Chapter 2 of Boettke’s book is an overview of Hayek’s major contribution across several disciplines and seven decades. The scope approaches the record of his slightly younger contemporary Jacques Barzun (1907-2012) who published some 40 books from the 1930s into the new millennium.
Hayek’s work runs so wide and deep that no single author or book could do justice to it and Peter Boettke explains that his purpose is very different from the intellectual biography by Bruce Caldwell. His purpose is to explain the how Hayek rose to the great intellectual, political and moral challenges of the 20th century and the story is simplified in bold strokes to identify four stages in Hayek’s progress.
1920 to 1945 Economics as a coordination problem.
1940-1960 The abuse of reason project.
1960-1980 Restatement of liberal principles
Finally Philosophical anthropology and the study of man.
His earlier interests were never left behind because they became worked into a broader tapestry of thought. The image of a tapestry or carpet may be helpful to see the intellectual themes running continuously as the warp and the crosswise threads (the woof) as the particular intellectual and political issues that he encountered as the carpet of the century unrolled.
Critics will find another similarity with the tapestry in the many loose ends of the pattern that are most evident on the side facing the wall. Those of us who love the pattern on the front may not be enthusiastic about looking at the back but the loose ends will be the growing point of the program for the next generation.
Hayek grew up in a family of academics in a range of disciplines in including law and economics. His first interest was biology but the crises of the times drove him into economics after a diversion into psychology that emerged decades later in The Sensory Order.
He had the good fortune to be inducted into the Austrian school of economics following Carl Menger and his two major colleagues Bohm-Bawerk and Wieser. Later Hayek worked closely with Ludwig von Mises in the Austrian Institute for Business Cycle Research. That was the period when Mises was advising the Austrian government during in the day and working out the fundamental problems of methodology in the evening. Hayek picked up the loose ends of that project during his Abuse of Reason project later on.
His published work on monetary theory and the trade cycle earned him a prestigious chair at the London School of Economics in 1930 at the ripe age of 32. The debate with Keynes dominated much of the next decade. Hayek was seriously disadvantaged by the defection of Robbins and the intimidating polemics of Keynes. Bertrand Russell was no mean controversialist and he confided that the thought of debating Keynes terrified him. Hayek wrote an essay on two kinds of mind to explain that he was the kind of “muddler” who wants to get deeper into complex problems while the other kind of mind dances rapidly and elegantly across the surface radiating brilliance and mastery.
During the same period Hayek took up the attack on socialist central planning and calculation, following up the opening salvo that Mises fired in 1920. That debate was widely perceived as another defeat for Hayek and it probably took the Fall of the Wall to demonstrate the truth of the matter. That should not have been necessary. A paper at the 1989 Mont Pelerin Conference in Christchurch described the Soviet economy in terms that brought to mind the image of a railway system where the rolling stock had rectangular wheels.
The problem of communication that Hayek encountered during this decade prompted him shift his main efforts into the Abuse of Reason project to find the deeper philosophical blockage. He also began to elaborate the social/institutional turn to comparative institutional analysis. This turn was required to broaden the “hourglass of economics” that started wide in the political economy and moral philosophy of Adam Smith and became narrow under the influence of the new positivist philosophy of science and mathematical economics.
In 1950 he moved partly for personal reasons to the University of Chicago. It is likely that he was not wanted in Economics and he taught in the Committee on Social Thought until 1962 while he wrote The Constitution of Liberty to consolidate the ideas in The Road to Serfdom.
In Freiburg after 1962 he completed his major three-volume study Law, Legislation and Liberty (1973, 1976 and 1979) and his final book The Fatal Conceit (1988). In 1974 he shared the Economics “Nobel Prize” with the socialist Gunnar Myrdal. Boettke advised people to read Hayek’s Nobel speech “The Pretense of Knowledge”.
Mises died in 1973 after a lifetime that spanned the period from the publication of Menger’s Principles to the “Nobel” and the South Royalton conference in the US that signalled a revival of the Austrian School.
Boettke’s takeaway from this chapter is to see his main interpretive contribution to Hayek studies as pointing up the importance of epistemological institutionalism for the social and moral sciences.