Friedrich Hayek

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Friedrich Hayek : biography

8 May 1899 – 23 March 1992

He became professor at the University of Salzburg from 1969 to 1977; he then returned to Freiburg, where he spent the rest of his days. When Hayek left Salzburg in 1977, he wrote, "I made a mistake in moving to Salzburg". The economics department was small, and the library facilities were inadequate.Ebenstein, p. 254.

Nobel laureate

On 9 October 1974, it was announced that Hayek would be awarded the Nobel Memorial Prize in Economics, along with Swedish socialist economist Gunnar Myrdal. The reasons for the two of them winning the prize are described in the Nobel committee’s press release. He was surprised at being given the award and believed that he was given it with Myrdal in order to balance the award with someone from the opposite side of the political spectrum.Ebenstein, p. 263.

During the Nobel ceremony in December 1974, Hayek met the Russian dissident Aleksandr Solzhenitsyn. Hayek later sent him a Russian translation of The Road to Serfdom. Although he spoke with apprehension at his award speech about the danger which the authority of the prize would lend to an economist, the prize brought much greater public awareness of Hayek and has been described by his biographer as "the great rejuvenating event in his life".Ebenstein, p. 261.

Personal life

In August 1926, Hayek married Helen Berta Maria von Fritsch, a secretary at the civil service office where Hayek worked. They had two children together.Ebenstein, p. 44. Friedrich and Helen divorced in July 1950 and he married Helene BitterlichEbenstein, p. 169. just a few weeks later, moving to Arkansas in order to take advantage of permissive divorce laws.Ebenstein, p. 155.

On Hayek’s religious views, he was an agnostic.Ebenstein, p. 224.

Critiques

Business cycle critiques

Keynes asked his friend Piero Sraffa to respond publicly to Hayek’s challenge; instead of formulating an alternative theory, Sraffa elaborated on the logical inconsistencies of Hayek’s argument, especially concerning the effect of inflation-induced "forced savings" on the capital sector and about the definition of a "natural" interest rate in a growing economy.P. Sraffa, Economic Journal, 42, S. 42–53 (1932). Others who responded negatively to Hayek’s work on the business cycle included John Hicks, Frank Knight, and Gunnar Myrdal.Bruce Caldwell, Hayek’s Challenge: An Intellectual Biography of F. A. Hayek (Chicago: University of Chicago Press, 2004), p. 179. ISBN 0-226-09193-7 Kaldor later wrote that Hayek’s Prices and Production had produced "a remarkable crop of critics" and that the total number of pages in British and American journals dedicated to the resulting debate "could rarely have been equalled in the economic controversies of the past."

Hayek continued his research on monetary and capital theory, revising his theories of the relations between credit cycles and capital structure in Profits, Interest and Investment (1939) and The Pure Theory of Capital (1941), but his reputation as an economic theorist had by then fallen so much that those works were largely ignored, except for scathing critiques by Nicholas Kaldor. Lionel Robbins himself, who had embraced the Austrian theory of the business cycle in The Great Depression (1934), later regretted having written that book and accepted many of the Keynesian counter-arguments.R. W. Garrison, , Hayek Society Journal (LSE), 5(2), 1 (2003).

Hayek never produced the book-length treatment of "the dynamics of capital" that he had promised in the Pure Theory of Capital. After 1941, he continued to publish works on the economics of information, political philosophy, the theory of law, and psychology, but seldom on macroeconomics. At the University of Chicago, Hayek was not part of the economics department and did not influence the rebirth of neoclassical theory which took place there (see Chicago school of economics). When, in 1974, he shared the Nobel Memorial Prize in Economics with Gunnar Myrdal, the latter complained about being paired with an "ideologue". Milton Friedman declared himself "an enormous admirer of Hayek, but not for his economics. I think Prices and Production is a very flawed book. I think his [Pure Theory of Capital] is unreadable. On the other hand, The Road to Serfdom is one of the great books of our time."