Hayek: A Collaborative Biography

Friedrich August Hayek (8 May 1899–23 March 1992) was born towards the end of what came to be regarded as the pre-deluge (World War I) golden age, and died just after the end of the Cold War (World War III). Cold War victory was expected to lead to an era of triumphant democracy The End of History and the Last Man (Fukuyama, 1992). Instead, capitalist democracies have faced intensified threats from theocratic-sponsored terrorism and plutocratic-sponsored financial crises.¹

In 1963, Friedrich Hayek looked back on his life as an economist in London in the 1930s: ¹

I found myself differing very strongly from the view then generally current in England and particularly held by the majority of my socialistically inclined colleagues in the other departments of the LSE [London School of Economics and Political Science, where Hayek had taught]. They all tended to interpret the National Socialist regime of Hitler as a sort of capitalist reaction to the socialist tendencies of the immediate post-war period, while I saw it rather as the victory of a sort of lower-middle-class socialism, certainly thoroughly anti-capitalistic and anti-liberal but taking over all the methods of socialism. It was in the end one of the memoranda which we occasionally did to prevent Sir William Beveridge from committing himself publicly to a thesis which we thought wrong that I first sketched the thesis. It caused so much surprise and disbelief … (Hayek, [1963] 1995, 62–63)

… that he decided to publish it as an article: ‘Freedom and the Economic System’ in the Contemporary Review of April 1938.²

Citations are a currency of academic standing. Among scholars, priority of discovery is acknowledged in footnotes and references, and the number of citations is a measure of the impact of conceptual innovations. Citation counts were first assembled in the 1920s. The Science Citation index was launched in 1960, and a companion Social Science Citation index was added in 1975.¹ Both are now part of the Thomson-Reuters ISI database, which is the most prominent citation database in use today. All citation counts have biases.² ISI is proprietary and is not easy to work with; its coverage dwindles the further back you go, it has a restricted range of journals, only counts first authors, and only takes account of books if they appear in journal citations. Elsevier’s more recent Scopus database covers many more journals, but has a poor coverage of the distant past. An online source of citations, Google Scholar, is easy to use, and it counts books as well as publications in languages other than English. That is not a decisive argument against it, since most important journals are available online, but the findings are weighted towards the present and the scores are always in flux. It is also difficult to extract citation on a yearly basis.

I was aware of Friedrich Hayek even when an undergraduate, and as a rather muddled left-winger (recently radicalized by Suez) I ‘knew’ he was on the ‘other side’, one of those responsible for the prolongation of the Great Depression and the author of a book called The Road to Serfdom (1944) which was a right-wing attack on the welfare state. However, I actually read almost nothing by him, nor was I ever asked to — his Introduction to Paper Credit was the only exception here, in my third undergraduate year at the LSE, probably at Lionel Robbins’ suggestion. I don’t recall being troubled in the least by the evident contrast between the even-tempered scholarship of the latter work and the allegedly repellant nature of Hayek’s work in general.

There are no two Austrian economists linked as closely as Friedrich A. von Hayek and Ludwig von Mises. If an educated man on the street knows the name of an Austrian economist at all it is however, likely to be that of Hayek. This recognition is all the more likely since the Global Financial Crisis of 2008, as shorthand for the debate as to how to fix the economy has become ‘Keynes vs. Hayek’.

The University of Freiburg is known as home of the ordoliberal Freiburg School (Vanberg, 1998), a research tradition that was founded in the 1930s by a group of economists and jurists¹ who shared the conviction that a properly functioning market order needs to be framed by appropriate rules, that such a framework is not self-generating but needs to be cultivated and enforced by government, and that law and economics are called upon to provide the institutional knowledge required for that purpose. To this research tradition and, specifically, to its principal founder, Walter Eucken, Hayek referred when, on 18 June 1962, in his inaugural lecture at the university of Freiburg he stated:

Special mention is due to the personal contacts with professional colleagues which have for decades provided for me a connection with this university…. By far the most important for me was, however, the friendship of many years’ standing, based on the closest agreement on scientific as well as on political questions, with the unforgettable Walter Eucken. During the last four years of his life this friendship had led to close collaboration…. You know better than I what Eucken has achieved in Germany. I need therefore not explain further what it means if I say here today that I shall regard it as one of my chief tasks to resume and continue the tradition which Eucken and his friends have created at Freiburg and in Germany.

Walter Eucken (17 January 1891–20 March 1950) was the leading and most prominent figure of German liberal economics from the 1920s until well after his death. He represented the convergence between the liberalism of the Austrian School of economics’ ‘third generation’ and the liberal tradition in German economics that gained momentum during the 1930s in opposition to the very strong socialist, national socialist and romanticist movements in German economics (Goldschmidt and Wohlgemuth, 2008; Janssen, 2009). Only after the war, when the ‘ordoliberal’ School of economic thought was erected at the University of Freiburg, did this strand of German economic reasoning become influential, especially in German economic policy pertaining to the reorganization of the West German economy. Though it was influential after the war, the influence of ‘ordoliberalism’ in academia faded out after Eucken’s death in the 1950s, for many reasons (Hesse, 2010). Therefore, the similarities as well as the differences between the German and the Austrian Schools of liberal thought have remained neglected in the literature.

When Friedrich August Hayek died (1992, age 92) his knowledge had helped undermine the legitimacy of one crusading faith: quasi-religious certainty about the benevolence of government. When his biographer, William Warren Bartley III, died (1990, age 55) his knowledge could also have gone on to perform a similar socially useful function: deconstructing and thus diffusing some of the fratricidal disputes between the ‘children of Abraham’ or ‘the people of the book’.

I came to know Professor Bill Bartley in 1972, when he contacted me some months after he had participated in The est Training, a personal development programme I had created. He told me that as a result of what he had accomplished for himself in the programme, he had gotten over his persistent insomnia (as he said, a real problem for a thinker and a teacher). He explained that he was interested in exploring with me the ideas expressed in that programme. Given Bill’s stature as a professional philosopher, I was thrilled by the opportunity. He was a rigorous thinker, and the depths to which he interviewed me about my ideas challenged me to express my own ideas more rigorously. In our discussions, Bill introduced me to and helped me to understand the philosophical thought related to the ideas that were presented in the programme, and I used what I learned from him in the programme’s ongoing development.