If there is one twentieth-century economist who can be tagged as the Renaissance man, it has to be Friedrich Hayek, the Austrian born British economist who made substantial contributions in the realms of political theory, psychology, and economics. Hailing from “Austrian School of Economics”, Hayek’s contributions in economics have been so noteworthy that even today his findings and writings are widely read and appreciated by people all over the world. The greatest advocate of Austrian economics, Hayek was the only ‘Austrian school’ economist to be born and raised in Austria. A doctorate in economics, law and political science, Hayek was honored with the Nobel Memorial Prize for his humungous contribution in economics in the year 1974. A staunch propagator of free market economy, Hayek wrote extensively on banking and monetary theory, the socialist calculation debate, and the theory of spontaneous orders. To know all about his life and accomplishments, trail the biography.
Friedrich von Hayek Childhood and Early Life
Friedrich von Hayek was born on 8 May 1899 in Vienna, the then capital city of Austria. His father, August von Hayek was a renowned botanist and a noted physician. Hayek’s mother, Felicitas, was the daughter of Franz von Juraschek, who was a professor and a high-flying civil servant. Boasting of a noble lineage Hayek had an affluent upbringing. However, after the Austrian law banned the titles of nobility in the year 1919, the family had to sacrifice the noble tag of ‘von’ from their family name. Nevertheless, his father carried the family’s scholarly tradition forward by committing himself to botany and authoring several esteemed botanical treatises.
Quite interestingly, Hayek was the second cousin of Ludwig Wittgenstein, the renowned philosopher, and was among the first few lucky ones to have read ‘Tractatus Logico-Philosophicus’, the ground-breaking book by Wittgenstein. Later, Friedrich admitted that the philosophies and analytical techniques of Ludwig Wittgenstein had a great impact on his own life and his ideas. When he was a child, his father suggested him to read the inherent and developing works of Hugo de Vries along with the philosophical works of Ludwig Feuerbach. During his school years, he was very much impressed by the lectures on Aristotle’s ethics given by one of his tutor. In 1917, he became a part of an artillery regiment in the Austro-Hungarian Army and fought bravely on the Italian border. Post war, Hayek decided to devote the rest of his life pursuing an academic career and finding out ways to overcome the situations that gave rise to the World War I.
Friedrich had an insatiable yearning for knowledge and during his university years, he took up extensive study of philosophy, psychology, and economics and earned doctorates in law and political science. During the brief time when University of Vienna remained shut, Hayek enrolled himself in Constantin von Monakow's Institute of Brain Anatomy. During this time, he spent more time in staining brain cells. The time spent in Monakow’s laboratory gave rise to his deep curiosity in the work of Ernst Mach that motivated the first academic project of Hayek, which was later on published as ‘The Sensory Order’ (1952). At the time, when he was studying at the University of Vienna, Carl Menger’s work on the explanatory strategy of social science together with Friedrich von Wieser’s impressive and instructing existence in the tutorial room had a non-lasting effect on Hayek. In 1923, he went to New York and registered in the Ph. D. program at New York University, but in the mean while he had shortage of money and thus he returned to Vienna. After coming back to Vienna, he started working on economics.
Friedrich August von Hayek married Helen Berta Maria von Fritsch in August 1926. She was a secretary at the civil service office of the Austrian government. They had two children. In July 1950, they divorced and he tied knot with Helene Bitterlich.
Hayek was very much influenced by the philosophies of Ludwig von Mises, who wrote the book ‘Socialism’ (1922) and was an important member of the Austrian School of Economics. After reading this book, Hayek started attending the private seminars of Ludwig von Mises with some of his university mates such as Felix Kaufmann, Fritz Machlup, Alfred Schutz and Gottfried Haberler. After sometime, Ludwig became his mentor and was employed by him on the reference of Friedrich von Wieser. Hayek worked as an expert for the Austrian government, functioning on the legal and economic details of the Treaty of Saint Germain. He also became the director of the newly established Austrian Institute for Business Cycle Research with the support of Ludwig. Hayek became the regular attendant of the biweekly seminar of Ludwig von Mises and qualified for Habilitation, a verbal exam important to pass to become a university teacher. Hence, in 1929, he published his first book, ‘Monetary Theory and the Trade Cycle’. Later on, in 1931, he was invited to England for delivering four lectures on monetary economics at the London School of Economics & Political Science (LSE) by Lionel Robbins. These lectures finally resulted in his selection as the Tooke Professor of Economic Science and Statistics at LSE. He served this position until 1950, becoming a legal British citizen in 1938. When he reached England for delivering the lectures, he also took part in a debate with John Maynard Keynes, who was an economist at University of Cambridge. They discussed on their specific theories regarding the role and effect of currency within a developed economy. Friedrich August von Hayek wrote a very big critical review of the book ‘A Treatise on Money’ (1930), by John Maynard Keynes and for which Keynes answered by criticizing the Hayek’s latest book ‘Prices and Production’ (1931). Due to this reason, the other economists criticized both the economists and this led them to think again on their own agenda. Thus, after this incident, Keynes came with his new economic book ‘The General Theory of Employment, Interest and Money’ (1936) which became the most popular economics book of that very time. The book written by Hayek ‘The Pure Theory of Capital’, however, could not enjoy the same popularity owing to its late publication and World War II. ‘The Road to Serfdom’ was written between 1940 and 1943 and the name of this book was the result of the inspiration from the writings on the ‘Road to Servitude’ written by the French classical liberal thinker Alexis de Tocqueville. This book was first published in March 1944 in Britain by Routledge.
Winner of Nobel Prize
It was on 9 October 1974 that it was declared that Friedrich August von Hayek would be honored with the Nobel Prize in Economics together with the Swedish socialist and economist Gunnar Myrdal. This came across as big news to Hayek. Later on, he was awarded with the Nobel Prize in December 1974. This prize bought him more publicity and huge appreciation.
Friedrich August von Hayek died on 23 March 1992, in Freiburg, Germany.
Contribution to Economics
Friedrich August von Hayek had a great contribution in the field of economics and is mainly popular for his work ‘The Road to Serfdom’ (1944) and for his outstanding work on knowledge in the 1930s and 1940s. He was also an expert of business-cycle theory. He had also worked on psychology (1952), political philosophy (1960) and legal theory (1973-79). Apart from this, his emphasis on impulsive order and his work on intricate systems have been very significant and persuasive amongst the Austrians.