F. A. Hayek: Prophet of the Modern World

This article appeared in The Washington Times on May 8, 1999.

On May 1, a handful of pathetic demonstrators celebrated May Day, the day of socialist solidarity, in Moscow and a few other cities around the world. It was a far cry from the great days of socialism. Socialism is dead.

On May 8 there will be small and quiet celebrations around the worldmarking the 100th birthday of one of the men who buried socialism, F. A.Hayek. Although a distinguished scholar and a winner of the Nobel Prize foreconomics, Hayek may have made his greatest contribution to the fightagainst socialism and totalitarianism with his best-selling 1944 book, TheRoad to Serfdom. In it, Hayek warned that state control of the economy wasincompatible with personal and political freedom and that statism set inmotion a process whereby "the worst get on top."

But not only did Hayek show that socialism is incompatible withliberty, heshowed that it is incompatible with rationality, with prosperity, withcivilization itself. In the absence of private property, there is nomarket. In the absence of a market, there are no prices. And in theabsence of prices, there is no means of determining the best way to solveproblems of social coordination, no way to know which of two courses ofaction is the least costly, no way of acting rationally. Hayek elaboratedthe insights of the Austrian economist Ludwig von Mises, whose 1922 bookSocialism offered a brilliant refutation of the dreams of socialistplanners. In his later work, Hayek showed how prices established in freemarkets work to bring about social coordination. His essay "The Use ofKnowledge in Society," published in the American Economic Review in 1945 andreprinted hundreds of times since, is essential to understanding how marketswork.

Building on his insights into how order emerges "spontaneously" fromfreemarkets, Hayek turned his attention after the war to the moral and politicalfoundations of free societies. The Austrian-born British subject dedicatedhis instant classic The Constitution of Liberty "To the unknown civilizationthat is growing in America." Hayek had great hopes for America, preciselybecause he appreciated the profound role played in American popular cultureby a commitment to liberty and limited government. While most intellectualspraised state control and planning, Hayek understood that a free society hasto be open to the unanticipated, the unplanned, the unknown. As he noted inThe Constitution of Liberty, "Freedom granted only when it is knownbeforehand that its effects will be beneficial is not freedom." The freedomthat matters is not the "freedom" of the rulers or of the majority toregulate and control social development, but the freedom of the individualperson to live his own life as he chooses. The freedom of the individual tobreak old molds, to create new things, and to test new paths is the mark ofa progressive society: "If we proceed on the assumption that only theexercises of freedom that the majority will practice are important, we wouldbe certain to create a stagnant society with all the characteristics ofunfreedom."

Although sometimes characterized by his critics as a "conservative,"Hayekalways maintained that he was in fact an old-fashioned liberal, a believerin individual liberty, constitutionally limited government, and the freemarket of ideas and of goods. A progressive society must always be open toinnovation, at the same time that it rests on a stable foundation of rightsand rules of just conduct. He entitled the postscript to The Constitutionof Liberty "Why I am not a conservative." While friendly to manyconservatives, Hayek pointed out that the conservative "has no politicalprinciples which enable him to work with people whose moral values differfrom his own for a political order in which both can obey their convictions.It is the recognition of such principles that permits the coexistence ofdifferent sets of values that makes it possible to build a peaceful societywith a minimum of force. The acceptance of such principles means that weagree to tolerate much that we dislike."

Hayek's views on the free society's openness to innovation was alsoa partof his own life. I vividly recall a lecture he gave in Washington, D.C.when he was in his 80s. A questioner indicated his disagreement with Hayekon a philosophical matter. Hayek's response was striking: "I, too, heldthat view for about fifty years. But lately I have been thinking about it agreat deal, and I have come to believe that it was a fundamental mistake."Most of us never change our views after the age of thirty, but Hayek wasalways open, questioning, trying new approaches, just like the free societyhe spent his life defending.

Tom G. Palmer

Tom G. Palmer is director of the Project on Civil Society at the Cato Institute, in Washington, D.C.