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Über dieses Buch

This fourth volume examines his time in Vienna and Chicago (1931-1950), when Hayek held the prestigious University of London Tooke Professorship of Economic Science and Statistics. Between Vienna and Chicago (1931-1950), although his business cycle work was apparently defeated, this study takes a closer look at Hayek's successes.



1. Introduction

Friedrich August Hayek (1899–1992) was born a Habsburg ‘von’ — and died a Nobel Laureate (1974), a House of Windsor Companion of Honour (1984) and a recipient of President George W. H. Bush’s Medal of Freedom (1991). In

The Road from Serfdom

, Erik ‘Ritter von’ Kuehnelt-Leddihn (1992) explained:

with the exception of Fritz Machlup, the original Austrian school consisted of members of the nobility.…[Hayek] descended from a family ennobled at the end of the eighteenth century by the Holy Roman Emperor.

Robert Leeson

2. The Spiked Helmets of the Österreichische Schule

Adam Smith (1723–1790) and David Ricardo (1772–1823) were the Founding Fathers of the Classical School of Political Economy; a ‘decisive step’ in Friedrich Hayek’s (1994, 63) ‘introduction to economic theory’ came through his presentation of a paper as a student at the University of Vienna (1920–1921) on the Ricardian theory of rent. Hayek’s (1942) subsequent use of the ‘Ricardo Effect’ may not, however, have been derived from Ricardo (Ferguson 1973; Blaug 1996, 547; Kaldor 1942).

Robert Leeson

3. Hayek and His Eastern Reich Fathers

One Neoclassical branch — the fifth-generation Austrian — consists primarily of those valued by the market as unworthy of academic employment — victims, they maintain, of corrupt producer sovereignty. The Austrian School of Economics is defined by Ludwig Mises’ discovery of a sentence in the third edition of Frank A. Fetter’s (1913) textbook. In

Die Gemeinwirtschaft: Untersuchungen über den Sozialismus (Socialism)

, Mises (1922, 435, 1951, 443) declared that ‘the Lord of Production is the Consumer’ (‘

Der Herr der Produktion ist der Konsument

‘). His source was Fetter’s (1905, 212) reference to consumer boycotts and preferences: ‘The market is a democracy where every penny gives a right of vote.’ According to Mises (1951, 443–444),

From this point of view the capitalist society is a democracy in which every penny represents a ballot paper. It is a democracy with an imperative and immediately revocable mandate to its deputies — Special means of controlling [the entrepreneur’s] behaviour are unnecessary. The market controls him more strictly and exactingly than could any government or other organ of society.

Robert Leeson

4. Austrian Debates on Utility Measurement from Menger to Hayek

This chapter examines how some of the main exponents of the Austrian school of economics addressed the issues related to the measurability of utility. The first part of the chapter (Sections 2–9) is devoted to the period between the publication of Carl Menger’s Principles of Economics in 1871 and World War I, and studies the approaches to utility measurement of Carl Menger, Friedrich von Wieser, Eugen von Böhm-Bawerk, František Čuhel, Joseph Schumpeter, and Ludwig von Mises. In the pre-1914 period, two main views on the measurability of utility clashed. According to the first one, defended in particular by Böhm-Bawerk, the utility of goods can be measured and expressed as a multiple of a unit. According to the second view, advocated by Čuhel and Mises, utilities can only be compared and ranked but not measured. I will argue that by World War I the latter view, that is the ordinal understanding of utility, had become the dominant position among Austrian economists.

Ivan Moscati

5. Hayek, the ‘Spontaneous’ Order and the Social Objectives of Michael Polanyi

Born into a family of exceptional intellects in Budapest in the twilight of the Austro-Hungarian Empire, Michael Polanyi (1891–1976) graduated from the University of Budapest with a medical degree (1913) and a PhD in chemistry (1917). In 1919 he shifted to Karlsruhe, then in 1920 to Berlin to join the Kaiser Wilhelm Institute for Fibre Chemistry, and in 1923, to the Kaiser Wilhelm Institute for Physical Chemistry and Electrochemistry. In 1933, Nazi dismissal of Jewish academics pushed Polanyi into resigning from the Kaiser Wilhelm Institute and accepting a chair in physical chemistry at the University of Manchester, England.

Struan Jacobs

6. The Other Path to Mont Pelerin

My concern in this chapter is to offer a preliminary account of an alternative path that led Friedrich Hayek to the formation of the Mont Pelerin Society. By referring to an ‘alternative’, I am acknowledging the importance — and the substantive correctness — of a better-known story of how the Mont Pelerin Society was formed. This — which was set out by Richard Cockett,2 and has subsequently been elaborated upon by others — stresses the continuity between the Mont Pelerin Society and an earlier gathering in France, the Colloque Walter Lippmann. This was an international gathering of classical liberals, convened by Louis Rougier, to which Lippmann was invited, which took off from his The Good Society. This work — which was itself strongly influenced by the ideas of Hayek and Lionel Robbins — made a considerable general impression. As has been documented in a recent article, it led both Robbins and Hayek to write at length to Lippmann about his work,3 and created a swell of interest amongst classical liberals in France. The proceedings were published (alas, there is no contribution from Hayek in them);4 and there were plans to set up an organization with branches in various countries, with Hayek taking an organizing role in the UK.

Jeremy Shearmur

7. Morality versus Money: Hayek’s Move to the University of Chicago

In 1950, Friedrich Hayek abandoned the title of University of London Tooke Professor of Economics and Statistics, to become the Professor of Social and Moral Science at the Committee on Social Thought at the University of Chicago (with an intervening Visiting Professorship at the University of Arkansas). The new title is commonly seen as a consolation prize after his failure to obtain a position in the Economics Department at the University of Chicago or, indeed, any other prestigious American universities. In fact, Hayek was recruited by the Committee on Social Thought: he viewed his position as ‘a scholar’s dream’ (Mitch 2010, 2011). The one prior attempt to consider Hayek by the Department of Economics had been in early 1946 (before Milton Friedman’s arrival), was unknown to Hayek and was not taken even moderately seriously by most members of the Chicago Department.

David Mitch


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