Episode 6: 'Hayek: A life, 1899 - 1950'. With Bruce Caldwell

hello everyone and Welcome to our podcast Series in the classical political economy tradition by the Vincent center for the public understanding of economics and Entrepreneurship at the University of Buckingham the Vincent Center runs a series of programs in economics and related fields designed to promote a wider understanding of classical liberal economics and how markets trade entrepreneurship promote welfare in a free Society I am Juan Castaneda director of the Vinson Center and today we'll be hosting Bruce Caldwell Bruce is a research professor of economics and the director of the center for the history of political economy at Duke University for the past three decades his research has principally focused on the writings of the Nobel prize winning Economist and social theorist Frederick a Hayek Colwell is the author of Hayek's Challenge and intellectual biography of fa Hayek in 2004 the general editor of the collective works of fa Hayek a multi-volume collection of hikes works and with a hanjiar klausinger Hayek alive 1899 1950 in 2022 the first volume of a two volume biography of Hayek Bruce I'm delighted to have you with us you must have been fascinated to take on the project of writing a biography of Hayek at your first volume from 1899 to 1950 indeed was the most influential thinkers of the 20th century how would you summarize the political and economic atmosphere in the early years in Vienna that shaped Hayek's view of the world right so um it was in a post-war period post-world War one period it was awful uh in in a phrase both politically and economically the war was was quite devastating there was of course the Spanish Flu influenza that followed it it was a very cold winter following the war and there was uh there was real hunger there was a indeed starvation would be would be not too strong of a word in terms of what people were everyday people were facing Hayek himself and his two brothers were sent away from Vienna directly after the war for a period just to recover politically the the Austria austro-hungarian Empire had had uh had been uh broken up so the various countries that emerged that were separate from or Austria Austria was a bit of a rump you know the the Armistice was in 1918 the peace treaty was not uh was not made official until September of 1919 so there was a period there where they at least many austrians well we've we've lost all of the all of the Empire here but perhaps we could have Angelus we could join with Germany but that was forbidden by the various uh peace treaties so uh it was a it was a bit of a rump of a of a of a country that was left at the end of uh World War one and uh there was this was a period from the 1880s 1890s onwards was uh a period of the extension of the franchise and what had emerged were various uh Mass parties and none of them were particularly Savory in terms of of Hayek's own political views he even early on he had Tendencies towards uh liberalism it wouldn't have been the sort of Classical liberalism that we identified with him today it would be more of a reformed liberalism he he actually equated his his early views to in this period to be almost uh uh Fabian socialist but uh the three Mass parties one was the Christian socials one was the Socialist Party and the third much smaller one was a variety of German uh emphasizing parties well the the Christian socials as well as the German parties were uh were sometimes uh you know quite explicitly anti-semitic having things like Aryan paragraphs the Socialist with less anti-semitic but they they certainly had tropes of of Jewish money lenders being associated with capitalism so none of these parties were particularly uh were particularly attractive and Hayek in his early uh in his early University days so this is the end of 1918 early 1919 before uh the the peace treaty had been uh established declared and established he was affiliated with a party that uh that is is a bit of a reformed Liberal Party it was secular as opposed to Catholic um it was uh promoted uh German uh culture but was not anti-semitic the person that he he was working with was was Herbert Firth who was Jewish by dissent um and it was uh for universal suffrage as opposed to the monarchy Universal male female suffrage so it was it was it was Progressive liberalish but not not full socialist because the austromarchist would have been the the the party there so I mean I think uh you asked how how this period may have influenced him uh I think it particularly after the hyperinflation took place I mean this this was a little bit later but certainly his concern for monetary issues uh was was given by that and um yeah he he lived in red Vienna which was controlled by the Socialists whereas the country as a whole uh the the conservative parties had more of a of a of a holding uh uh in in the outside of Vienna within Vienna it was red Vienna so he got to see socialist policies he got to see various sorts of policies that one might as also with the with the far right uh and uh and and he found his own way that's a way that was quite different from from what was uh on offer for most of the people in the mass parties quite often High has been labeled by his critics uh as a supporter of conservative policies uh but you make it clear in your biography that uh this is far from being true yes I mean I I think actually the source to go to to really get a sense of Hayek's fuse is uh the epilogue to the constitution of Liberty and there he makes it very clear that the Left Right distinction he thought was not very useful that it was far better to think of a triangle with socialist liberal and conservative as being the three points on the triangle and he said you know very often you will have socialist critics and and uh conservative critics echoing similar sorts of complaints about liberalism and certainly in in the course of his lifetime he experienced that we we see something similar today indeed uh there there are elements at least in the United States of the NAT what so-called National conservatives who embracing uh uh all sorts of protectionist devices that that would normally be associated with the with the left as opposed to with the right so um I think he was very much of a liberal and uh and was uh fairly early on and only became more so of course Von mises was a was a big influence in terms of bringing him into a into a more classically liberal uh sort of position uh in the early 1920s uh uh and he gradually uh came to adopt that that position much more strongly as as time went on when you say liberal it starts to avoid confusion because of the different terminology we're using yes in Europe and in the US you mean the classical liberal I mean classical Liberal Liberal in the European sense as opposed to the American usage of liberal but perhaps you can comment to be more on the criteria to Define what a classical liberal is as compared to a Libertarian sure so libertarianism at least in the United States is often associated with in terms of economics with someone like Murray rothbard and and others who uh were quite extreme in terms of their uh anti-statism a Hayek as a as a classical liberal saw a role for the state and he often called him he didn't like the word libertarian and he did try to he wanted to figure out how to refer to himself and in the constitution of Liberty in that epilogue I referred to he he called himself an old wig and I think he has has in mind a tradition that that one could think of as uh emerging out of uh the kind of proto-liberals like Adam Smith and economics and and John Locke in in politics uh that that these are these are people who are concerned about uh the the individual and and the the idea is that the state has to exist you give all the coercive Powers uh to the state and then you put limits on the state so it's not a denial of the importance of the state States absolutely essential uh to protect property rights to protect people's lives to enforce contracts to have a police system to things like National Defense all of these things are things that are necessary for a well-functioning society that high uh thought was was quite compatible uh with with liberalism and then um you know the the people that he interacted with would have been from across the Spectrum in terms of what further functions of the state might be viewed as as uh as important and he was quite prepared to have all of those conversations one reason that he participated in the colloqu Litman in the late 1930s and also uh you know founded the montpeleran society which had its first meeting in 1947 was to get a discussion going with people who may have agreed on the broad outlines but then differed on on some of the details of what would be a proper liberal state a major episode in Hayek's life was his move to London in the early 1930s and his intellectual discussion with John Michael Keynes on the the causes of the greater president and the remedies for it if you like what was Hayek's attitude towards Keynes during this exchange and intellectual discussion yes well I mean I know that today they're viewed as these great Rivals and I think that there was elements of that truth in that certainly their initial uh exchanges that took place right as high was arriving from Vienna to take a position at the London School of Economics he reviewed not the general theory but but A Treatise on money uh keynes's 1930 book and Hayek was uh was critical of it and uh Keynes had a strong reaction against uh the criticism so in responding to the first half of Hayek's review of atreidus on money uh uh Keynes uh replied to some of Hayek's criticisms but then went on the offensive and attacked Hayek's own Book prices in production and Keynes was a wonderful uh stylist uh I have a quote from from his his response to Hayek where he said that Hayek's book was an example of how starting with a mistake a remorseless logician can end up in Bedlam Bedlam being the mental hospital uh so I mean it was it was quite a feisty exchange and they had met earlier in the in the late 1920s but uh but this this was the one that really got everyone's attention um and uh as time went on however uh they both started working on their own projects uh Keynes obviously wrote the general theory which became probably the most well-known uh economics book of the 20th century whereas Hayek wrote uh the pure theory of capital equally unknown a book that was published in 1941 so they went there their separate ways trying to develop further their models I think both of them recognized the truth and the criticisms that each of them had given in the early 1930s Hayek certainly recognized that he needed to make some revisions and prices in production and Kane's equally not just because of Hayek's responses but the response of others in the in the Cambridge circus Etc so it's a it's a nice episode I will simply say that that later in the 1930s as the world became much more uh much crazier and and you started to have you know fascisms uh emerging everywhere and real emphasis on socialism in in England in the 1930s great popularity uh uh great enthusiasm for socialism that both of them you know saw themselves as as liberals who would who were in in that sense uh kind of on the same side Hayek was quite enthusiastic for example about keynes's uh pamphlet how to pay for the war as it was clear that that England was heading towards War so they and they became quite good friends uh saw each other much more during during World War II because Kane's uh would travel to Cambridge uh on the weekends and and the LSC had evacuated there so they'd be seeing each other socially then given that they had such a fascinating Exchange in the in the early 1930s and given the popularity of the of the general theory in 1936 and afterwards of course what explains do you think uh Hayek silence no response to to the general theory afterwards yeah it's a wonderful question Hayek actually gave a number of different answers uh and and so it may have been a number of things or or uh you know it it is a good question so some of the things that he said was first of all uh Keynes had changed his mind about a tree just on money so he didn't he thought that perhaps Keynes would change his mind again about the general theory uh I think he recognized that he they that their disputation in the early 30s didn't lead to uh you know didn't lead anywhere really uh so he thought maybe it's better not instead of having disputation just simply I'll I'll do my own work he did seem to recognize that Keynes is a macroeconomic approach was something that was really different and didn't really know what to make of it and if you've if you've looked at the general theory it's it's not a particularly um transparent book it's not an easy book to read so I I think he probably also thought well geez do I really want to spend my time doing this maybe I should I would be better to spend my time working on the pure theory of capital and then as I said as as the 30s progressed I think they more or less saw each other on the same side so there's those are some of the reasons um there had also been a very strong negative review by one of uh another Cambridge economists the Prof AC pagu and I think there may have been some feeling that well we don't want to pile on because uh it was it was a pretty uh devastating yeah very negative uh uh review and and to come from a fellow Cambridge uh don is that that's that that was viewed as something that was probably going to be a very significant review um and they just didn't know it was going to be the general theory let me tell you right well Hayek of course was very prominent in Academia in the defense of a classical liberal principles but also very influential Beyond purely academic circles if you like what explains the foundation by Hayek of a montpeland society sure so the Montpelier in society is is an organization of classical liberals that Hayek founded uh by having a meeting calling a meeting where he invited people from lots of different countries um uh to mount Pellerin a a place uh on the on Lake Geneva in Switzerland they met for 10 days in April 1947 and at the conclusion of the meeting decided that indeed they would found a society so this is 1947 two years after World War II has ended Europe is still in a horrible horrible Place horribleness uh Central Europe has still got the four different powers occupying different zones the Russians Soviet Union uh France England and the United States uh price controls and all sorts of controls are still in place in most of those places in countries outside of that region you had the Communist Party being very active in both France and Italy you had Civil War in Greece England was under rationing and would be until uh sometime in the in the middle 50 1950s there were strikes in the United States uh post-war period so there was a lot of political and economic turmoil and virtually everywhere people were turning towards the left uh the labor party had won in a landslide in in England and uh was executing uh various sorts of nationalization programs so it was a period when liberal ideas were really at their Nader really at their lowest uh possible point and Hayek one of the things that John Maynard Keynes said about the road to serfdom a highest book was that he was in he was in uh you know agreement morally uh you know profound agreement with it both morally and philosophically but he wanted to know exactly what Hayek's alternative to this socialist state would be and I think I took that seriously and wanted to have a discussion among the few like-minded people who still uh persisted in these various countries uh about what what a liberal agenda for the 20th century the post-war period would be and so that was that was his uh motivation I think the the topics uh that were discussed were were all of of current uh interest uh at the time and I will just mention that um uh one of the books that uh came out of the Hayek biography that I worked on was that I edited uh for the Hoover institution press a a the transcripts from that 1947 meeting be for a number of reasons I thought it would be important it did the the 75th Anniversary was 2022 so that was one part of it but uh the the Resonance of these questions that were being discussed at the time currently is is really quite amazing I mean they were they were worried one of the sessions was what do we do about Russia you know they're just they're sitting there they're they're the foreign ministers are having meetings and they're not no one's moving and the Russians were quite happy to sit right on the border and wait for the West to get to get exhausted and tired and and just pull out and then who knows what would have happened so I mean you have uh you know just similarities uh in terms of many of the issues that were discussed then with with issues today that I think uh uh it's it's it's really quite remarkable um so yes it was a it was a an important uh uh meeting uh it was just soon thereafter that the Marshall Plan was announced so it was really at the very bottom point of the way things were looking for for Europe and it was not until a couple of years later things really started to uh to take off again you have already mentioned the road to serve them uh published in 1944 I understand that this was a a critical uh moment in in Hayek's intellectual Legacy and it very much changed how he was perceived by the public can you comment a bit on it please sure so this was Hayek's attempt to do something that was much more popular and and in part this was because the left had had really captured uh the public discourse and he was living in England and particularly in England uh he wrote the book with the English uh public in mind and it was an attempt to criticize uh socialist planning because a lot of people were saying look we're we're undertaking socialist planning now to fight the war and if we have a single goal of winning the war it can be quite an effective way to kind of get resources directed in the proper channels uh as necessary um and many people said why don't we just continue on with socialist planning after the war so this was what he was responding to and deciding to write the book and it wasn't much more popular sort of work compared to anything else he had ever done he was very much of a of a theoretical Economist uh you know engaging with other economists like Keynes in terms of of monetary Theory and theory of the cycle with with academic socialists that were colleagues of his at the London School of economics about the critique of socialism but this was a much more popular work and it turned out uh you know it came out in 1944 but there was a Reader's Digest compensation of it in the United States in 1945 that really made it a much more popular work I think people would not have noticed it had it not been for that reader's Dodges condensation people would have noticed it but it would not have been it would not have gotten the attention that it did through this uh through this American Magazine condensation a 20-page summary of of his arguments of of an 180 page book and that's the way most people learned about Hayek and and the ideas in the road to serve them uh as a result of course if with a popularization like that some people would say oh geez but yeah this is supposed to be an academic guy and he's and he's publishing this this you know very popular stuff for other people it was it was quite uh quite a an important moment um the the person who's who founded the iea uh was someone who uh visited Hayek in his office soon after the the book came out and said should I should I go into politics your book has really moved me and and Hayek said to Anthony Fisher no uh um what you should do is the ideas are important and apparently he took it to heart and you know yeah yeah it is a much more long-lasting than politics I believe that was his yeah his advice wasn't it yes yes and Hayek apparently doesn't remember the encounter because of course you know this is just someone who's stopping by in his office but but uh but obviously it had had a great impact that way so the book has a very mixed Legacy another thing that came out of it was that he took a tour in the United States to talk about the book and it was on that tour that he got to meet a number of academics who went he ended up inviting to uh the mod the first Montpelier in uh meeting as well as a a foundation a president of the foundation who helped to provide funds for people like Milton Friedman Frank knight uh Prince Mark clip and Von mises who were all in the United States to to come over in 1947 which was not trivial at that time to to be able to uh to be able to pay for people to to make it across the Atlantic and come to a meeting in Europe well we are very much uh discussing your your biography the first volume of your biography of uh of Hayek um rather than focusing on intellectual discussion of his legacy but perhaps we can comment a bit off on how relevant Hayek's economics and political philosophy contributions still are to explain the the world today sure so I did mention a little earlier in our talk about the montpeleran society transcripts and so if people are interested in seeing just how relevant some of the discussions were then now I would urge them to to have a look at that uh they're actually a very interesting read too because the the people are discussing ideas and they're arguing about them they're debating them so it's a it's a very useful one there um one of the things that Hayek uh took away from the Montpelier and society meeting during his period at the University of Chicago this is what I'm working on right now for volume two uh he was at the University of Chicago from 1950 to 1962 on the committee on social thought and one of the one of the things that he that he wrote and published while he was there is the constitution of Liberty which is his in a sense response to Kane saying uh he here is a book that looks at what liberal principles are and what sorts of society might fall might follow from people taking these ideals he called talked about the political ideal of the rule of law as an important part of of these liberal principles this was uh this was some a statement of of how liberal principles might inform various policies now he's Hayek he's not Milton Friedman he doesn't go into the nitty-gritty detail of policies but he does talk about how how certain principles should should illuminate and and kind of guide uh uh he uses the the the metaphor of a gardener who cultivates as opposed to trying to control plants but cultivates certain certain uh aspects of society that would that would allow people to thrive each in their own each in their own individual ways a a third idea that comes out of Hayek um starting back in the 30s But continuing on in his later years is the dangers of scientism the idea of scientific control of society particularly when that is joined with the with the coercive power of government um and he saw that as quite dangerous and I yeah I think we have a wonderful case study of of that uh in the governmental worldwide governmental responses to to covet uh the idea was that science was supposed to give us the answer and there should be a one-size-fits-all policy that's that's really quite dangerous I mean one of the nice things about having in the United States of Florida or or in Europe uh Sweden is to say look we don't really know what the right policies are and we certainly don't know what the cost of these shutdowns are going to be but they seem to be quite enormous in terms of uh lost education uh for for for particularly uh poor uh students students from low-income families I mean there was devastating effects that are still being felt and will continue to be felt from a policy that was that when anyone challenged it well no this is what the science is and and we have government mandates that are going to be dictating things so I think um those are the ways in which what Hayek thought worried about wrote about uh actually has resonance to to various issues of of very much great importance today well for those interested in in learning much more about Hayek's uh intellectual biography I would recommend them to to read your book your 2004 Hayek's talents and intellectual biography of fa Hayek by the University of Chicago press but for a new generation of students interested in Hayek which of his books would you recommend to attend first yeah so I mean I think the road to serfdom is always a safe place to start for people who generally want to learn more but in terms of and and that's because it's a relatively short book and it's for Hayek it's very well written you know he was aiming it at a at a more popular audience uh for students who might be students of Economics there are two articles that I would recommend rather than books one is the use of knowledge in society where he talks about how a a well-functioning market system uh will be able to coordinate Human Action in the world in which information is dispersed different people have different access to different information it's it's really getting at in a in a theoretical economics kind of framework the sort of thing that bastiat was getting at when he when he talked about Paris being fed how millions and millions of peoples activities are coordinated through a market system nobody says I'm going to feed Paris yet so many people contribute to that particular uh uh outcome um and and Hayek is talking about that in in a general term another uh paper of his for people who have a little who might be students in their first or second years in economics is the meaning of competition where he talks about the actual competition that that that creates all sorts of new goods and services the Rivalry that creates that and discovery of lower cost ways of producing Goods as opposed to the textbook perfect competition which is also often quite misleading um the austrians are sometimes uh uh caricatured as saying but I think it's a great caricature saying well yeah they're the people who think there's no competition and perfect competition there's no choice in in consumer Choice Theory because in consumer Choice Theory it's equilibrium determines it everything is determined and they're the people who want to actually get at the meanings of ideas like choice and competition for people who are more politically uh you know political science inclined uh individuals and true and false I think is a is a very uh nice piece It Was Written in the published in the 1940s uh reflecting on on the sort of political institutions that might be necessary in a in a liberal Society and also the intellectuals and socialism which is a paper that you wrote in 1949 after the Montpelier in society was formed where he reflects on how what he calls intellectuals he doesn't mean that just to be College professors or something like that he means what he what he called the second hand dealers and ideas people who are are well known for for being public intellectuals who have you know are are happy to pontificate on all sorts of issues and he says and all of them seem to be kind of left-wing and they and they really they really have an influence and what is a liberal to do and it's his reflection on that why that might be the case and what what a what a well-meaning liberal might do is in response to it and I think anyone who might be uh somewhat sympathetic to Classical liberalism would find it to be a very a very enjoyable and an inspirational read well excellent references like good homework for everyone to to do in the next few weeks uh thank you Bruce for for joining us today if you want to know more about Hayek's life please read the first volume of his biography of Hayek with Hazard closing published in 2022 Hayek alive 1899 1950. thank you Bruce very much and thank you all for listening Juan thank you so much for having me on I it was a delight to have this discussion with you my pleasure thank you all very much for listening this podcast is edited by the Vincent Center at the University of Buckingham you can visit our website at visioncenter.com to access our podcast series and know more about the programs and events we host both in Buckingham and in London please subscribe to our newsletter if you want to receive timely information on the Vincent census agenda foreign [Music]

Channel: Vinson Economics at Buckingham

Views: 2,328

Keywords: Vinson Centre podcast series, University of Buckingham, Bruce Caldwell, F A Hayek, Hayek's biography, the road to serfdom, Institute of Economic Affairs, Mont Pelerin Society, Hayek and Keynes, Juan Castaneda, Hayek's legacy

Id: A6LLK3y369E

Length: 33min 9sec (1989 seconds)

Published: Mon Jul 10 2023