Friedrich Hayek (1899 – 1992)
Nobel laureate in economics, social scientist and political theorist.
Q. [McCallum]
are there other economists who have had a really major influence on your thinking? A. [Melzer] Well I mentioned Hayek. There are two ways. One is because of my interest in political economy. The other way is that Hayek was a pioneer in the use of information in economics. One of the papers that Karl and I wrote together that I continue to like was a paper called "The Uses of Money". In that paper we tried to incorporate information and the cost of information to explain why people use money. One of Hayek's most basic ideas is that institutions are a way of reducing uncertainty. Man struggles to find institutional arrangements which on average make life a bit more predictable. Our "Uses of Money" is not so much about money as we conventionally think about it, it's about the idea of a medium of exchange, the function of an institution called the medium of exchange and how the medium of exchange as an institution resolves a part of peoples uncertainty about the future.
Justice, like liberty and coercion, is a concept which, for the sake of clarity, ought to be confined to the deliberate treatment of men by other men.
As a result of the efforts of Hayek, Friedman, and the many others who share their general outlook, the idea of a centrally planned and centrally administered economy, so popular in the 1930s and early 1940s, has been discredited.
I feel sure that no one has done this particular kind of job [i.e. a physicalistic system of psychology, mind, and consciousness] nearly so well.
It was from Hayek that I began.
It is in good part because of Professor Hayek's work [on the topic of social engineering], and also because of his profound insights most notably in "The Constitution of Liberty" into the connection between a free market, the rule of law, and individual liberty, that you don't hear professors saying today, as they used so glibly to say, that 'we are all socialists now.
A society that does not recognise that each individual has values of his own which he is entitled to follow can have no respect for the dignity of the individual and cannot really know freedom.
[Estonian Prime Minister] Mart Laar came to my office the other day to recount his country's remarkable transformation. He described a nation of people wh are harder-working, more virtuous yes, more virtuous, because the market punishes immorality and more hopeful about the future than they've ever been in their history. I asked Mr. Laar where his government got the idea for these reforms. Do you know what he replied? He said, "We read Milton Friedman and F. A. Hayek".
Friedrich Hayek
seems to have been the first to postulate what is the core of this paper, namely, the idea of memory and perception represented in widely distributed networks of interconnected cortical cells. Subsequently this idea has received theoretical support, however tangential, from the fields of cognitive psychology, connectionism and artificial intelligence. Empirically, it is well supported by the physiological study and neuroimaging of working memory.
Where the sole employer is the State, opposition means death by slow starvation.
It is when it is contended that "in a democracy right is what the majority makes it to be" that democracy degenerates into demagoguery.
We shall all be the gainers if we can create a world fit for small states to live in.
If I am not mistaken, psychology, psychiatry and some branches of sociology, not to speak about the so-called philosophy of history, are even more affected by what I have called the scientistic prejudice, and by specious claims of what science can achieve.
I must say that I have been deeply gratified by reading a book [Hayek's "The Sensory Order"] of which I had not been aware when I wrote my little essay on group selection theory
I was deeply impressed
I recommend this book to your attention [i.e. The American Academy of Arts and Sciences], as an exercise in profound thinking by a man who simply considers knowledge for its own sake. What impressed me most is his understanding that the key to the problem of perception is to comprehend the nature of classification. Taxonomists have struggled with this problem many times, but I think von Hayek considered this problem in a broader sense.
Ever since the beginning of modern science, the best minds have recognized that "the range of acknowledged ignorance will grow with the advance of science." "In science the more we know, the more extensive the contact with nescience." Unfortunately, the popular effect of this scientific advance has been a belief, seemingly shared by many scientists, that the range of our ignorance is steadily diminishing and that we can therefore aim at more comprehensive and deliberate control of all human activities. It is for this reason that those intoxicated by the advance of knowledge so often become the enemies of freedom
The more men know, the smaller the share of all that knowledge becomes that any one mind can absorb. The more civilized we become, the more relatively ignorant must each individual be of the facts on which the working of his civilization depends.
[Apartheid law in South Africa] appears to be a clear and even extreme instance of that discrimination between different individuals which seems to me to be incompatible with the reign of liberty. The essence of what I said [in The Constitution of Liberty] was really the fact that the laws under which government can use coercion are equal for all responsible adult members of that society. Any kind of discrimination be it on grounds of religion, political opinion, race, or whatever it is seems to be incompatible with the idea of freedom under the law. Experience has shown that separate never is equal and cannot be equal.
Part of our present difficulty is that we must constantly adjust our lives, our thoughts and our emotions, in order to live simultaneously within the different kinds of orders according to different rules. If we were to apply the unmodified, uncurbed, rules of the micro-cosmos (i.e. of the small band or troop, or of, say, our families) to the macro-cosmos (our wider civilisation), as our instincts and sentimental yearnings often make us wish to do, we would destroy it. Yet if we were always to apply the rules of the extended order to our more intimate groupings, we would crush them. So we must learn to live in two sorts of world at once.
As is true with respect to other great evils, the measures by which war might be made altogether impossible for the future may well be worse than even war itself.
If we can reduce the risk of friction likely to lead to war, this is probably all we can reasonably hope to achieve.
In no other field has the world yet paid so dearly for the abandonment of nineteenth-century liberalism as in the field where the retreat began: in international relations. Yet only a small part of the lesson which experience ought to have taught us has been learned.
Perhaps even more than elsewhere current notions of what is desirable and practicable are here still of a kind which may well produce the opposite of what they promise.
We must shed the illusion that we can deliberately 'create the future of mankind'
This is the final conclusion of the forty years which I have now devoted to the study of these problems