In Celebration of Friedrich August von Hayek

Twenty-five years ago today, on March 23 1992, Friedrich August von Hayek died. Winner of the 1974 Nobel Memorial Prize in Economic Sciences, Hayek was an Austrian / British liberal. I consider him to be not just one of the greatest economists of all times but one of the world’s most enlightened social thinkers.

Reading Hayek makes me marvel at the heights that human intellect is capable of. Compared to him, some of the most renowned economists appear to be pygmies. I feel sorry that most people β€” even those who claim to be economists β€” have not even heard of him, let alone read him. Here are a few excerpts, from Hayek and about Hayek.
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Hayek on the Abstract Rules of Just Conduct

Hayek’s monumental work “Law, Legislation and Liberty” contains deep insights into what the proper functions of governments are, and how they should be understood and implemented. Every paragraph is worth quoting in full. But here are a few select bits extracted from the 3-volume work to give you a sense of Hayek’s ideas.
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Hayek on the Decay of Democracy

Friedrich Hayek’s Law, Legislation and Liberty. Vol. 3 The Political Order of a Free People. 1979. Chapter 13, “The Division of Democratic Powers.” Pg 31-32.

A system which may place any small group in the position to hold a society to ransom if it happens to be the balance between opposing groups, and can extort special privileges for its support of a party, has little to do with democracy or ‘social justice’. But it is the unavoidable product of the unlimited power of a single elective assembly not precluded from discrimination by a restriction of its powers either to true legislation or to government under a law which it cannot alter.

Not only will such a system produce a government driven by blackmail and corruption, but it will also produce laws which are disapproved by the majority and in their long-run effects may lead to the decline of the society. . . .

A further peculiar sort of bias of government created by the necessity to gain votes by benefiting particular groups or activities operates indirectly through the need to gain the support of those second-hand dealers of ideas, mainly in what are now called the ‘media’ , who largely determine public opinion.

Worth pondering.

Hayek on Democracy

Here’s a quote from Friedrich Hayek’s Law, Legislation and Liberty. It appears in the 3rd volume, The Political Order of a Free People, in the chapter on MAJORITY OPINION AND CONTEMPORARY DEMOCRACY, page 4:

May it not be true, as has been well said, that ‘the belief in democracy presupposes belief in things higher than democracy’? And is there really no other way for people to maintain a democratic government than by handing over unlimited power to a group of elected representatives whose decisions must be guided by the exigencies of a bargaining process in which they bribe a sufficient number of voters to support an organized group of themselves numerous enough to outvote the rest?

What are things that are higher than democracy? A belief in the sovereignty of law, and obedience to the rules of just conduct.

Hayek on Equality

A brief excerpt from Friedrich Hayek’s essay, “Equality, Value and Merit.”

From the fact that people are very different it follows that, if we treat them equally, the result must be inequality in their actual position, and that the only way to place them in an equal position would be to treat them differently. Equality before the law and material equality are therefore not only different but are in conflict with each other; and we can achieve either the one or the other, but not both at the same time. The equality before the law which freedom requires leads to material inequality. Our argument will be that, though where the state must use coercion for other reasons, it should treat all people alike, the desire of making people more alike in their condition cannot be accepted in a free society as a justification for further and discriminatory coercion.

A careful reading of that essay (link above) is guaranteed to lead to profit and enlightenment. Read it a few times.

Rating Achievements Through “Rate of Growth”

“. . . how absurd it is to judge relative performance by rate of growth, which is as often as not evidence of past neglect rather than of present achievement. In many respects it is easier and not more difficult for an undeveloped country to grow rapidly once an appropriate framework has been secured.”

Source: F. A Hayek. The Political Order of a Free People. 1979. Page 190. Volume 3 of Law, Legislation and Liberty.