Sunday, December 29, 2013

The Inconsistency and Non-Libertarian and Non-Austrian Positions of Hayek

Because Friedrich Hayek studied under the great economist Ludwig von Mises and because Hayek won the Nobel prize in economics and is associated with the Austrian School of Economics, there is a tendency to want to hug Hayek and tell the mainstream, "See, our guy got your big award."  But in a way, the award may be a mixed blessing to the Austrian school.

Professor Walter Block has written a number of papers on some of the non-libertarian and non-Austrian positions of Friedrich Hayek. See Walter Block: Hayek Is No Rothbardian.

Gary North has written:
Some of us were more than a little suspicious when F. A. Hayek received the Nobel Prize for 1974, the year after the death of Ludwig von Mises, who provided Hayek with his major economic theorems, and for which Hayek was awarded the prize. Admittedly, Hayek put these ideas into a form which was more acceptable to "scientific economists." For example, in his youth, he once used six graphs in an essay. Admittedly, he never did it again. Mises, in contrast, never once adopted such tactics to appeal to his peers. He assumed that one graph is worth a thousand
methodologically illegitimate words.[...]

To put it bluntly, the secret of success in academic economic circles has as much to do with style as it does with content. This is not a new development; it has ever been true.
But it goes beyond style. North understand this. For whatever reason, Hayek has taken on positions that are occasionally contradictory and often non-libertarian and non-orthodox Austrian. This causes the problem Murray Rothbard warned about when discussing funding for Hayek's book, The Constitution of Liberty:
For when the supposed leader of one’s movement takes compromising and untenable positions, the opposition can always say: “but even [Hayek] admits . . .” Hayek is the philosophic counterpart. The only tenable conclusion is that any Volker Fund or any other support for this book will be self-destructive in the highest degree.
See Will Luther for a current example of the "even Hayek admits" problem. Rothbard went on to say:
In my letter of October 23, 1956, I criticized Hayek’s Claremont lectures, which summarized this book, and reference to the letter would be helpful. However, there I wrote  that Hayek is a “composite of brilliant things, and very wrong things . . . a mosaic of confusion.” In the full-fledged book, the picture and impact change greatly; for the brilliant things fade dismally into the background, and all of Hayek’s care and elaboration go into the terribly wrong things. Indeed, this book is a fusion of bad tendencies in his previous books, but which there had been only minor flaws in the product; here the flaws are magnified and raised to the status of a philosophic system. In all the 400 pages, I found only chapters 1 and 10 as agreeable chapters, and all the rest a veritable morass of error.
For a complete understanding of Rothbard's take on Hayek's Constitution of Liberty, see these two important Rothbard writings:

Confidential Memo on Hayek's Constitution of Liberty


Letter on The Constitution of Liberty by F. A. Hayek

Both can be found in Murray N. Rothbard vs. The Philosophers: Unpublished Writings on Hayek, Mises, Strauss, and Polanyi, Edited by Roberta A. Modugno.


  1. I found Jorg Guido Hulsmann's biography of Mises to be very helpful in understanding why there is this difference between Mises and Hayek.

    Hayek was not actually a student of Mises, per se. He was a student of Wieser. Wieser in turn did not follow after Menger, the founder of the Austrian school, but fell in with Jevons and Walras. Mises essentially took the discoveries of Menger and used them to reformulate all of economics based on real action. Walras simply painted over the defects of John Stuart Mills version of classical economics to found the neoclassical view.

    Thus Wieser was not really Austrian because he did not follow the thinking of Menger, but Mises did. Mises helped Hayek partially rethink what he learned from Wieser. However, Wieser's non-Austrian point of view was never completely removed from Hayek's thinking.

  2. Hoppe on the Hayek Myth. Definitely worth the time.