Back to Basics: Friedrich Hayek

Among the many problems staring our society in the face is the imminent meltdown of the financial and monetary system. There are numerous facets: uncontrolled government spending and intervention; a looming sovereign debt crisis; the enormous, Byzantine derivatives complex; the insolvent banking system; the growing power of the BRICS countries; and on and on. Putting all the pieces together is a daunting task.

Standing ready to assist us in this labor are the great thinkers of the field. Among these must be counted the incomparable Friedrich August von Hayek (1899-1992). He is best known as one of the founding fathers of the Austrian school of economics, and the outspoken nemesis of John Maynard Keynes. Hayek demonstrates conclusively how Keynesian economics—that web of misconceptions and mythology in which the West is now trapped—is dysfunctional and guaranteed to fail.

But Hayek goes far beyond this level of analysis. He goes deeper, burrowing into every rabbit hole of socialism and interventionism to expose the ideological and spiritual foundations of this perennial challenge, not merely to the financial and monetary system, but to civilization in its entirety.

I am reprinting below a post that I wrote about him in 2007, on the original AWOL Civilization blog.

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              The Extended Order of Human Cooperation

No blog on the deterioration of Western culture would be complete without a tribute to Friedrich August von Hayek (1899-1992), the great Austrian-born economist and philosopher. When one considers the breadth of his work and the acuity of his analysis, he may very well be the preeminent sociopolitical thinker of the 20th century.

No one has been such an outspoken advocate for liberty, or such a devastating foe of all forms of socialism—what Hayek often calls "collectivism." In The Counter-Revolution of Science (1952), he deconstructs the illusions of the early socialist thinkers, notably the false doctrine of “scientism," the misapplication of scientific methodology to social phenomena, particularly history.

History, Hayek explains, is not a real thing, subject to the methods of the natural sciences. If we are to undertake a study of zebras, we need not hesitate to employ these methods. We see before us a type of animal that is clearly distinguished from other species. There can be little doubt that a zebra is a zebra. Our subjects behave in accordance with the characteristics of their kind. They cannot change themselves, and there is no emotional or intellectual bond between researcher and subject.

All this is completely different when it comes to human history. Our subjects do not behave in a predictable fashion, and they can remake themselves. There are many bonds (and enmity) between researcher and subject. But most importantly, the creation of history is itself a subjective act. The actors are implementing what they believe to be “their" history of the moment; moreover, each individual has a different perception of his own behavior, his neighbor’s behavior, and indeed everything else occurring in the world. To say that this phenomenon is subject to laws in the same sense as natural laws is a serious error.

In The Road to Serfdom, written during World War II, Hayek demonstrates that Communism and Nazism are two sides of the same collectivist coin. He traces the careers of the National Socialist (Nazi) leadership, showing that they were socialist in every sense of the word. In fact, many were prominent “left-wing" socialists or communists who embraced the swastika as Hitler rose to power. Hayek thereby dismisses the influential myth that the Nazis were some sort of ultra-conservative movement.

In The Constitution of Liberty (1960), perhaps his magnum opus, Hayek lays out a philosophical blueprint for a 20th-century society based on liberty. This book is the modern heir to the ideas of Locke and Adam Smith.

The Fatal Conceit (1988) is a general critique of socialism, in which Hayek shows that “rational" planning is doomed to failure. The very first paragraph sums up much of his thinking:

“This book argues that civilisation depends, not only for its origin but also for its preservation, on what can be precisely described only as the extended order of human cooperation, an order more commonly, if somewhat misleadingly, known as capitalism. To understand our civilisation, one must appreciate that the extended order resulted not from human design or intention but spontaneously: it arose from unintentionally conforming to certain traditional and largely moral practices, many of which men tend to dislike, whose significance they usually fail to understand, whose validity they cannot prove, and which have nonetheless fairly rapidly spread…”

When I read Hayek, I am always struck by his vast command of history, culture, philosophy, and economics, as well as by his matter-of-fact tone. His attitude is distinctly non-ideological; he is never the advocate of a party or “program.”

Hayek warned us about flirtation with the wily seductress that is collectivism. Will we take heed?