Friedrich von Hayek

In 1944, Friedrich Hayek, an Austrian-born professor at the London School of Economics since the early thirties, had his book published – The Road to Serfdom. The book was popular among people who disliked socialism and the totalitarianism of Hitler's Germany and the Soviet Union. Hayek championed human freedom and private enterprise. He was a democrat. He believed that government guided by majority opinion made sense only if that opinion was independent of government, and he believed it best to leave a free play of ideas among the masses in matters economic. People following their own innovations and doing what they see as their own interest is better, he proposed, than a few bureaucrats trying to constrict economic development into a plan of their making – no matter how bright the planners. A few bureaucrats are not as able to see the future with enough thoroughness to be superior to a society-wide freedom to innovate. An economy works best, Hayek believed, when individual risk-takers are free to innovate and to allocate their resources as they please and consumers are free to spend their money as they please – old fashioned economic liberalism.

Friedrich von Hayek

Hayek attracted little attention in Britain, but more in the United States. He was invited to speak before an audience of more than 3000 – a new experience for him. In 1945, Hayek's, Individualism and Economic Order was published. In 1950, he was hired to teach at the University of Chicago. In 1960 his Constitution of Liberty was published and, in 1967, his Studies in Philosophy, Politics and Economics.

Through the 1950s, while many intellectuals were still impressed by the Soviet Union's economy, Hayek's views were unpopular, and his views remained unpopular through the 1960s. In 1967, Britain's Marxist historian, Eric Hobsbawm, called Hayek a "prophet in the wilderness." A British philosopher, Anthony Quinton, called him a "magnificent dinosaur." Hayek was criticized for exaggerating the threat to liberty presented by Europe's Social Democrats – his attacks, for example, on compulsory health insurance, state-financed education and his attacks on regional development programs.

By the early seventies, flaws in the planned economies of the Soviet Union and its satellite countries were more apparent. Soviet-style enterprises were welfare institutions, making shoddy products, with a lot of people hanging around who needed incomes but had little or nothing to do, with over-production here, under-production there, distribution breakdowns and goods rotting or rusting alongside rail platforms – not because people in the Soviet Union were dumb but because the system was flawed.

Hayek's overview of economics and freedom gained some favor, and, in 1974, he was accepted enough that the committee that selected Nobel Prize winners offered him an award – for work on technical matters concerning money and economic fluctuations. Hayek shared the prize with the well-known Swedish economist Gunnar Myrdal, a Social Democrat who said later that had he known he would be sharing the prize with Hayek he would not have accepted it.