Profile Major Works Resources

Friedrich August von Hayek, 1899-1992

Portrait of F.A. Hayek

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Among the most masterful and insightful of 20th Century economists, the Austrian economist Friedrich A. von Hayek alone could have stood shoulder-to-shoulder with his great rival, J.M. Keynes. Trained by Wieser and B÷hm-Bawerk in the Austrian tradition at Vienna, F.A. Hayek nonetheless carved a distinct spot in the economic pantheon - in some ways more different from the Austrian School than that of his friend and intellectual companion, Ludwig von Mises.

After some fundamental early contributions (e.g. his 1928 article is often credited with having introduced the concept of a fully intertemporal equilibrium), Hayek's early work was primarily in monetary cycle theory (1929, 1931, 1939). Drawing upon the "cumulative process" of Knut Wicksell and a Continental tradition of multi-sectoral overinvestment models, Hayek argued that when finance permitted investment to be greater than savings, then both desired investment and consumption demand cannot be met by actual output - thus there will be "forced saving" and changing degrees of "capital intensity" (with capital conceived in a very Austrian sense) changing output and employment. However, forced savings are not sustainable as capital goods demand will not be maintained if consumer goods producers are being dried of consumption demand. Thus, there is a contraction in output and a subsequent fall in capital intensity. Hayek argued that this "concertina" process was the main motor behind business cycles.

Hayek presented his main treatise on monetary cycle theory in a slim book, Prices and Production (1931), in England and was immediately drafted by Lord Robbins to join the L.S.E. - where he would serve as that institution's answer to Cambridge's John Maynard Keynes who was then working on similar issues. Keynes did not take lightly the criticisms Hayek made of his Treatise on Money (1930), and thus Keynes and Sraffa joined forces to bury Hayek and his cycle theory in the Economic Journal in 1932.

At the L.S.E., Hayek was instrumental in furthering its then-novel "continental" bent and he was highly influential on his junior colleagues (such as Hicks) and students (which included Lerner and Kaldor). However, following the appearance of the General Theory by J.M. Keynes in 1936, Lerner and Kaldor, like the rest of the economics profession, were drawn away from Hayek's orbit. Kaldor's departure was particularly stinging - since his subsequent criticisms of the "Ricardo Effect" upon which Hayek was hanging the remnants of a shredded cycle theory, led Hayek to abandon his cycle theory entirely.

Hayek's attempted to work a new system in his Pure Theory of Capital (1941), which he originally envisioned as a part of a larger work.  In it, he attempted to develop a joint theory of investment and capital.  Inexplicably, his 1941 book fell dead-born from the press and proved to be his last substantial effort in the area of theoretical Neoclassical economics.   Nonetheless, many of the Hayekian capital themes would emerge later in the theory of investment by his students, notably Friedrich and Vera Lutz and Abba Lerner and, more distantly, Trygve Haavelmo.

Hayek turned in 1944 to the political arena with his Road to Serfdom, a polemical defense of laissez-faire - the work for which he is best known outside academia. His subsequent political activities include the foundation of the libertarian "Mont Pelerin Society" in the 1940s.

In 1935, Hayek had edited a book on the Socialist Calcuation debate in which Mises had been engaged. In resurrecting Barone's 1908 article, Hayek realized that the Mises attack on the socialist position was untenable. As a result, in several famous articles - notably, "Economics and Knowledge" (1937) and "On the Use of Knowledge in Society" (1945) - Hayek composed a response which advanced the "Socialist Calculation" debate to a new level. Succinctly, he claimed, countering Lange and the Paretians, that prices are not merely "rates of exchange between goods", but rather "a mechanism for communicating information" (Hayek, 1945). Hayek argued that people have little knowledge of the world beyond their immediate surroundings and this is what forces them to be price-takers - the crucial ingredient that makes the price system work. If, on the other hand, a particular agent's knowledge were greater, agents would then refuse to act as price-takers but rather make decisions in a way which would manipulate their environment to their advantage thereby destroying the price system. In a complex, uncertain environment, Hayek argument, agents are not able to predict the consequences of their actions, and only this way could the price system work. In Hayek's words, the "fatal conceit" of the Oskar Lange and other "Socialists" in the calculation debate was that they believed this order could be "designed" by a planner who just gets the prices right, without realising that a price system evolved spontaneously as a result of lack of knowledge. The same limited knowledge which afflicts the agent's predictive power must necessarily constrain the planner's as well.

Hayek enhanced this argument with considerations of "spontaneous order" - the idea that a harmonious, evolving order arises from the interaction of a decentralized, heterogeneous group of self-seeking agents with limited knowledge. This order, he claimed, was not "designed" nor could be "designed" by a social planner, even a very wise one, but merely "emerged" or evolved spontaneously from a seemingly complex network of interaction among agents with limited knowledge. Hayek's elaborations on this complex, evolving spontaneous order are found in various places (e.g. 1952, 1964). Hayek continued with his work on "evolving order", linking it with his work on political and legal theory (e.g. 1960, 1973). In tackling the evolution of political, social, legal and economic institutions, Hayek is rightly conceived as one of the founding fathers of "evolutionary economics".

In many ways, one can see how the work of the social "evolutionist" and skeptic philosopher, David Hume was particularly influential on Hayek. Indeed, Hayek's scholarly work on the history of economic thought - e.g. on John Stuart Mill, Richard Cantillon and the Bullionist Debates - often echoed his search for bedfellows in the past, those who had resisted the "rational", calculable worldviews and simplistic solutions ever-so-present within intellectual circles. In his work on the philosophy of science (1952), Hayek traces the intellectual roots of the rational-socialist tendencies of economics to the French tradition of  Saint-Simon and Comte in the 19th Century.

Hayek's efforts were nonetheless ignored in the Keynesian mainstream which then dominated economics. Finding a deaf ear in economics, he looked elsewhere. In an apparently bizarre interlude, Hayek turned his attention to psychology - turning out an anti-behaviorist (and Hume-drenched) tract, The Sensory Order (1952), which fit into his "group selection" type of evolution he had applied to his "spontaneous order" in economics.

All this led to one of his most famous works, the Constitution of Liberty (1960) bringing all his previous work on political theory together into one magnificent defense of "Old Whig" political doctrine and a return attack on the Saint-Simon-Comte collectivism.

Having seen his old idea of a "commodity reserve currency" (1943) fail to generate much interest, Hayek turned in the 1970s to champion the cause of a "free banking system" originally proposed by Vera Smith Lutz and the devolution of monetary control away from the central banks and into the hands of private banks (1978). This drew upon him the opposition of Milton Friedman and the Chicago Monetarists.

After spending many fruitful years at the L.S.E., Hayek joined the Committee on Social Thought (not the economics department) of the University of Chicago in 1950. In 1962, Hayek left for the University of Freiburg in Germany and subsequently Salzburg, where he spent his remaining years. Hayek shared the Nobel Prize with Gunnar Myrdal in 1974 in one of the more controversial and surprising awards ever made (controversial because Myrdal had called for the abolition of the Nobel prize as a result of it having been awarded to Hayek and Friedman, and surprising for, at that time, Hayek was virtually forgotten in the economics profession). Interest in Hayek and his work increased after the 1974 award (his Nobel speech being a reiteration of his Counterrevolution thesis) and has kept on that track until today - his stock being enormously boosted by the collapse of Communism in Eastern Europe.



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Major Works of Friedrich A. Hayek

  • "The Monetary Policy of the United States After the Recovery from the 1920 Crisis", 1925, ZfVS.
  • "Friedrich von Wieser", 1926, JfNS.
  • "Intertemporal Price Equilibrium and Movements in the Value of Money", 1928, WWA.
  • Monetary Theory and the Trade Cycle , 1929 [mis]
  • "Gibt es einen Widersinn des Sparens?", 1929, ZfN [English trans. "The 'Paradox' of Saving", 1931, Economica] [mis]
  • Prices and Production , 1931 [mis]
  • "Reflections on the Pure Theory of Money of Mr. J.M. Keynes", 1931-2, Economica. [mis, pdf]
  • "A Note on the Development of the Doctrine of Forced Saving", 1932, QJE.
  • "The Present State and Immediate Prospects of the Study of Industrial Fluctuations", 1933, in Spiethoff festschrift.
  • "The Trend of Economic Thinking", 1933, Economica.
  • "On Neutral Money", 1933, ???
  • "Carl Menger, 1840-1921", 1934, Economica.
  • "Introduction - Carl Menger" in Carl Menger, 1934, Principles of Economics,  [mis]
  • "The Maintenance of Capital", 1935, Economica.
  • "A Regulated Gold Standard", 1935, The Economist [mis]
  • "The Nature and History of the Problem", 1935, in Hayek, editor, Collectivist Economic Planning, p.1 [repr. as "Socialist Calculation I" in 1948], [mis]
  • "The Present State of the Debate", 1935, in Hayek, editor, Collectivist Economic Planning, p.201 [repr. as "Socialist Calculation II" in 1948], [mis]
  • "Price Expectations, Monetary Disturbances and Malinvestments", 1935, Nationalokonisk Tidskrift.
  • "Richard Cantillon: His life and work", 1936, Revue des Sciences Economiques.  [English 1985 translation mis]
  • "The Mythology of Capital", 1936, QJE [mis, pdf]
  • "Economics and Knowledge", 1937, Economica. [pdf] [mis, lib, cox]
  • "Investment that Raises the Demand for Capital", 1937, REStat [mis, pdf]
  • Monetary Nationalism and International Stability, 1937 [mis]
  • "What Price a Planned Economy?" 1938, Contemporary Review [mis]
  • Freedom and the Economic System, 1939
  • Profits, Interest and Investment: And other essays on the theory of industrial fluctuations , 1939. [mis]
  • "The Economic Conditions of Inter-state Federalism", 1939, New Commonwealth Quarterly.
  • "The Socialist Calculation: the competitive solution", 1940, Econometrica. [repr. as "Socialist Calculation III" in 1948] [excerpts mis]
  • "Planning, Science and Freedom", 1941, Nature [mis]
  • The Pure Theory of Capital , 1941 [mis]
  • "The Ricardo Effect", 1942, Economica
  • "The Facts of the Social Sciences", 1943, Ethics.
  • "A Commodity Reserve Currency", 1943, EJ.
  • The Road to Serfdom , 1944 [mis] [abr]
  • "The British Genius for Compromise", 1945, The Spectator [mis]
  • "The Use of Knowledge in Society", 1945, AER. [lib, cox]
  • "Individualism: true and false", 1946 [first pub in Hayek, 1948]
  • "The Meaning of Competition", 1946 [first pub in Hayek, 1948]  [mis]
  • "'Free Enterprise' and the Competitive Order"", 1947 [first pub in Hayek, 1948]
  • Individualism and Economic Order , 1948  [mis]
  • "The Intellectuals and Socialism", 1949, U of Chicago Law Review. [mis, mis]
  • John Stuart Mill and Harriet Taylor, 1951.
  • The Counter-Revolution of Science: Studies on the abuse of reason, 1952. [av]
  • The Sensory Order: an inquiry into the foundations of theoretical psychology,, 1952.
  • "The Decline of the Rule of Law", 1953, The Freeman [mis]
  • "Substitute for Foreign Aid", 1953, The Freeman [mis]
  • "Degrees of Explanation", 1955, British Journal for Philosophy of Science.
  • "The Dilemma of Specialization", 1956, in White, editor, State of Social Sciences.
  • The Constitution of Liberty, 1960.
  • "The Economics of Abundance", 1960, in H. Hazlitt, editor, Critics of Keynesian Economics, p.126 [mis]
  • "The Non Sequitur of the Dependence Effect", 1961, Southern EJ. [mis]
  • "Rules, Perception and Intelligibility", 1962, Proceedings of British Academy.
  • "The Economy, Science and Politics", 1963.
  • "The Theory of Complex Phenomena", 1964, in Bunge, editor,The Critical Approach to Science and Philosophy.
  • "Kinds of Order in Society", 1964, New Individualist Review [lib]
  • "Kinds of Rationalism", 1965, ESQ.
  • "Principles of a Liberal Social Order", 1966, Il Politico.
  • "Dr. Bernard Mandeville, 1670-1733", 1966, Proceedings of British Academy.
  • "The Legal and Political Philosophy of David Hume", 1967, Il Politico.
  • Studies in Philosophy, Politics and Sociology , 1967.
  • "Der Wettbewerb als Entdeckungsverfahren", 1968, Kieler Vortrage [English trans. "Competition as a Discovery Procedure", 2002, QJAE, mis]
  • "The Primacy of the Abstract", 1968, ???
  • "Three Elucidations of the Ricardo Effect", 1969, JPE.
  • A Tiger by the Tail: the Keynesian legacy of inflation, 1972. [mis]
  • Law, Legislation and Liberty, 3 volumes, 1973-79.
  • "The Pretence of Knowledge", 1975, Les Prix Nobel en 1974 [nobel] [mis]
  • Choice in Currency: A way to stop inflation. 1976 [mis]
  • Denationalisation of Money: The argument refined, 1978. [mis], [excerpts mis]
  • New Studies in Philosophy, Politics, Economics and the History of Ideas, 1978.
  • "Can We Still Avoid Inflation?" (orig. 1970) [mis]
  • "Ludwig von Mises", 1977. [pub. 1988, AEN [mis] [mis]
  • "The Skillful Profesor Rothbard", 1979 [mis]
  • "Toward a Free-Market Monetary System", 1979, J of Libertarian Studies. [mis, mis]
  • Money, Capital and Fluctuations: Early essays, 1984.
  • "The Moral Imperative of the Market", 1986, in Unfinished Agenda [mis]
  • The Fatal Conceit: Or the errors of socialism, 1988




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Resources on F.A.Hayek

  • 1974 Nobel Prize site: Hayek press release, facts, bio, lecture
  • Taking Hayek Seriously (formerly Hayek Scholars Page) of Greg Ransom - excellent -- massive bibliographies and links.
  • F.A. Hayek profile page at the Mises Institute
  • "Interview with Hayek", 1975, Reason magazine [online]
  • Register for Friedrich Hayek Papers at Hoover Institution
  • "Friedrich August von Hayek" by Roger Garrison and Israel Kirzner (1987), in New Palgrave [online]
  • Time and Money: the macroeconomics of capital structure, by Roger Garrison, 2000  [online]
  • "Time and Money: Hayek's Macroeconomic Theory" by  Roger Garrison, 2001 [ppt]
  • "Phillips Curves And Hayekian Triangles: Two Perspectives on Monetary Dynamics" by Don Bellante and Roger W. Garrison (1988), HOPE [online]
  • "Hayekian Triangles and Beyond" by Roger Garrison (1994), in  Birner and van Zijp, eds. Hayek, Coordination and Evolution [online]
  • "Hayek Made No Contributions?" by Roger Garrison (1999), The Freeman [online]
  • "Friedrich A. Hayek (1899-1992)" by Peter Boettke, 1992, Freeman, [fee]
  • Peter Boettke's website (lots of articles on Hayek)
  • "On the Legacy of Mises and Hayek: Symposium", Cato Journal, 1999 [online]
  • Hayek-L e-mail list.
  • Hayek Stiftung [site]
  • Hayek page at Freiburg
  • Hayek Society page at L.S.E.
  • Hayek Biography by Peter Klein, at von Mises Institute
  • Hayek and Behavioral Economics edited by Roger Frantz and R. Leeson, 2012 [pdf]
  • Hayek page at Acton Institute
  • Hayek page at Stanford Encycl of Philosophy
  • Hayek entry page at Concise Encyc. of Economics, LibertyFund
  • Hayek profile page at Online Library of Liberty, LibertyFund
  • Hayek entry at
  • Wikipedia


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