Friedrich von Hayek

"I am personally convinced that the reason which led the intellectuals, particularly of the Engish-speaking world, to socialism was a man who is regarded as a great hero of classical liberalism, John Stuart Mill." The source of such grumblings was Friedrich von Hayek, a 20th century economist of the Austrian school.* Hayek fingered Mill as the first to see economics as divisible into two realms, the production of goods and the distribution of them. He points especially to this passage in Mill's Principles of Political Economy (1848), as perfidious, the prying open of pandora's box: "The things once there, mankind, individually or collectively, can do with them as they like." But like Bill Gates or Ted Kennedy, Mill said many things about economics that are grave but sufferable errors: no matter how much he gassed about it, economics was just not his game. We are tempted to forgive Mill his unfortunate insights, or ignore them, despite this one's ominous significance accorded by Hayek.

Initially, Hayek appeared as the foil to the great Cambridge economist John Maynard Keynes. During the 1930s, Hayek taught at the London School of Economics. The feud began with Hayek's strong rebuttal to Keynes' Treatise on Money (1930) in an economic journal in 1931. Keynes checked with his own rebuttal, followed by another damning article by Hayek, and so on. This ping-pong debate was civil, but quite heated, perhaps like the correspondence of Arab and Israeli pen pals. Ultimately, other talent at Cambridge and LSE joined the skirmish, and the lines were drawn. As the world sank into the Great Depression, Keynes' policy prescriptions of government intervention and public spending won the attention of political leaders, and Hayek's following dwindled through the 1930s and into the war years.

As World War II was drawing to a close, America was in a time of grave uncertainty for New Deal naysayers and right-wing isolationists, when a dominating Democratic machine was ascendant as much for domestic policy success in the face of Depression-prone free markets as for the closing ring of a triumphant war effort. The Western world gave alliance and comfort to the Soviet Union in order to defeat those militaristic and horrific regimes which, for whatever reason, were lumped with Republicans on the right-hand side of the political ledger. The pull towards socialism in Britain, on the Continent, and under Harry Truman left many followers of traditional values and classical economics discouraged, disaffected, astray.

In short, there could not have been a more opportune time for the publication of Hayek's most consequential work, The Road to Serfdom (1944). Dedicated mockingly to "the Socialists of All Parties," the book would be instructive today, not just to Bernie Sanders, but to Ralph Nader and Hillary Clinton too. The book's well-argued main idea is that the concept of a planned economy, which is the heart of the socialist program, is not compatible with economic liberty, and fails precisely because of this. Hayek also gives bright perspective to recent history, explaining the parallels of naziism and socialism, supposedly at opposite ends of the spectrum: the same intellectual forbears; the same hatred of the business class; the same goal of centralized control. In whole, the book is a spirited defense of individualism against the state, in a fashion not much unlike John Stuart Mill.

But while Mill could not seem to carry his philosophizing into economics, Hayek could and would carry his economicking into philosophy. In The Constitution of Liberty (1960), Hayek veers more forcefully into the relation of the individual to society, the philosophy of law, and the emergence of the welfare state. He provides all the practical, moral, and philosophical justifications for a free society. Not a society of false freedoms, such as "freedom from fear" and "freedom from want," but a society where we are all free from the demands and designs of our fellow man.

Eventually, the planned economy was thrown out on its ear, and Hayek's thinking gained greater and greater acceptance. His writings and his philosophy are read with zeal in the post-communist societies of Eastern Europe (where his philosophy has been implemented most notably by Vaclav Klaus of the Czech Republic and Mart Laar of Estonia) and in the not-quite-yet-post-communist People's Republic of China (where Zhu Rongji is an admirer). Of course, his impact on the West was no less, and in America he was well read by Barry Goldwater and well rendered by Ronald Reagan.

He perhaps had the most profound impact on British Prime Minister Margaret Thatcher, who revealed that his manna was "imbibed at my father's knee or acquired by candle-end reading" during an apparently carefree childhood. In the late 1970s, after becoming Conservative Party leader, Thatcher attended a meeting of Conservative Party functionaries bickering over the direction of the party. When a colleague was speaking on the merits of carving a pragmatic, centrist approach, Thatcher pulled from her briefcase a copy of The Constitution of Liberty. Interrupting the speaker, she held up the book for all to see, slammed it down on the table, and declared, "This is what we believe."

* The "Austrian school" was a group of Viennese economists who were responsible for a general economic and philosophical defense of laissez-faire capitalism. They were led in the 19th century by Carl Menger, Friedrich von Wieser, and Eugen von Böhm-Bawerk; and in the 20th century by Joseph Schumpeter, Ludwig von Mises, and von Hayek himself.