Friedrich August Hayek


Friedrich August von Hayek (1899-1992) was a Viennese economist, jurist and philosopher of the Austrian School. Especially known for receiving the Nobel Prize in 1974, Hayek was a staunch defender of liberalism and a critic of planned economy and socialism.

Friedrich August von Hayek was born in Vienna in 1899. After fighting in the First World War, he received his doctorate in law and economics. He was a student of Ludwig von Mises, whose book Socialism made him abandon leftist positions to embrace liberalism. He later secured a professorship at the London School of Economics thanks to Lionel Robbins, another Mises alumnus. In London he embarked on a constant debate with J.M. Keynes who catapulted him to fame.

He later worked at the University of Chicago, the University of Freiburg and the University of Salzburg, where he retired in 1977. In 1974 he would receive the Nobel Prize in Economics "for his pioneering work on the theory of money and economic fluctuations and his pioneering analyzes of the interdependence of economic, social and institutional phenomena ”.

After his retirement he dedicated himself to traveling spreading his ideas. He would die in 1992 in Freiburg and be buried in Vienna.

Main contributions

The main contribution of von Hayek was his theory of the business cycle. The Viennese blames the cycles on the actions of the government, specifically the central banks. Through their expansionary monetary policies, central banks cause, in addition to inflation, an increase in bad investments, especially in capital goods, and the underproduction of consumer goods. These policies will generate the need for adjustment, which takes the form of depressions. His theory was especially appreciated after predicting the Great Depression, but was abandoned with the appearance of the General theory of Keynes.

The other recurring theme in his work is the critique of socialism and the planned economy. In this sense, he developed the theorem of the impossibility of socialism, previously raised by Mises. His contribution in terms of the role of information, and prices as data transmitters in the free market, stands out. This proposition was developed in his article The Use of Knowledge in Society. Broadly speaking, Friedrich Hayek criticizes that, in the absence of prices, socialist planners would not have access to the information they provide on individual preferences and knowledge, since it is subjective, dispersed and difficult to articulate information. He also criticized socialism on the philosophical level for its incompatibility with individual freedom.

Tags:  Commerce Business economic-analysis 

Interesting Articles