Hayek was born in 1899 in Vienna and earned doctorates in law and political science at the University of Vienna.
Hayek was born in 1899 in Vienna and earned doctorates in law and political science at the University of Vienna. ◦ He joined Ludwig von Mises's private seminar and in 1927 became director of the Austrian Institute for Business Cycle Research. ◦ In the early 1930s he moved to the London School of Economics at the invitation of Lionel Robbins, becoming a British citizen in 1938. ◦ In 1974 he shared the Nobel Prize with Gunnar Myrdal "for their pioneering work in the theory of money and economic fluctuations and for their penetrating analysis of the interdependence of economic, social and institutional phenomena." ◦
Hayek held that the peculiar character of the problem of a rational economic order is determined precisely by the fact that the knowledge of the circumstances of which we must make use never exists in concentrated or integrated form but solely as the dispersed bits of incomplete and frequently contradictory knowledge which all the separate individuals possess. ◦ He reframed the economic problem of society as a problem of the utilization of knowledge which is not given to anyone in its totality. ◦ He insisted that there is beyond question a body of very important but unorganized knowledge which cannot possibly be called scientific in the sense of knowledge of general rules, specifically the knowledge of the particular circumstances of time and place. ◦ He saw the price system as a spontaneous order that did a remarkable job of coordinating people's actions even though that coordination was not part of anyone's intent. ◦ He held that the extended order resulted not from human design or intention but spontaneously, arising from unintentionally conforming to certain traditional and largely moral practices. ◦ He maintained that our moral traditions developed concurrently with our reason, not as its product. ◦ He argued that humans must learn to live in two sorts of world at once, because if we applied the intimate rules of the small band to wider civilisation we would destroy it, yet if we applied the rules of the extended order to our families we would crush them. ◦ He feared that in our endeavour consciously to shape our future in accordance with high ideals, we should in fact unwittingly produce the very opposite of what we have been striving for. ◦ He rejected conservatism as a social program, noting that in its paternalistic, nationalistic and power adoring tendencies it is often closer to socialism than true liberalism. ◦ He held that the laws under which government can use coercion are equal for all responsible adult members of society and that any kind of discrimination is incompatible with the idea of freedom under the law. ◦
Hayek distinguished two systems of planning, noting that planning in the specific sense means central planning—direction of the whole economic system according to one unified plan—whereas competition means decentralized planning by many separate persons. ◦ He stressed that economic problems arise always and only in consequence of change, and that so long as things continue as before there arise no new problems requiring a decision. ◦ He preferred true but imperfect knowledge, even if it leaves much indetermined and unpredictable, to a pretence of exact knowledge that is likely to be false. ◦ He warned against the superstition that only measurable magnitudes can be important. ◦
Hayek viewed the market as a spontaneous order that evolved slowly as the result of human actions, not designed by anyone. ◦ He saw the economic problem as the utilization of knowledge which is not given to anyone in its totality. ◦ He argued that practically every individual has some advantage over all others because he possesses unique information of which beneficial use might be made, but of which use can be made only if the decisions depending on it are left to him or are made with his active coöperation. ◦ He held that humans must live by two incompatible sets of rules, one appropriate to the small band and another to the extended order. ◦
Hayek earned doctorates in law and political science and directed the Austrian Institute for Business Cycle Research. ◦ He was awarded the Nobel Prize for pioneering work in the theory of money and economic fluctuations and for penetrating analysis of the interdependence of economic, social and institutional phenomena. ◦ He later attacked "scientism"—the imitation in social science of the methods of the physical sciences. ◦
Hayek defended commercial knowledge as socially valuable by citing concrete practitioners such as the shipper who earns his living from using otherwise empty or half-filled journeys of tramp-steamers, the estate agent whose whole knowledge is almost exclusively one of temporary opportunities, and the arbitrageur who gains from local differences of commodity prices. ◦ In his 1974 Nobel Memorial Prize lecture, he opened with a confession that economists had made a mess of things. ◦ He attributed economists' failures to a propensity to imitate as closely as possible the procedures of the brilliantly successful physical sciences, an approach which has come to be described as the "scientistic" attitude. ◦
Despite their opposition, Keynes praised The Road to Serfdom on its cover, writing that he found himself in deeply moved agreement with virtually the whole of it. ◦ Hayek believed that Keynesian policies to combat unemployment would inevitably cause inflation, and that to keep unemployment low, the central bank would have to increase the money supply faster and faster, causing inflation to get higher and higher. ◦ Yet he distinguished the liberal framework from collectivist planning by stating that his target was solely the planning against competition—the planning which is to be substituted for competition—not the planning required to make competition as effective and beneficial as possible. ◦ He held that conservatism is a necessary element in any stable society but is not a social program. ◦
Hayek held that practically every individual has some advantage over all others because he possesses unique information, and that beneficial use can be made of it only if the decisions depending on it are left to him or are made with his active coöperation. ◦ He distinguished the planning which is to be substituted for competition from the planning which is required to make competition as effective and beneficial as possible. ◦ He held that any kind of discrimination is incompatible with the idea of freedom under the law. ◦
"The peculiar character of the problem of a rational economic order is determined precisely by the fact that the knowledge of the circumstances of which we must make use never exists in concentrated or integrated form but solely as the dispersed bits of incomplete and frequently contradictory knowledge which all the separate individuals possess." ◦
"I prefer true but imperfect knowledge, even if it leaves much indetermined and unpredictable, to a pretence of exact knowledge that is likely to be false." ◦
"The curious task of economics is to demonstrate to men how little they really know about what they imagine they can design." ◦
"To understand our civilisation, one must appreciate that the extended order resulted not from human design or intention but spontaneously: it arose from unintentionally conforming to certain traditional and largely moral practices, many of which men tend to dislike, whose significance they usually fail to understand, whose validity they cannot prove, and which have nonetheless fairly rapidly spread by means of an evolutionary selection." ◦
"Is there a greater tragedy imaginable than that, in our endeavour consciously to shape our future in accordance with high ideals, we should in fact unwittingly produce the very opposite of what we have been striving for?" ◦
"The power which a multiple millionaire, who may be my neighbour and perhaps my employer, has over me is very much less than that which the smallest functionaire possesses who wields the coercive power of the state, and on whose discretion it depends whether and how I am to be allowed to live or to work." ◦