Friedrich Hayek – a brief intro

Following videos on Marx, Keynes, Adam Smith and Capitalism, and in the interests of some kind of balance, here is a brief video introduction from The School of Life on Austrian School economist Friedrich Hayek. His thinking influenced the political programmes of Reagan and Thatcher in the 1980s and, many years before, he was involved in some great intellectual debates with Keynes.

I found the video useful, as I have not read any of Hayek’s work, though I have read other writer’s critiques of him. One of the points in the video that stood out for me was Keynes’ questioning of Hayek as to where the line should be drawn between government intervention and the private sector, given the inevitability of some state planning. Of course, private firms make plans as much as governments, but the balance between the public and private will surely vary over time in any country depending on a range of factors.

I would also make the point that Thatcherism has been described by one academic as ‘the free economy and the strong state’. If this is an accurate characterisation, it illustrates the inevitable and shifting relationship between the market and the state, and a range of other institutions. Like it or not, modern capitalist economies are all mixed economies with interventionist states. There will always be room for debate over the balance between the various and evolving institutions that comprise such a system.


4 thoughts on “Friedrich Hayek – a brief intro

  1. I normally love your blog, but I can’t bring myself to watch the video! I’ve waded through ‘The Road to Serfdom’ many years ago, and it seemed slanted to this somewhat bewildered reader. But I’m aware Hayek did some writing on the inadequacy of total state planning which is not without insight, and it’s nice to be reminded of his debates with Keynes. I think Mrs Thatcher loved waving a volume of Hayek around, but as Andrew Gamble (who I think you cite) elaborated she never translated Hayek into reality. The wise Bob Jessop talks about Schumpeterian Competition States I recall, so maybe another Austrian economist had a bigger influence on ‘real world’ post-Thatcherism than Hayek. Ideologues may admire the likes of Hayek, but unless the elite dispense with elections like happened under Pinochet, the population has ways of objecting!

    • Thanks for your comments. I am no fan of Hayek either, but think he does have something to offer, as described in Georg Thomas’s comment for this post, even for those who find the implications of some of this thinking pretty disagreeable.

  2. You write: “Like it or not, modern capitalist economies are all mixed economies with interventionist states.”

    Excellent point. I refused to see it that way for a long time, and only oversight of this fundamental truth could make me an admirer of Hayek’s. Not much of substance remains of Hayek once one understands his neoliberal dogmatism which is based on the purported dichotomy of a pure market economy and socialism or a tendency toward socialism of immediate destructiveness. (You are either doing what the pure market economy demands or you are on the fast track to socialism, an attitude very pronounced in The Road to Serfdom.)

    The best part of his work concerns the role of handling knowledge in an economy.

    His monetary theory is deficient in that he does not understand that any “free market in currencies” including the Gold Standard requires massive political intervention—and will not, as Hayek believes, deliver us of the need to engage in politics; his political theory tends toward the anti-democratic, while in my analysis of freedom democracy is one of the indispensable core features of liberty ( for which reason I consider him not a voice of liberty as much as he writes about her). His legal theory is also hollow insinuating the existence of quasi-Platonic constants of a rule of law that ensures perfect markets; unsurprisingly one never gets to grasp these miraculous super-rules when reading his “Law, Legislation and Liberty”; they remain an unsubstatiated promise. He does not understand that markets are fundamentally political because they require the constant working out of legal and other rules; and this working out is a thoroughly political process. Instead he expects the application of certain legal rules to depoliticised society and turn it into a purportedly unpolitical, mysteriously market-driven event.

    Lastly, Hayek, the great theoretician of spontaneous order is hindered by his liberal dogmatism to extend the concept of a spontaneous order to the state, politics and society at large. Such extension would have made him understand that a free society is one of indeterminate outcomes and does not terminate in in any specific preconceived vision of it, such as proposed by classical liberalism.

    I have documented my criticism of Hayek in a series of posts, starting with this one:

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