Friedrich Hayek, Austrian Economist
Journal of the History of Economic Thought
1 Friedrich A. Hayek was an Austrian economist. Although this is perhaps not the most controversial claim put forward in the history of economics, it is one that needs to be repeated and revisited from time to time. Over the last twenty to thirty years, there has been an avalanche of scholarly and popular work on Hayek. The scholarly work was likely prompted by his having received the Nobel Prize in 1974 and the subsequent revival of Austrian economics (and the continuing criticisms of, and
... ticisms of, and searches for alternatives to, the mainstream of modern economics). The popular work reflects the revival of classical liberalism more broadly, both in the world of ideas and in the events of the 1980s and 1990s, such as the fall of the Berlin Wall and the rise of the global marketplace. Hayek's name is invoked as the source of a great number of economic and political ideas these days, both for the better and the worse. Often times, these treatments, especially but not only the popular ones, misunderstand key Hayekian themes. The main reason they do so is that they forget that the entire edifice of Hayek's social and political thought is built upon the foundations of the ideas he first engaged as a young man, those of the Austrian school of economics. This argument is made clear in the contrast between two recent books on Hayek's thought. Alan Ebenstein's Hayek's Journey: The Mind of Friedrich Hayek is a companion volume to his Friedrich Hayek: A Biography that appeared a couple of years ago. Ebenstein's volume is not a critical exploration of Hayek's thought, but an attempt to delve somewhat more deeply into Hayek's ideas than he did in the biography and to draw linkages between Hayek and other major thinkers who either influenced him or with whom his work can be contrasted. The chapter titles thus vary between topics, book titles Friedrich Hayek: Austrian Economist 2 of Hayek's, and the names of other major thinkers. In less than 250 pages of text, Ebenstein tries to cover a great deal of intellectual ground. Bruce Caldwell's Hayek's Challenge: An Intellectual Biography of F. A. Hayek is the culmination of about twenty years of Hayek scholarship. Caldwell's book, which comprises about twice the length of Ebenstein's, also traces Hayek's intellectual evolution more or less chronologically. However, Caldwell takes on this evolution with a more particular task in mind. Where Ebenstein's book reads like a laundry list of topics that are designed to introduce Hayek's ideas to the newcomer, Caldwell's approaches Hayek with an eye toward what his life's work has to say to economists. The result is that Caldwell provides a clear argument about Hayek's evolution that holds his narrative together, while Ebenstein's book leaves the reader, and certainly the economist reader, wondering just what it was all about. Caldwell's focus is on Hayek's continual return to methodology as central to finding the unifying themes in Hayek's work, but he also rightly situates those methodological, and later psychological, issues in the context of Hayek's immersion in the Austrian school of economics. In discussing these two books, I want to put forward an argument of my own. Hayek's ongoing concerns with methdology and the nature of human knowledge were the result of him having been on the losing end of the two great debates of the 1930s, the debate with Keynes and the socialist calculation debate. The reasons he was perceived, at the time and for many years after, to have lost those debates had everything to do with the method and content of Austrian economics. In the aftermath of those debates, his continued search for answers to questions about knowledge, science, and the structure of Friedrich Hayek: Austrian Economist 3 social order can be understood as his ongoing attempt to figure out why arguments that seemed obviously right to him could not be understood by those with whom he disagreed. This is why, as Caldwell recognizes, Hayek's 1952 book on theoretical psychology, The Sensory Order, is so central to understanding the intellectual path he carved. Hayek's work on the nature of the mind is the link between the Austrian economics of his early years and the reconstruction of classical liberalism that dominated his later years.