This past Tuesday, May 8th, was the 119th anniversary of the birth of Friedrich Hayek. Although Hayek was a serious economist who won the 1974 Nobel Prize in Economics, he is almost certainly best known for his classic tome The Road to Serfdom, which is less an economics book than a social, philosophical, and political critique of the tyranny of “central planning.”
The Road to Serfdom was an incredibly powerful, incredibly informative, and incredibly useful book. Indeed, we wrote a short piece on it in these pages just a few weeks ago. But Hayek’s legacy stretches far beyond it, as the folks as the Mises Institute note in his bio:
Among mainstream economists, he is mainly known for his popular The Road to Serfdom (1944) and for his work on knowledge in the 1930s and 1940s. Specialists in businesscycle theory recognize his early work on industrial fluctuations, and modern information theorists often acknowledge Hayek’s work on prices as signals, although his conclusions are typically disputed. Hayek’s work is also known in political philosophy, legal theory, and psychology.
Within the Austrian School of economics, Hayek’s influence, while undeniably immense, has very recently become the subject of some controversy. His emphasis on spontaneous order and his work on complex systems has been widely influential among many Austrians. Others have preferred to stress Hayek’s work in technical economics, particularly on capital and the business cycle, citing a tension between some of Hayek’s and Mises’s views on the social order.
Hayek’s writings on capital, money, and the business cycle are widely regarded as his most important contributions to economics. Building on Mises’s Theory of Money and Credit (1912), Hayek showed how fluctuations in economy-wide output and employment are related to the economy’s capital structure. In Prices and Production (1931) he introduced the famous “Hayekian triangles” to illustrate the relationship between the value of capital goods and their place in the temporal sequence of production.
In Monetary Theory and the Trade Cycle (1933) Hayek showed how monetary injections, by lowering the rate of interest below what Mises (following Wicksell) called its “natural rate,” distort the economy’s intertemporal structure of production. Most theories of the effects of money on prices and output (then and since) consider only the effects of the total money supply on the price level and aggregate output or investment.
In this spirit, then, we offer you today a bit of Hayek’s wisdom not from The Road to Serfdom. In our digital age, it seems that every man, woman, and child alive has both an opinion on every occurrence and a platform to express that opinion. Some of those men, women, and children – in the media, in entertainment, in government, and even in academia – presume that the public will defer to them on these matters, since they are famous, or well known, or “experts” of some sort or another. But as Hayek reminded us all nearly seven decades ago, the problem of so-called experts pontificating on subjects about which they know almost nothing is one that has existed for a long, long time. The following, which is one of our favorite quotes, comes from a paper Hayek wrote called “The Intellectuals and Socialism,” which was published in the Spring 1949 issue of the University of Chicago Law Review.
The typical intellectual need . . . not possess special knowledge of anything in particular, nor need he even be particularly intelligent, to perform his role as intermediary in the spreading of ideas. What qualifies him for his job is the wide range of subjects on which he can readily talk and write, and a position or habits through which he becomes acquainted with new ideas sooner than those to whom he addresses himself. . . .
Until one begins to list all the professions and activities which belong to the class, it is difficult to realize how numerous it is, how the scope for activities constantly increases in modern society, and how dependent on it we all have become. The class does not consist of only journalists, teachers, ministers, lecturers, publicists, radio commentators, writers of fiction, cartoonists, and artists all of whom may be masters of the technique of conveying ideas but are usually amateurs so far as the substance of what they convey is concerned. The class also includes many professional men and technicians, such as scientists and doctors, who through their habitual intercourse with the printed word become carriers of new ideas outside their own fields and who, because of their expert knowledge of their own subjects, are listened with respect on most others. . ..
There is little that the ordinary man of today learns about events or ideas except through the medium of this class; and outside our special fields of work we are in this respect almost all ordinary men, dependent for our information and instruction on those who make it their job to keep abreast of opinion. It is the intellectuals in this sense who decide what views and opinions are to reach us, which facts are important enough to be told to us, and in what form and from what angle they are to be presented. Whether we shall ever learn of the results of the work of the expert and the original thinker depends mainly on their decision. . . .
And it is specially significant for our problem that every scholar can probably name several instances from his field of men who have undeservedly achieved a popular reputation as great scientists solely because they hold what the intellectuals regard as "progressive" political views; but I have yet to come across a single instance where such a scientific pseudo-reputation has been bestowed for political reason on a scholar of more conservative leanings. This creation of reputations by the intellectuals is particularly important in the fields where the results of expert studies are not used by other specialists but depend on the political decision of the public at large. There is indeed scarcely a better illustration of this than the attitude which professional economists have taken to the growth of such doctrines as socialism or protectionism. There was probably at no time a majority of economists, who were recognized as such by their peers, favorable to socialism (or, for that matter, to protection).