Late last fall the Nobel committee awarded one of the two 1974 Nobel Prizes in Economic Science to Friedrich A. von Hayek. Unfortunately, the publicity in the liberal press concerning the simultaneous Nobel award to socialist Gunnar Myrdal tended to obscure recognition of the significance of the award to Hayek. For those in the know, however, the award was a long-overdue acknowledgement of the achievements of the man who is, in Murray Rothbard’s words, "the world’s most eminent free market economist and advocate of the free society. ''
Hayek was born in Austria in 1899. At the University of Vienna he received doctorates in both law and political science, and soon became the first director of the Austrian Institute of Economic Research. It was during those years (the 1920's) that Hayek developed the "Austrian" theory of the business cycle, building on work by Ludwig von Mises Using this theory, Hayek and Mises predicted the crash of 1929 and the subsequent Great Depression. The business cycle theory was formally set forth in Hayek's Prices and Production (1931) and Monetary Theory and the Trade Cycle (1933).
From 1931 through 1949 Hayek represented the classical liberal (free market) viewpoint as professor at the London School of Economics. While there he wrote The Road to Serfdom (7944), probably his most famous book. This brilliant, popularly-written study shows how central planning leads to totalitarian control; its logical arguments and empirical evidence impressed even John Maynard Keynes, who wrote of the book, "'Morally and philosophically, I find myself in agreement with virtually the whole of it, and not only in agreement, but deeply moved by it.”
In 1950 Hayek accepted a position as Professor of Social and Moral Sciences at the University of Chicago. During this period he produced such major works as The Counter-Revolution of Science and The Constitution of Liberty, and edited Capitalism and the Historians. Although he returned to Europe in the 1960s to teach economics at the Albert-Ludwigs-Universitat of Freiburg, he remains Professor Emeritus at Chicago and a Fellow of the British Academy. He is currently Visiting Professor of Economics at the University of Salzburg. At age 75 Hayek is still actively thinking and writing. In 1973 the first volume of his major three-volume treatise on the free society, Law, Legislation, and Liberty, was published.
(Volume I covers "Rules and Order,"and drafts of Volume II, "The Mirage of Social Justice," and Ill, "The Political Order of a Free Society,"are already in existence.) Among Hayek's other works are Individualism and Economic Order, John Stuart Mill and Harriet Taylor, The Pure Theory of Capital, The Sensory Order, and Studies in Philosophy, Politics, and Economics.
In addition to his teaching and writings, one of Hayek's other main contributions to the cause of liberty was the creation, after World War II of the Mont Pelerin Society. This international organization consists of scholars in all the humane studies who are dedicated to the principles of political and economic freedom. Its primary purpose is to keep such people in touch with one another for mutual interchange of ideas, via meetings and exchange of papers.
Last summer Senior Editor Tibor Machan visited Hayek at his home in Salzburg, Austria. Their conversation ranged over a variety of subjects, from epistemology to political philosophy to psychology, focusing especially on Hayek's ideas of a natural evolution towards a free society, in the absence of government action to prevent it, and his concept of the 'Spontaneous order" produced by the market, in contrast to centrally planned order.
REASON is proud to present the highlights of this conversation, to give our readers a better appreciation of one of the intellectual giants of our time.
REASON: Dr. Hayek, your book, The Road to Serfdom predicted serious problems for England and America should these follow the policies of welfare statism–how do you see it now?
HAYEK: Well, now, I don't think I have anything to retract. Perhaps I did see the danger nearer, but it is a common experience that these tendencies take a long time to work themselves out; on the whole, though, the world is following the path I was afraid it would. In a way the thing has become more serious just now because we are now being driven into a planned society by inflation.
REASON: Do you see any serious differences between movement toward what might be called a Marxist socialist society and toward a non-Marxist socialist society in the West?
HAYEK: The use of "Marxist" in this connection is rather misleading because Marx never really had a program for the future socialist society. Most people who follow his philosophy have committed themselves to a centrally planned system and have started out with a radical reorganization of society. But basically I don't think there is much difference between the traditional continental socialism and what you call Marxist socialism. Except of course that in recent times the Western socialists have discovered that many of the aims of socialism can be achieved by distributing income via taxation and have therefore shelved a great deal of their programs of socialization or nationalization. To that extent there is a difference.
REASON: Do you find the totalitarian or repressive aspects of the communist bloc or socialist societies an integral part of socialism, or can socialism emerge and sustain itself with reasonable success without these measures?
HAYEK: It could maintain itself but it's not likely to escape that development because I'm sure a totalitarian socialism is incompatible with a really democratic system. Once you have abandoned democracy, any authoritarian government in power will be driven, just to maintain itself, to take all kinds of repressive measures, even if it doesn't intend to do so from the beginning.
REASON: Would you say, then, that a traditional relatively open society such as Austria will experience this kind of repression in the future if it continues with its socialistic economic policy?