fulfilled until the whole of society was organized in accordance with it. This would produce a kind of society which in all essential respects would be the opposite of a free society".
Spontaneous orderHayek viewed the free price system not as a conscious invention (that which is intentionally designed by man), but as spontaneous order or what Scottish philosopher Adam Ferguson referred to as "the result of human action but not of human design". For instance, Hayek put the price mechanism on the same level as language, which he developed in his price signal theory. Hayek attributed the birth of civilisation to private property in his book ''The Fatal Conceit'' (1988). He explained that price signals are the only means of enabling each economic decision maker to communicate tacit knowledge or dispersed knowledge to each other to solve the economic calculation problem. Alain de Benoist of the ''Nouvelle Droite'' (New Right) produced a highly critical essay on Hayek's work in an issue of ''Telos (journal), Telos'', citing the flawed assumptions behind Hayek's idea of "spontaneous order" and the authoritarian and totalising implications of his Free market, free-market ideology. Hayek's concept of the market as a spontaneous order was recently applied to ecosystems to defend a broadly non-interventionist policy. Like the market, ecosystems contain complex networks of information, involve an ongoing dynamic process, contain orders within orders and the entire system operates without being directed by a conscious mind. On this analysis, species takes the place of price as a visible element of the system formed by a complex set of largely unknowable elements. Human ignorance about the countless interactions between the organisms of an ecosystem limits our ability to manipulate nature. Hayek's price signal concept is in relation to how consumers are often unaware of specific events that change market, yet change their decisions, simply because the price goes up. Thus pricing communicates information.
Social safety netsWith regard to a social safety net, Hayek advocated "some provision for those threatened by the extremes of indigence or starvation due to circumstances beyond their control" and argued that the "necessity of some such arrangement in an industrial society is unquestioned—be it only in the interest of those who require protection against acts of desperation on the part of the needy". Summarizing Hayek's views on the topic, journalist Nicholas Wapshott has argued that "[Hayek] advocated mandatory universal health care and unemployment insurance, enforced, if not directly provided, by the state". Critical theory, Critical theorist Bernard Harcourt has argued further that "Hayek was adamant about this". In 1944, Hayek wrote in '' '': In 1973, Hayek reiterated in ''Law, Legislation and Liberty'':
There is no reason why in a free society government should not assure to all, protection against severe deprivation in the form of an Guaranteed minimum income, assured minimum income, or a Universal basic income, floor below which nobody need to descend. To enter into such an insurance against extreme misfortune may well be in the interest of all; or it may be felt to be a clear moral duty of all to assist, within the organised community, those who cannot help themselves. So long as such a uniform minimum income is provided outside the market to all those who, for any reason, are unable to earn in the market an adequate maintenance, this need not lead to a restriction of freedom, or conflict with the Rule of law.
Liberalism and skepticismArthur M. Diamond argues Hayek's problems arise when he goes beyond claims that can be evaluated within economic science. Diamond argued:
The human mind, Hayek says, is not just limited in its ability to synthesize a vast array of concrete facts, it is also limited in its ability to give a deductively sound ground to ethics. Here is where the tension develops, for he also wants to give a reasoned moral defense of the free market. He is an intellectual skeptic who wants to give political philosophy a secure intellectual foundation. It is thus not too surprising that what results is confused and contradictory.Chandran Kukathas argues that Hayek's defence of liberalism is unsuccessful because it rests on presuppositions that are incompatible. The unresolved dilemma of his political philosophy is how to mount a systematic defence of liberalism if one emphasizes the limited capacity of reason. Norman P. Barry similarly notes that the "critical rationalism" in Hayek's writings appears incompatible with "a certain kind of fatalism, that we must wait for evolution to pronounce its verdict". Milton Friedman and Anna Schwartz argue that the element of paradox exists in the views of Hayek. Noting Hayek's vigorous defense of "invisible hand" evolution that Hayek claimed created better economic institutions than could be created by rational design, Friedman pointed out the irony that Hayek was then proposing to replace the monetary system thus created with a deliberate construct of his own design. John Gray (philosopher), John N. Gray summarized this view as "his scheme for an ultra-liberal constitution was a prototypical version of the philosophy he had attacked". Bruce Caldwell (economist), Bruce Caldwell wrote that "[i]f one is judging his work against the standard of whether he provided a finished political philosophy, Hayek clearly did not succeed", although he thinks that "economists may find Hayek's political writings useful".
Dictatorship and totalitarianismHayek sent António de Oliveira Salazar a copy of ''The Constitution of Liberty'' (1960) in 1962. Hayek hoped that his book—this "preliminary sketch of new constitutional principles"—"may assist" Salazar "in his endeavour to design a constitution which is proof against the abuses of democracy". Hayek visited Chile in the 1970s and 1980s during the Government Junta of Chile (1973), Government Junta of general Augusto Pinochet and accepted being appointed Honorary Chairman of the Centro de Estudios Públicos, the think tank formed by the economists who transformed Chile into a free market economy. Asked about the Military dictatorship of Chile (1973–90), military dictatorship of Chile by a Chilean interviewer, Hayek is translated from German to Spanish to English as having said the following:
As long term institutions, I am totally against dictatorships. But a dictatorship may be a necessary system for a transitional period. [...] Personally I prefer a liberal dictatorship to democratic government devoid of liberalism. My personal impression—and this is valid for South America—is that in Chile, for example, we will witness a transition from a dictatorial government to a liberal government.In a letter to the ''London Times'', he defended the Pinochet regime and said that he had "not been able to find a single person even in much maligned Chile who did not agree that personal freedom was much greater under Pinochet than it had been under Salvador Allende, Allende". Hayek admitted that "it is not very likely that this will succeed, even if, at a particular point in time, it may be the only hope there is", but he explained that "[i]t is not certain hope, because it will always depend on the goodwill of an individual, and there are very few individuals one can trust. But if it is the sole opportunity which exists at a particular moment it may be the best solution despite this. And only if and when the dictatorial government is visibly directing its steps towards limited democracy". For Hayek, the distinction between authoritarianism and totalitarianism has much importance and he was at pains to emphasise his opposition to totalitarianism, noting that the concept of transitional dictatorship which he defended was characterised by authoritarianism, not totalitarianism. For example, when Hayek visited Venezuela in May 1981, he was asked to comment on the prevalence of totalitarian regimes in Latin America. In reply, Hayek warned against confusing "totalitarianism with authoritarianism" and said that he was unaware of "any totalitarian governments in Latin America. The only one was Chile under Allende". For Hayek, the word "totalitarian" signifies something very specific, namely the intention to "organize the whole of society" to attain a "definite social goal" which is stark in contrast to "liberalism and individualism". He claimed that democracy can also be repressive and totalitarian; in ''The Constitution of Liberty'' he often refers to Jacob Talmon's concept of totalitarian democracy.
Immigration, nationalism and raceHayek was skeptical about international immigration and supported Margaret Thatcher, Thatcher's anti-immigration policies. In ''Law, Legislation and Liberty'' he elaborated:
Freedom of migration is one of the widely accepted and wholly admirable principles of liberalism. But should this generally give the stranger a right to settle down in a community in which he is not welcome? Has he a claim to be given a job or be sold a house if no resident is willing to do so? He clearly should be entitled to accept a job or buy a house if offered to him. But have the individual inhabitants a duty to offer either to him? Or ought it to be an offence if they voluntarily agree not to do so? Swiss and Tyrolese villages have a way of keeping out strangers which neither infringe nor rely on any law. Is this anti-liberal or morally justified? For established old communities I have no certain answers to these questions.He was mainly preoccupied with practical problems concerning immigration:
There exist, of course, other reasons why such restrictions appear unavoidable so long as certain differences in national or ethnic traditions (especially differences in the rate of propagation) exist-which in turn are not likely to disappear so long as restrictions on migration continue. We must face the fact that we here encounter a limit to the universal application of those liberal principles of policy which the existing facts of the present world make unavoidable.He was not sympathetic to Nationalism, nationalist ideas and was afraid that mass immigration might revive nationalist sentiment among domestic population and ruin the postwar progress that was made among Western nations.Hayek, Friedrich (1976) ''Law, Legislation and Liberty, Volume 2: The Mirage of Social Justice''. Routledge 1982. p 58) He additionally explained:
However far modern man accepts in principle the ideal that the same rules should apply to all men, in fact he does concede it only to those whom he regards as similar to himself, and only slowly learns to extend the range of those he does accept as his likes. There is little legislation can do to speed up this process and much it may do to reverse it by re-awakening sentiments that are already on the wane.Despite his opposition to nationalism, Hayek made numerous controversial and inflammatory comments about specific ethnic groups. Answering an interview question about people he cannot deal with he mentioned his dislike of Arabs, Middle Eastern populations, claiming they were dishonest, and also expressed "profound dislike" of Indian students at London School of Economics, saying that were usually "detestable sons of Bengalis, Bengali moneylenders". He claimed that his attitude is not based on any Racism, racial feeling. During World War II he discussed the possibility of sending his children to the United States, but was concerned that they might be placed with a "coloured family". In a later interview, questioned about his attitude towards Black people, he said laconically that he "did not like dancing Negroes" and on another occasion he ridiculed the decision to award the Nobel Peace Prize to Martin Luther King Jr..Leeson, Robert (2018) ''Hayek: A Collaborative Biography: Part XV: The Chicago School of Economics, Hayek's 'Luck' and the 1974 Nobel Prize for Economic Science.'' Palgrave Macmillan, 2015. p. 175 He also made negative comments about awarding the Prize to Ralph Bunche, Albert Luthuli, and his LSE colleague W. Arthur Lewis who he described as an "unusually able West Indian negro". In 1978 Hayek made a month-long visit to South Africa (his third) where he gave numerous lectures, interviews, and met prominent politicians and business leaders, unconcerned about possible propagandistic effect of his tour for Apartheid regime. He expressed his opposition to some of the government policies, believing that publicly funded institutions should treat all citizens equally, but also claimed that private institutions have the right to discriminate. Additionally, he condemned the "scandalous" Foreign relations of South Africa during apartheid, hostility and interference of the international community in South African internal affairs. He further explained his attitude:
People in South Africa have to deal with their own problems, and the idea that you can use external pressure to change people, who after all have built up a civilization of a kind, seems to me morally a very doubtful belief.While Hayek gave somewhat ambiguous comments on the injustices of Apartheid and proper role of the state, some of his Mont Pelerin colleagues, such as John Davenport (economic journalist), John Davenport and Wilhelm Röpke, were more ardent supporters of South African government and criticized Hayek for being too soft on the subject.
Inequality and classHayek claimed that the idea that "all men are born equal" is untrue because evolution and Human genetic variation, genetic differences have created "boundless variety of human nature". He emphasized the importance of Nature versus nurture, nature, complaining that it became too fashionable to ascribe all human differences to environment. Hayek defended economic inequality, believing that the existence of wealthy class is important not only for economic reasons—accumulating capital and directing investments—but also for political, cultural, scientific and conservationist goals which are often financed and promoted by Philanthropy, philanthropists. Since the market mechanism cannot provide for all societal needs, some of which are outside of economic calculation, existence of wealthy individuals guarantees the efficiency and pluralism in their development and realization, which could not be guaranteed in the case of state monopoly. Individual wealth offers independence and can create intellectual, moral, political and artistic leaders which are not employed and influenced by the state. According to Hayek the society benefits from having a hereditary wealthy class because individuals born in it don't have to devote their energy to earning a living and can devote themselves to other purposes such as experimenting with different ideas, hobbies and lifestyles which can later be adopted by broader society.Hayek, Friedrich (1960) ''The Constitution of Liberty''. Routledge, 2006. p. 110 In ''The Constitution of Liberty'' he wrote:
Yet is it really so obvious that the tennis or golf professional is a more useful member of society than the wealthy amateurs who devoted their time to perfecting these games? Or that the paid curator of a public museum is more useful than a private collector? Before the reader answers these questions too hastily, I would ask him to consider whether there would ever have been golf or tennis professionals or museum curators if wealthy amateurs had not preceded them. Can we not hope that other new interests will still arise from the playful explorations of those who can indulge in them for the short span of a human life? It is only natural that the development of the art of living and of the non-materialistic values should have profited most from the activities of those who had no material worries.He contrasted individuals who Old money, inherited wealth, with upper class values and education, with the ''nouveau riche'' who often use their wealth in more vulgar ways. He decried the disappearance of such leisured aristocratic class, claiming that contemporary Western elites are usually business groups that lack intellectual leadership and coherent "philosophy of life" and use their wealth mostly for economic purposes. Hayek was against high Inheritance tax, taxes on inheritance, believing that it is natural function of the family to transmit standards, traditions and material goods. Without transmission of property, parents might try to secure the future of their children by Nepotism, placing them in prestigious and high-paying positions, as was customary in socialist countries, which creates even worse injustices. He was also strongly against progressive taxation, noting that in most countries additional taxes paid by the rich amount to insignificantly small amount of total tax revenue and that the only major result of the policy is "gratification of the envy of the less-well-off". He also claimed that it is contrary to idea of equality under law and against democratic principle that majority should not impose discriminatory rules against minority.
Influence and recognitionHayek's influence on the development of economics is widely acknowledged. With regard to the popularity of his Nobel acceptance lecture, Hayek is the second-most frequently cited economist (after Kenneth Arrow) in the Nobel lectures of the prize winners in economics. Hayek wrote critically there of the field of orthodox economics and neo-classical modelisation. A number of Nobel Laureates in economics, such as Vernon L. Smith, Vernon Smith and Herbert A. Simon, recognise Hayek as the greatest modern economist. Another Nobel winner, Paul Samuelson, believed that Hayek was worthy of his award, but nevertheless claimed that "there were good historical reasons for fading memories of Hayek within the mainstream last half of the twentieth century economist fraternity. In 1931, Hayek's ''Prices and Production'' had enjoyed an ultra-short Byronic success. In retrospect hindsight tells us that its mumbo-jumbo about the period of production grossly misdiagnosed the macroeconomics of the 1927–1931 (and the 1931–2007) historical scene". Despite this comment, Samuelson spent the last 50 years of his life obsessed with the problems of capital theory identified by Hayek and Böhm-Bawerk, and Samuelson flatly judged Hayek to have been right and his own teacher Joseph Schumpeter to have been wrong on the central economic question of the 20th century, the feasibility of socialist economic planning in a production goods dominated economy. Hayek is widely recognised for having introduced the time dimension to the equilibrium construction and for his key role in helping inspire the fields of growth theory, information economics and the theory of spontaneous order. The "informal" economics presented in Milton Friedman's massively influential popular work ''Free to Choose'' (1980) is explicitly Hayekian in its account of the price system as a system for transmitting and co-ordinating knowledge. This can be explained by the fact that Friedman taught Hayek's famous paper "The Use of Knowledge in Society" (1945) in his graduate seminars. In 1944, he was elected as a Fellow of the British Academy after he was nominated for membership by Keynes. Harvard economist and former Harvard University President Lawrence Summers explains Hayek's place in modern economics: "What's the single most important thing to learn from an economics course today? What I tried to leave my students with is the view that the invisible hand is more powerful than the [un]hidden hand. Things will happen in well-organized efforts without direction, controls, plans. That's the consensus among economists. That's the Hayek legacy". By 1947, Hayek was an organiser of the , a group of Classical liberalism, classical liberals who sought to oppose socialism. Hayek was also instrumental in the founding of the Institute of Economic Affairs, the Right-libertarianism, right-wing libertarian and free-market think tank that inspired Thatcherism. He was in addition a member of the conservative and Libertarianism, libertarian Philadelphia Society. Hayek had a long-standing and close friendship with philosopher of science Karl Popper, who was also from Vienna. 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". 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 that "ever since his ''Logik der Forschung'' first came out in 1934, I have been a complete adherent to his general theory of methodology". Popper also participated in the inaugural meeting of the Mont Pelerin Society. Their friendship and mutual admiration do not change the fact that there are important differences between their ideas. Hayek also played a central role in Milton Friedman's intellectual development. Friedman wrote:
My interest in public policy and political philosophy was rather casual before I joined the faculty of the University of Chicago. Informal discussions with colleagues and friends stimulated a greater interest, which was reinforced by Friedrich Hayek's powerful book The Road to Serfdom, by my attendance at the first meeting of the Mont Pelerin Society in 1947, and by discussions with Hayek after he joined the university faculty in 1950. In addition, Hayek attracted an exceptionally able group of students who were dedicated to a libertarian ideology. They started a student publication, The New Individualist Review, which was the outstanding libertarian journal of opinion for some years. I served as an adviser to the journal and published a number of articles in it....While Friedman often mentioned Hayek as an important influence, Hayek rarely mentioned Friedman. He deeply disagreed with Chicago School of economics, Chicago School methodology, quantitative and macroeconomic focus, and claimed that Friedman's ''Essays in Positive Economics'' was as dangerous a book as Keynes' ''The General Theory of Employment, Interest and Money, General Theory''. Friedman also claimed that despite some Popperian influence Hayek always retained basic Ludwig von Mises, Misesian Praxeology, praxeological view which he found "utterly nonsensical". He also noted that he admired Hayek only for his political works, and disagreed with his technical economics; he called ''Prices and Production'' a "very flawed book" and ''The Pure Theory of Capital'' "unreadable". There were occasional tensions at the Mont Pelerin meetings between the Hayek's and Friedman's followers that sometimes threatened to split the Society. Although they worked at the same university and shared political beliefs, Hayek and Friedman rarely collaborated professionally and were not close friends. Hayek's greatest intellectual debt was to , who pioneered an approach to social explanation similar to that developed in Britain by Bernard Mandeville and the Scottish moral philosophers in the Scottish Enlightenment. He had a wide-reaching influence on contemporary economics, politics, philosophy, sociology, psychology and anthropology. For example, Hayek's discussion in ''The Road to Serfdom'' (1944) about truth, falsehood and the use of language influenced some later opponents of postmodernism. Some radical libertarians had a negative view of Hayek and his milder form of liberalism. Ayn Rand disliked him, seeing him as a conservative and compromiser. In a letter to Rose Wilder Lane in 1946 she wrote:
Now to your question: 'Do those almost with us do more harm than 100% enemies?' I don't think this can be answered with a flat 'yes' or 'no,' because the 'almost' is such a wide term. There is one general rule to observe: those who are with us, but merely do not go far enough are the ones who may do us some good. Those who agree with us in some respects, yet preach contradictory ideas at the same time, are definitely more harmful than 100% enemies. As an example of the kind of 'almost' I would tolerate, I'd name Ludwig von Mises. As an example of our most pernicious enemy, I would name Hayek. That one is real poison.Hayek made no known written references to Rand.
Hayek and conservatismHayek received new attention in the 1980s and 1990s with the rise of conservative governments in the United States, United Kingdom and Canada. After winning the 1979 United Kingdom general election, Margaret Thatcher appointed Keith Joseph, the director of the Hayekian Centre for Policy Studies, as her secretary of state for industry in an effort to redirect parliament's economic strategies. Likewise, David Stockman, Ronald Reagan's most influential financial official in 1981, was an acknowledged follower of Hayek. Hayek wrote an essay, "Why I Am Not a Conservative" (included as an appendix to ''The Constitution of Liberty''). In it he disparaged conservatism for its inability to adapt to changing human realities or to offer a positive political program, remarking: "Conservatism is only as good as what it conserves". Although he noted that modern day Conservatism in the United States, American and Conservatism in the United Kingdom, British conservatism share many opinions on economics with classical liberals, particularly a belief in the free market, he believed it is because conservatism wants to "stand still" whereas classical liberalism, liberalism embraces the free market because it "wants to go somewhere". He was much more critical of conservativism in continental Europe which he saw as more similar to socialism. European conservatives, according to Hayek, are similar to socialists in their belief that social and political problems can be solved by placing right people in governmental positions and giving them the opportunity to rule without much restrictions. Both are less concerned with limiting state power and more concerned with arbitrarily using that power to promote their own goals and force their values on other people. Hayek also disliked conservative tendency to obscurantism, such as rejection of theory of evolution and naturalistic explanations of life because of supposedly problematic moral consequences that follow from them. He opposed conservatism for "its hostility to Internationalism (politics), internationalism and its proneness to a strident nationalism", with its frequent association with imperialism. He also criticized the intolerance and lack of pluralism:
What I mean is that he [conservative] has no political principles which enable him to work with people whose moral values differ from his own for a political order in which both can obey their convictions. It is the recognition of such principles that permits the coexistence of different sets of values that makes it possible to build a peaceful society with a minimum of force. The acceptance of such principles means that we agree to tolerate much that we dislike. There are many values of the conservative which appeal to me more than those of the socialists; yet for a liberal the importance he personally attaches to specific goals is no sufficient justification for forcing others to serve them.Hayek identified himself as a classical liberal, but noted that in the United States it had become almost impossible to use "liberal" in its original definition and the term "Libertarianism in the United States, libertarian" was used instead. He also found libertarianism a term "singularly unattractive" and offered the term "Old British Whig Party, Whig" (a phrase borrowed from Edmund Burke) instead. In his later life, he said: "I am becoming a Burkean Whig". Whiggery as a political doctrine had little affinity for classical political economy, the tabernacle of the Manchester Liberalism, Manchester School and William Ewart Gladstone, William Gladstone. Samuel Brittan, concluded in 2010 that "Hayek's book [''The Constitution of Liberty''] is still probably the most comprehensive statement of the underlying ideas of the moderate free market philosophy espoused by neoliberals".Samuel Brittan, "The many faces of liberalism,
Hayek and policy discussionsHayek's ideas on spontaneous order and the importance of prices in dealing with the knowledge problem inspired a debate on economic development and transition economies after the fall of the Berlin wall. For instance, economist Peter Boettke elaborated in detail on why reforming socialism failed and the Soviet Union broke down. Economist Ronald McKinnon (economist), Ronald McKinnon uses Hayekian ideas to describe the challenges of transition from a centralized state and planned economy to a market economy. Former World Bank Chief Economist William Easterly emphasizes why foreign aid tends to have no effect at best in books such as ''The White Man's Burden: Why the West's Efforts to Aid the Rest Have Done So Much Ill and So Little Good''. Since the Financial crisis of 2007–2008, 2007–2008 financial crisis, there is a renewed interest in Hayek's core explanation of boom-and-bust cycles, which serves as an alternative explanation to that of the Global saving glut, savings glut as launched by economist and former Chair of the Federal Reserve, Federal Reserve Chair Ben Bernanke. Economists at the Bank for International Settlements, e.g. William White (economist), William R. White, emphasize the importance of Hayekian insights and the impact of monetary policies and credit growth as root causes of financial cycles. Andreas Hoffmann and Gunther Schnabl provide an international perspective and explain recurring financial cycles in the world economy as consequence of gradual interest rate cuts led by the central banks in the large advanced economies since the 1980s. Nicolas Cachanosky outlines the impact of American monetary policy on the production structure in Latin America. In line with Hayek, an increasing number of contemporary researchers sees expansionary monetary policies and too low interest rates as mal-incentives and main drivers of financial crises in general and the Subprime mortgage crisis, subprime market crisis in particular. To prevent problems caused by monetary policy, Hayekian and Austrian economists discuss alternatives to current policies and organizations. For instance, Lawrence H. White argued in favor of free banking in the spirit of Hayek's "The Denationalization of Money, Denationalization of Money". Along with Market monetarism, market monetarist economist Scott Sumner, White also noted that the monetary policy norm that Hayek prescribed, first in ''Prices and Production'' (1931) and as late as the 1970s, was the Nominal income target, stabilization of nominal income. Hayek's ideas find their way into the discussion of the post-Great Recession issues of secular stagnation theory, secular stagnation. Monetary policy and mounting regulation are argued to have undermined the innovative forces of the market economies. Quantitative easing following the financial crises is argued to have not only conserved structural distortions in the economy, leading to a fall in trend-growth. It also created new distortions and contributes to distributional conflicts.
Central European politicsIn the 1970s and 1980s, the writings of Hayek were a major influence on some of the future postsocialist economic and political elites in Central and Eastern Europe. Supporting examples include the following:
Personal lifeIn August 1926, Hayek married Helen Berta Maria von Fritsch (1901–1960), a secretary at the civil service office where Hayek worked. They had two children together. Upon the close of World War II, Hayek restarted a relationship with an old girlfriend, who had married since they first met, but kept it secret until 1948. Hayek and Fritsch divorced in July 1950 and he married his cousin Helene Bitterlich (1900–1996) just a few weeks later after moving to Arkansas to take advantage of permissive divorce laws.Ebenstein, p. 155. His wife and children were offered settlement and compensation for accepting a divorce. The divorce caused some scandal at LSE where certain academics refused to have anything to do with Hayek. In a 1978 interview to explain his actions, Hayek stated that he was unhappy in his first marriage and as his wife would not grant him a divorce he had to enforce it. After divorce, for a time, Hayek rarely visited his children, but continued more regular contact with them in his older age, after moving to Europe. Hayek's son, Laurence Hayek (1934–2004) was a distinguished microbiologist. His daughter Christine was an Entomology, entomologist at the British Museum of Natural History, and she cared for him during his last years of declining health. Gustav Jorberg, an associate member of the 1993 Nobel Prize Selection Committee claims that they paired Hayek and Swedish Economist, Gunnar Myrdal, with the prize in the same year as a slight to Myrdal. Not only for the political differences between Hayek and Myrdal, but because Hayek had 'paired' with Myrdal's wife, Alva, in an extra-marital affair. Hayek had a lifelong interest in biology and was also concerned with ecology and environmental protection. After being awarded Nobel Prize he offered his name to be used for endorsements by World Wide Fund for Nature, World Wildlife Fund, National Audubon Society, and conservationist National Trust for Places of Historic Interest or Natural Beauty, National Trust. Evolutionary biology was simply one of his interests in natural sciences. Hayek also had a unique interest in epistemology, which he often applied to his own thinking, as a social scientist. He held that methodological differences in the social sciences and in natural sciences were key to understanding why, in his mind, incompetent policies are often allowed. Hayek was brought up in non-religious setting and decided that he was an agnostic from age 15. He died in 1992 in Freiburg, Germany, Freiburg, Germany, where he had lived since leaving Chicago in 1961. Despite his advanced age by the 80s, he continued to write, even finishing a book, ''The Fatal Conceit'', in 1988.
Legacy and honoursEven after his death, Hayek's intellectual presence is noticeable, especially in the universities where he had taught, namely the London School of Economics, the University of Chicago and the University of Freiburg. His influence and contributions have been noted by many. A number of tributes have resulted, many established posthumously: * The Hayek Society, a student-run group at the , was established in his honour. * The Oxford University, Oxford Hayek Society, founded in 1983, is named after Hayek. * The Cato Institute named its lower level auditorium after Hayek, who had been a Distinguished Senior Fellow at Cato during his later years. * The auditorium of the school of economics in Universidad Francisco Marroquín in Guatemala is named after him. * The Hayek Fund for Scholars of the Institute for Humane Studies provides financial awards for academic career activities of graduate students and untenured faculty members. * The Ludwig von Mises Institute holds a lecture named after Hayek every year at its Austrian Scholars Conference and invites notable academics to speak about subjects relating to Hayek's contributions to the Austrian School. * George Mason University has an economics essay award named in honour of Hayek. * The Mercatus Center, a free-market think tank also at George Mason University, who has a philosophy, politics and economics program of study named for Hayek. * The has a quadrennial economics essay contest named in his honour. * Hayek was awarded honorary degrees from Rikkyo University, University of Vienna and University of Salzburg. * Hayek has an investment portfolio named after him. The Hayek Fund invests in corporations who financially support free market public policy organisations * 1974: Austrian Decoration for Science and Art * 1974: (Sweden) * 1977: Pour le Mérite for Science and Art (Germany) * 1983: Honorary Ring of Vienna * 1984: Honorary Dean of WHU – Otto Beisheim School of Management * 1984: (United Kingdom) * 1990: Grand Gold Medal with Star for Services to the Republic of Austria * 1991: (United States) * 1994: The FA Hayek Scholarship in Economics or Political Science, University of Canterbury. The scholarship supports students toward study for an honours or master's degree in the Economics or Political Science at the University. It was established in 1994 by a gift from entrepreneur Alan Gibbs.
Notable works* '' '', 1944. * ''Individualism and Economic Order'', 1948. * ''The Constitution of Liberty'', 1960. ''The Definitive Edition'', 2011. Description and preview. * ''Law, Legislation and Liberty'' (3 volumes) ** Volume I. ''Rules and Order'', 1973. ** Volume II. ''The Mirage of Social Justice'', 1976. ** Volume III. ''The Political Order of a Free People'', 1979. * ''The Fatal Conceit: The Errors of Socialism'', 1988. Note that the authorship of ''The Fatal Conceit'' is under scholarly dispute. The book in its published form may actually have been written entirely by its editor W. W. Bartley III and not by Hayek.Ian Jarvie (Editor), Karl Milford (Editor), David Miller (philosopher), David Miller (Editor) (2006), ''Karl Popper: a Centenary Assessment Vol. 1: Life and Times, and Values in a World of Facts'', pp. 120, 295,
See also* Constructivist epistemology * ''Fear the Boom and Bust'', a series of music videos produced by the Mercatus Center in which Keynes and Hayek take part in a rap battle * Global financial system, which describes the financial system consisting of institutions and regulators that act on the international level * History of economic thought * Liberalism in Austria * * Milton Friedman * Murray Rothbard
Bibliography* Birner, Jack (2001). "The mind-body problem and social evolution," CEEL Working Paper 1-02. * Birner, Jack, and Rudy van Zijp, eds. (1994). ''Hayek: Co-ordination and Evolution: His legacy in philosophy, politics, economics and the history of ideas'' * Birner, Jack (2009). "From group selection to ecological niches. Popper's rethinking of evolutionary theory in the light of Hayek's theory of culture", in S. Parusnikova & R.S. Cohen eds. (Spring 2009). "Rethinking Popper", ''Boston Studies in the Philosophy of Science''. Vol. 272 * * * Caldwell, Bruce (2005). ''Hayek's Challenge: An Intellectual Biography of F.A. Hayek'' * * Cohen, Avi J. (2003). "The Hayek/Knight Capital Controversy: the Irrelevance of Roundaboutness, or Purging Processes in Time?" ''History of Political Economy'' 35(3): 469–90. Fulltext: online in Project Muse, Swetswise and Ebsco * * Doherty, Brian (2007). ''Radicals for Capitalism: A Freewheeling History of the Modern American Libertarian Movement'' * Douma, Sytse and Hein Schreuder, (2013). "Economic Approaches to Organizations". 5th edition. London: Pearson, * Ebeling, Richard M. (March 2004)
Introductions* Boudreaux, Donald J. (2014). ''The Essential Hayek'' * Butler, Eamonn (2012). ''Friedrich Hayek: The Ideas and Influence of the Libertarian Economist''
Primary sources* Hayek, Friedrich. ''The Collected Works of F.A. Hayek,'' ed. W.W. Bartley, III and others (University of Chicago Press, 1988–); "Plan of the Collected Works of F.A. Hayek" for 19 volumes; vol 2 excerpt and text search; vol 7 2012 excerpt.