Liberty’s Unusual Economist
The most influential political thinker of the 21st century was born in the waning hours of the 19th, exactly 100 years ago today. Friedrich August von Hayek was the latest of late bloomers. For most of his very long lifetime, he was scoffed at as a reactionary throwback to the bourgeois liberalism of Queen Victoria’s century. Only at the very end did it become apparent that he was in fact a harbinger of the libertarianism of Bill Gates. As Hayek himself used to joke, “When I was a boy of 20, the only people I agreed with were old men of 80. And now that I am 80, I find that people I agree with all seem to be 20.”
Hayek is usually thought of as an economist, and did after all win the Nobel Prize for economics in 1974. The very text of his Nobel award, however, recognizes him as a very unusual kind of economist, one whose work reached “far beyond pure economic science.”
Hayek devoted his life to arguing for one big idea: A modern economy is too complex for any individual human intelligence to command. That this idea now sounds commonplace is Hayek’s triumph, for when he started publishing back in the early 1920s, it seemed obvious that a planned economy, under the guidance of wise and impartial experts, would outperform a free market. This was how Stalin was supposedly modernizing Russia, how Hitler was allegedly rebuilding Germany, and how President Roosevelt’s more radical advisers were recommending he save America from the Depression.
In a series of brilliant books — most importantly the polemical Road to Serfdom and the more dispassionate and scholarly Constitution of Liberty — Hayek argued that a planned economy must fail: No central bureaucracy could ever possess enough information to make all the economic decisions for a society of millions. And in attempting to make their doomed plan work, the planners — no matter how benign their intentions — would soon realize that they required near-absolute power over human life and property. Hayek learned his devotion to freedom from painful experience. Born to a prosperous Viennese family, he served in the Habsburg armies in the First World War and returned home to a world destroyed. The Austrian middle class was wiped out by wartime and postwar inflation. When the Depression struck, Austria quickly succumbed to a right-wing dictatorship.
Hayek fled for England, and from a professorship at the London School of Economics watched as Austria was gobbled up by Hitler’s Germany, Central Europe was destroyed in another war and then slid under the ice of Soviet dictatorship. Through it all, he reminded his audiences that there was a better way.
Capitalism, he tirelessly insisted, was not a competitive system but a co-operative one: a means of linking hundreds of millions of human beings, strangers to each other, in peaceful exchanges that enable each to satisfy his own wants. It may look chaotic, but it is in fact orderly — in just the same way a rain forest looks more chaotic than a wheat field, but constitutes a much more sophisticated and self-sustaining ecosystem. True order, Hayek taught, was spontaneous order.
Hayek’s influence has been both diffuse and inescapable. It suffuses, for example, Jane Jacobs’ famous book on cities. Jacobs attacked the urban planners of the 1950s for bulldozing cities as they had organically grown in order to replace them with new projects that looked tidier on a map, but did not serve human needs nearly so well.
His influence was felt in Britain, where Mrs. Thatcher’s anti-inflation policies reflected his conviction that inflation was a monetary failure that called for a monetary solution. It has been felt above all in his old Central European homelands, where Czechs, Hungarians, Poles, and Germans have adopted “spontaneous order” as their slogan for the free and civic societies they are attempting to restore to life after 60 years of Nazi and Soviet occupation. Hayek, by great good fortune, lived until 1992, long enough to see the old Habsburg lands rejoin the free world.
But even now, with free markets in the ascendant everywhere, Hayek’s work is not done. He has another lesson to teach, this one about the importance of the rule of law. Hayek believed that strong government was essential to a free society, but that government’s function was to maintain a structure of law that applied equally to everyone, thus freeing human beings to pursue happiness, each in his or her own way, in peace and security.
Our increasing tendency to bend our law in favour of some and against others — to have one law for a robbery committed by a native and another for a robbery committed for a white; or to require employers to have one standard for male job applicants and a different one for female — would appall him. A free society must be a just society. Our determination to set equality above justice would horrify him, suggesting that not even all this century’s horror has sufficed to cure us of our inkling to journey down that road to serfdom.