Liberty Matters

Misconceptions about Hayek

Bruce Caldwell once told me he can tell how seriously a scholar treats Hayek by how soon Chile comes up in the conversation.  If it is within the first few seconds or minutes, not so serious. If deeper into the discussion, then you might be able to have a serious conversation -- even about Hayek and Chile.  Serious work is being done in that regard by Andrew Farrant and Edward McPhail (2014) and Caldwell and Leonidas Montes (2015).  But far more work recently has been of a nonserious and muckraking nature by the likes of Naomi Klein (2007) and Corey Robin (2013). Recall, also, the various efforts to see the Mont Pelerin Society as the center of a grand neoliberal conspiracy working to achieve -- well, precisely what is never completely clear except it has something to do with some sort of world domination. Neoliberalism is synonymous with "bad things": monopoly privilege, income inequality, macroeconomic instability, racial and ethnic injustice. And did I mention massive unearned wealth for the guardians of privilege at the expense of the unprivileged here and abroad? 
Not only do the nonserious fail to provide more than thin textual evidence (a sentence here or there, a quote out of context) for their wild accusations, they fuel those accusations with a tone of moral condemnation of people and ideas. Wrestling with those accusations, which in some sense must be done for the sake of the ideas, is definitely an exercise in "punching down" in the world of scholarship.
But how do we engage without becoming apologists engaging propaganda?  Perhaps, I want to suggest, we do so by patiently and carefully clarifying the misconceptions about these thinkers -- Hayek, Friedman, Buchanan, and the schools of thought they represent: Austrian, Chicago, and Virginia; and the organizations they are often identified with: the Mont Pelerin Society, Hoover Institution, University of Chicago, and George Mason University.  Friedman and Buchanan are for another time, as our focus is on Hayek.
There should be little doubt that Hayek remains a lightning rod in the social and policy sciences. Unfortunately, he suffered the fate of an intellectual revolutionary in two ways due to methodological, analytical, and practical policy prejudices. He was both misunderstood and falsely appropriated.  In the practical policy realm, this meant that his books such as The Road to Serfdom (1944) and The Constitution of Liberty (1960) were not read but displayed; his arguments were not wrestled with but reduced to slogans in the popular imagination. 
In the realms of methodology and analytics, Hayek's bold ideas were either incorrectly translated into the preferred language of the day – the very language he was trying to get folks to break out of – or they were outright dismissed as either incomprehensible or relics of an earlier age that science had progressed beyond.  I recently wrote in an article for the Journal of the History of Economic Thought that "Mises was a sophisticated nineteenth-century thinker and Hayek was a sophisticated twenty-first-century thinker, but in both instances the twentieth century didn't know how to deal with their arguments about methodology, analytic methods, and the political economy import of their analysis of socialism, interventionism, and radical liberalism." (2015, 84)  As we seriously study the evolution of Hayekian ideas concerning epistemic institutionalism, we can see that Hayek spoke to an age that could not understand him and thus interpreted him as saying something old and irrelevant if not incoherent.
So perhaps by putting aside the ideological misconceptions embedded in the critique of neoliberalism, and by concentrating on the main scientific misconceptions, we can begin to reverse this intellectual state of affairs. I refer to the misconception that:
  1. Hayek's methodological individualism meant he worked with atomistic actors who were perfectly rational;
  2. he saw the price system as perfectly efficient;
  3. he was categorically opposed to government action;
  4. The Road to Serfdom presents a slippery-slope argument
  5. he regarded anything produced by spontaneous order as good;
  6. his resistance to formal modeling and statistical testing was based on old-fashioned methodological ideas that led to dogmatic stances rather than scientific progress;
  7. the evolutionary arguments developed late in his career about group selection constituted an abandonment of his earlier methodological individualism;
  8. his ideas on monetary theory and the price system never evolved throughout his career;
  9. his ideas were roundly defeated by Keynes with respect to macroeconomics, and by Lange-Lerner with respect to market socialism;
  10. after the publication of The Pure Theory of Capital (1941) Hayek effectively abandoned economics and retreated to political theory, legal theory, and public intellectual work.
My lead essay sought to address 10 and touched on 2 and 8. But all of these need to be addressed in a thorough manner. If we can clarify these misconceptions, I sincerely believe Hayek's revolutionary ideas in methodology, analytics, and political economy will be better understood and the implications for practice of the science of economics, the art of political economy, and thinking in social philosophy will be transformative.
Boettke, Peter. 2015 "The Methodology of Austrian Economics as a Sophisticated, Rather than Naive, Philosophy of Economics." Journal of the History of Economic Thought, vol. 37 no. 01 March, pp. 79-85.
Caldwell, Bruce, and Leonidas Montes. 2015. "Friedrich Hayek and His Visits to Chile." The Review of Austrian Economics vol. 28. issue 3, pp 261–309.
Farrant, Andrew, and Edward McPhail. 2014. "Can a Dictator Turn a Constitution into a Can-opener? F.A. Hayek and the Alchemy of Transitional Dictatorship in Chile." Review of Political Economy. vol. 26 , issue. 3, pp. 331-48.
Klein, Naomi. 2008. The Shock Doctrine: The Rise of Disaster Capitalism. New York: Picador.
Robin, Corey. 2013. "Nietzsche's Marginal Children: On Friedrich Hayek." The Nation, May 7. <>.