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Happy Birthday F.A. Hayek - A Collection of Works and Thoughts

May 08, 2009 – Comments (8)

Today is the 110th birthday of F.A. Hayek. As we watch our government waste trillions upon trillions of dollars in the name of saving us; as we watch our government's destructive attempt to re-inflate the housing and stock markets; and as we watch our government's continuous Orwellian expansion into our private lives, we should ponder what F.A. Hayek would think of the world today and what advice he would dispense.  Thus, for me, it is a bit of a melancholy day to share his memory.  His wisdom is needed.

Who Was F.A. Hayek?

Friedrich August von Hayek is undoubtedly the most eminent of the modern Austrian School economists. His most notable contribution to the field of Economics is his work on the Austrian Business Cycle Theory (ABCT) which helped earn him a Nobel Prize in 1974.  ABCT explains how Central Banks distort capital markets by manipulating interest rates, lowering them below the rate the market would set, which causes a misallocation of capital resources.  This process leads to massive speculation in projects, stock ventures, and credit instruments that would not be justifiable or even possible under normal market conditions.  This boom eventually runs out of steam (due to the scarcity of resources), leading to the bust.  Does any of that sound familiar?  It is ABCT that free market thinkers such as Ron Paul and Peter Schiff applied to predict the crash of 2007-08.  It is a fitting tribute since Hayek famously predicted the crash and Great Depression in February 1929.

F.A. Hayek (1899-1992)

For most people however, Hayek is known for his classic and disturbing look at political philosophy in the book The Road to Serfdom.  Written in 1944 while living in London, Serfdom was immediately recognized as a radical and thought provoking look at the direction of State control in the lives of private citizens.  

Instead of linking to several of Hayek's works, acknowledging that such a task is impossible to complete (a planned collection of Hayek's works is slated to be 19 volumes long) I want to bring special attention to one before I close with some thoughts of my own.

The Pretense of Knowledge is a lecture Hayek gave in 1974 in memory of Alfred Nobel. He outlined his case against the predominant school of thought in the field of Economics, a "scientific" approach that he argued was not very scientific at all.  Predictably, his sage words were ignored by intellectuals everywhere. Please give it a read when you have a moment.

It seems to me that this failure of the economists to guide policy more successfully is closely connected with their propensity to imitate as closely as possible the procedures of the brilliantly successful physical sciences — an attempt which in our field may lead to outright error. It is an approach which has come to be described as the "scientistic" attitude — an attitude which, as I defined it some thirty years ago, "is decidedly unscientific in the true sense of the word, since it involves a mechanical and uncritical application of habits of thought to fields different from those in which they have been formed." I want today to begin by explaining how some of the gravest errors of recent economic policy are a direct consequence of this scientistic error. - F.A. Hayek

For a more complete summary of Hayek's contributions and thoughts, please visit the Ludwig Von Mises Institute, the online home of Austrian School Economics.

My Indirect Tribute to Hayek - Gratitude and Courage

I can't possibly speak of Hayek without speaking about another man, the one who is responsible for saving me from a life of vacuous anti-intellectualism. He galvanized me (and a million others and counting) to question what we were taught, stand up for what we believe, and have the courage to fight against evil no matter the odds.  His courage in the face of open contempt and ridicule, constant hit pieces from the media, marginalization by the power structure, and the overwhelming political and economic apathy of the American public can only be understood when one examines the lives of his mentors: F.A. Hayek, Ludwig Von Mises, and Murray Rothbard, all of whom suffered the very same treatment and shared the same persaverance, humility, and courage.

That man of course is Ron Paul, a member of the Austrian School, a Congressman, and the rarest of human beings: an honest politician.  I had the honor of meeting Ron Paul at a rally in Phoenix, AZ last year. Though his campaign was winding down, there was no evidence of a drop in enthusiasm. Hope springs eternal. Indeed, Dr. Paul has taken the teachings of Hayek and Mises and started a revolution, one which grows stronger every day, much to the chagrin of the American power structure. I will cherish that day in Arizona for the rest of my life.

It is neither an overstatement nor a simplification to say that Ron Paul has changed me in a more meaningful and fulfilling way than any other human being except perhaps my father.  I feel blessed by the existence Hayek because I was blessed by the existence of Ron Paul.   Hayek helped make Dr. Paul possible, and know he makes us possible.  We can do our part.   I use my modest financial means to donate liberally to C4L, LP, and the Mises Institute, and will continue to do so as long as life permits.  Others use their organizational skills.  Many others write and speak out.  Some are taking on the power structure directly, running for offices across the country.  F.A. Hayek would be proud of these events, I'm certain.  We're starting to win very small victories but it is a long road.  Hopefully we will have the courage of Hayek to continue the fight no matter the odds.

Happy Birthday Friedrich. Thank you for enriching my life.

David in Qatar