Friedrich Hayek Anniversary 2025
On 8 May 1899, in Vienna, Friedrich Hayek was born. He would become the dominant intellectual influence of the later twentieth century and is still influential in economic and political theory today.
In the decades after the Second World War, Hayek kept alive the spirit of personal and economic freedom that had been crushed by the chaos of War and the interventionist politics that followed it. Such interventionism, he argued, was based on a fatal conceit, that economic planners knew far more than they really did. They simply could not collect all the information needed to run an efficient economy, because that information is dispersed, diffuse, incomplete and essentially personal. Their ignorance would always frustrate the socialist dream of rational planning. And as they struggled to impose their own version of reality, individuals would find their freedoms stripped away. It was a road to serfdom.
But Hayek showed how unplanned societies could be highly rational, their conventions and practices containing a ‘wisdom’ that we may not even understand, never mind be able to control. The price system, for example, allocates resources to their most urgent uses, with a speed and efficiency that no public agency could never achieve.
Hayek explained how social orders like markets were a product of evolution rather than of rational thought. Indeed, trying to replace them with some ‘rational’ vision was likely to end in disaster. This idea influenced a whole generation of economists, including many who, like he, would win the Nobel Prize, such as Milton Friedman, George Stigler, Maurice Allais, James Buchanan, Vernon Smith, Gary Becker and Ronald Coase.
Hayek’s ideas also enthused a whole generation of intellectuals, writers and think-tankers who in turn disseminated his ideas even more widely—including the founders of the Adam Smith Institute. Politicians such as Margaret Thatcher and Ronald Reagan owed much to his thinking. So did those, like Mart Laar and Vaclav Klaus, who became the political leaders of Eastern Europe after the fall of the Soviet system — which Hayek’s thought did much to undermine. “No person,” concluded Milton Friedman, “had more of an influence on the intellectuals behind the Iron Curtain than Friedrich Hayek.”
Hayek’s ideas remain a guide and inspiration to lovers of individual freedom all over the world. Think tanks promote his view; student groups name themselves after him; college programmes spring up in his name; journalists cite him; academics admit their intellectual debt to him; his views are analysed in books, papers and blogs. Millions of ordinary people owe to Hayek their enjoyment of the fruits of economic and personal freedom, even though they may not realise it; but then as Hayek pointed out, knowledge is not always obvious.
Eamonn Butler is author of Friedrich Hayek: The Ideas and Influence of the Libertarian Economist (Harriman Economics Essentials). https://www.amazon.co.uk/Friedrich-Hayek-influence-libertarian-Essentials/dp/0857191756