EXTRA. Hayek unwanted in Economics at Chicago. Read all about it!

Something from the highways and byways of academic research. (nerd alert). The story is that some older members of the Economics department at Chicago like Knight and Viner thought that the subject was becoming too specialised and established another department called The Committee on Social Thought for broader studies. Hayek moved to the US in 1950 partly for financial reasons, he had a new wife and an ex wife to support. He did not get into the Economics school!

Hayek’s membership was refused by the Department – despite a grant which would have covered all expenses – and the Austrian economist joined the CST. This fact marked and started a sparkling period for the CST, when prominent intellectuals from all over the world joined the Committee, including, among others, T.S. Eliot, Mircea Eliade, Hannah Arendt, Leo Strauss, Saul Bellow, Robert Fogel etc. The main idea and the most important issue, developed by the paper is that the extraordinary flourishing of the CST was mostly due to a stir within the Department of Economics, between the old wing (Knight, Viner, Nef) and the younger fellows.

He was there from 1950 to 1962 writing The Constitution of Liberty. The first part is The Value of Freedom, the second is Freedom and the Law and the third is Freedom and the Welfare State. The Postscript is Why I Am Not a Conservative.

He has been roasted by libertarians ever since for compromising with the welfare state, possibly not a surprising move since he much earlier referred to “wooden-headed laissez faire” in The Road to Serfdom. I suppose he thought since the genie of the welfare state was out of the bottle the thing is to keep it under control as best we can and he worked through the range of issues to suggest what might be doe to preserve freedom and keep the state within limits. So he wrote about labour unions and employment, social security, taxation and redistribution, the monetary framework, housing and town planning, agriculture and natural resources, education and research. This is a 500 page book that never got to the top of my reading list although the postscript is important.

It should have been called ‘Why I am not a particular kind of conservative’ because none of the conservatives of my acquaintance fit the description of Hayek’s villain. He is looking at the likes of Malcolm Fraser who hated socialism but did not follow any instructions from his backbench dries and fitted Hayek’s description of the person who wanted leadership in the right hands without regard to the institutions required to limit the powers of the state and keep power under control when the wrong hands are on the tiller.

Robert Manne was a bit like Fraser, he had an honourable record of anti-communism when it was hard yards and that earned him a gig as editor of Quadrant until his anti-market stance and his championship of the stolen people myth and other leftwing themes indicated that he never belonged in that seat. See also Fraser’s support for Mugabe.

Hayek pointed out that the spectrum from radicals through good liberals to conservatives is unhelpful for locating people in ideological space. He sketched a triangle with leftwing radicals at one corner, the good guys at another corner and the wrong kind of conservatives at the third. His point was that those kind of conservatives were not economically literate enough to resist the pull from the radical corner and merely took on board prejudices from that direction over a period of time as the intellectual winds blew them. The result is the situation in the Liberal Party where there is a strong body of leftwing opinion (described as moderate) and the ideas of the good guys (us) are described as “hard right” (and very bad).

Hayek wants more pull from good guys in the third corner who he unhelpfully described as Old Whigs in this paper.

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9 Responses to EXTRA. Hayek unwanted in Economics at Chicago. Read all about it!

  1. Jim Rose

    Up until now, I do not recall any mention of the grant to cover his expenses as well

  2. Jim Rose

    Hayek also spent a semester at the University of Arkansas to qualify for their reason divorce laws. Because of his divorce, he was drummed out of the LSE Senior common room because longtime friendships were broken

  3. Rafe Champion

    Up until now I never knew anything about the Committee on Social Thought except that Hayek went there. What an amazing collection, I wonder if they were there for long or just visited for a semester or a few lectures?

    Thanks for the reminder about Arkansas! At the LSE Robbins was outraged and Popper went in to bat for the official Mrs Hayek. All to no avail. True first love would not be denied! I suppose he was regarded as a bounder and a cad in the Senior Common Room. I wonder if the junior staff room would have let him in? Lipsey of the text book spent time there, he said the junior staff produced cigarette smoke in industrial quantities and so there was no way to get Popper to visit to talk about methodology to the study group led by Lipsey on that topic.

  4. Jim Rose

    rafe, people forget how socially disapproved divorce was not all that long ago. His friendship with Robbins was only repaired at his son’s wedding in the mid-60s.

    I understand the divorce ended in great sadness and tragedy for his ex-wife.

    his children were still teenagers when he got the divorce so the finances would have been deeply stretched.

  5. Jim Rose

    rafe, see https://www.independent.co.uk/news/obituaries/laurence-hayek-550426.html

    One of the hobbies I have is when people talk about the power of the Austrian school, I asked them to compare the length of Hayek’s obituary in the New York Times with the length of his son’s obituary some tend or so years later. His son’s obituary was longer because high became somewhat more famous and started appearing in textbooks in the mid-1990s.

    For a guy who was the global ringmaster of the vast right-wing conspiracy headed up by the MP society, hayek barely rated an obituary.

    When I was a job interviews in Canberra in the 1980s and 90s, I knew mentioning Milton Friedman was a bit of a career killer but if you mentioned hayek and got any name recognition, you are being interviewed by educated and well read people.

  6. max

    It is a good idea to read Hayek. It is a far better idea to read Mises and Rothbard.

    A. Hayek was Ludwig von Mises’ most famous convert to free market economics, although there were tens of thousands of others.


    When Hayek Was Blackballed by the University of Chicago’s Economics Department
    What Friedman never mentioned was that the department of economics at the University of Chicago refused to hire Hayek in 1946. Hayek returned to the London School of Economics. Then, in 1950, Hayek came to the University of Chicago to teach in the tiny and obscure Committee on Social Thought. His salary was paid by the William Volker Fund. He cost the University nothing. He received no pension.


  7. max

    When Hayek Abandoned Mises
    I began reading The Constitution of Liberty (1960) almost immediately.
    In 1960, I regarded Hayek’s book as one of the most profound books I had ever read. In retrospect, it was the first profound book that I had ever read. I have reread it two times since then, and I still regard it as a profound book. It is also a deeply flawed book.

    When I reached Section 5 of Chapter 16,

    At that point, a yellow flag went up in my mind.

    I knew at that point that I was dealing with a defender of the free market social order who had sold out intellectually to the fundamental error of the modern world, namely, the welfare state’s programs for the aged. I knew of his reputation from The Road to Serfdom, yet here I recognized clearly that this was the first step on the road to serfdom.

    From that point on, I knew that I would have to pick and choose carefully from his writings.
    This is not a minor issue. The Social Security system, which includes state subsidized medical care for the aged, is by far the most widely accepted institution associated with welfare state economics. More than any other pair of institutions, in every western nation, Social Security and government medicine are guaranteed to bankrupt all national governments. There is no escaping this. There will be a great default. They will abandon the programs which have been promised to the masses as the absolute guarantee provided by the state.

    Hayek defended these programs in the name of liberty. People who have not read Hayek are unaware of this. The first thing I ever read of a Hayek’s was this, and I never trusted him again. I would trust him on certain issues. On certain issues, he is reliable: socialist economic calculation, the decentralization of knowledge, and the market system as a discovery process, and the market as a means of coordination.

    These ideas he extracted from Mises’s writings prior to 1925. Hayek’s were published in the in the early part of Hayek’s academic career: before 1946. They were not original. In stark contrast, in terms of an overall philosophy of liberty, Hayek abandoned Mises in his discussion of the legal framework of the free market order. He did this mainly in the work that is generally regarded as his most original defense of liberty: The Constitution of Liberty.

    Chapter 16, “Social Security,” is so profoundly compromised both morally and conceptually that it still amazes me that the libertarian camp would regard Hayek as anything except a man who had no conception of an overall system of political liberty. If he had had any principle of interpretation of the free society which provided something like a coherent set of standards by which a defender of liberty could evaluate a particular political program, he would not have written the following.

  8. Rafe Champion

    Thanks Max, that is very helpful, I am flat out at present but will soon put up a post to draw attention to your nuanced appraisal of the book.

  9. max

    Mr. Rafe Champion it is not mine appraisal of the book, it Gary North appraisal.

    I tend to agree with his appraisal.

    also I have one specific law:

    do not trust any one who is winner of Nobel Memorial Prize in Economics


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