Margaret Thatcher’s Tribute to Friedrich von Hayek

To mark the 75th anniversary of the publication of Friedrich Hayek‘s The Road to Serfdom, several of Hayek’s personal items were auctioned at Sotheby’s in London on March 19th.

Hayek, together with Gunnar Myrdal (the economist from the opposing camp), was awarded the “Nobel Memorial Prize” (not really a Nobel prize) in 1974. At Sotheby’s auction, Hayek’s award citation and gold medal went for over $1.5 million.[1]

Although the Nobel prize[2] gave renewed vigor to the then 75-year old Hayek, he was absolutely clear that economists should not be honored with prestigious prizes. “Nobel Prize confers on an individual an authority which in economics no man ought to possess,” he said.

Jeff Deist explains —

In Hayek’s view, the Prize threatened to create an aura of hard science certainty around the decidedly social science of economics. This veneer, he worried, would influence both government officials and the public to view economic theory more like laws of physics or properties of molecules.

… He understood the deadly combination of hubris and certainty, and hoped to impress upon the audience that economics remained a discipline that studied humans, with all their irrationalities and frailties. {Source: What Hayek said about the “Nobel Prize” in Economics.}

All that is fine and good. What interested me was one item that fetched close to $75,000. It was the signed text of a speech that Margaret Thatcher gave in October 2003 on being awarded by the Friedrich August von Hayek Foundation. Here it is, for the record (quoted in blue, with my emphasis):

I am profoundly grateful to have been honored by this award. Friedrich von Hayek was an inspiration for me in the 1980s, when the government which I led sought to reverse the malign effects of socialism on Britain’s economy and society. Hayek did not offer a set of policies: that, he considered, was for politicians themselves to devise. Rather, he offered an account of what was fundamentally wrong and he described how a better system would work. Thus he gave us the commodity which was then in shortest supply: he gave us hope.

For that very reason, Hayek’s writings have not dated with the years. They remain a star by which the governments of free nations everywhere would be well advised to steer their course.

Hayek’s analysis of the perils of the planned society and the command economy is, indeed, unrivalled. He shows how attempts to defy markets are doomed to be self-defeating. He warns us that beneath the seductive slogans and the simplistic targets of the utopians who promise heaven on earth there frequently lurks the reality of a totalitarian hell. He reminds us that we must value the habits, rules and institutions of liberty for their own sake if we are to enjoy for long the benefits that freedom brings. And all these messages are as relevant to our own age as when he first spoke to the West about that Road to Serfdom.

Perhaps more so. This is because Hayek is still the preeminent modern philosopher of ordered liberty — something that in every continent is today under threat from dark forces of anarchy, hatred, revolution, fanaticism and violence. Against such ideologues, he encourages us to have faith in the peaceful, subtle processes by which people co-operate in fulfilling their requirements under a rule of law; to rely on an extended, spontaneous order; in short, to promote the system generally known as capitalism. 

Hayek is, therefore, the prophet not of doom and disaster, but of peace and plenty. His is a voice of wisdom for our time, and for all time. We should listen to him.

(signed) Margaret Thatcher.

Margaret Thatcher had met Hayek shortly after he won the Nobel. In the late 1970’s, at a policy meeting of the Conservative Party, as the new Party Leader,  Thatcher had taken a book out of her briefcase and slammed it on the table saying, “This is what we believe.” It was Hayek’s The Constitution of Liberty. [3]

Do check out the various lots of Hayek items sold at Sotheby’s. Fascinating stuff.

Notes:

[1] “Prior to 1980, Nobel Prize medals were made of 23k solid gold. Since then, they have been made of 18k electrum and plated with 24k gold. The actual amount of gold used to make Nobel Prize medals varies slightly each year depending on gold prices. On average, the medals weigh about 175 grams each.” {Source.}

At current gold prices, that works out to around $7.5K. Meaning the medal sold for about 2000 times it’s value in gold. Furthermore, $1.5 million is probably more than twice (in nominal terms) the prize money that Hayek received in 1974.

[2] The so-called Nobel prize winners in economics are neither selected by the Noble committee nor are funded by the Nobel Foundation. The wiki says:

“In 1968, Sweden’s central bank, Sveriges Riksbank, established the Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel, which, although not a Nobel Prize, has become informally known as the “Nobel Prize in Economics”.

[3] Get your free pdf copy of The Constitution of Liberty here.