Economics captivated me from the moment that I first saw on a chalkboard a supply-and-demand graph. That was in January of 1977. I was then an 18-year-old college freshman at Nicholls State University in Thibodaux, Louisiana. I immediately took to pestering my economics professors for suggestions on what to read in economics.
One of my professors, Bill Field, told me about Milton Friedman. I began reading Friedman’s Newsweek columns and was immediately struck by his logic and passion. (One of these articles, in particular, really resonated with me; I believe that its title is “Free not Fair,” in which Friedman argued that government attempts to engineer fairness succeed only in restricting our freedoms.) Soon thereafter I read Milton and Rose Friedman’s Capitalism and Freedom. Its power floored me.
I was deliriously happy with my newfound intellectual friend, Milton Friedman.
Introduced to Hayek’s Works
One afternoon, after reading something or other by Friedman, I wandered in to Bill Field’s office—a place, incidentally, where I was always welcome—and announced that Friedman must be the world’s greatest living economist.
“Nope. In my opinion Friedman is the world’s second greatest living economist,” Bill replied matter-of-factly.
“Second greatest?” I sputtered. I didn’t believe what I’d just heard.
“Who is it?” I asked. “Which living economist can possibly be greater than Friedman?”
The name came. It was the first time I’d ever heard it. “Hayek. F.A. Hayek.”
The name meant nothing to me. “Never heard of him,” I responded.
“Here,” Bill said. “Take this book and read chapter four. It’s an article entitled “The Use of Knowledge in Society.” You haven’t studied economics long enough to grasp it all, but give it a try.” Bill lent me his copy of Hayek’s 1948 book Individualism and Economic Order.
That night I read “The Use of Knowledge in Society,” an article that originally appeared in the September 1945 issue of the American Economic Review.
Bill was right; I grasped only very little of it. But I did grasp the main point that markets allow everyone to benefit from everyone else’s knowledge. This insight was so profound that I knew right then that I had before my eyes the product of a mind so deep and so wise that I could never call myself an economist without knowing the full range of this man’s works.
“Do you understand what Hayek says in that article?” Bill asked the next day. He and I then proceeded on the first of what became countless afternoons of reflecting upon Hayek’s work. Later, Bill introduced me to the writings of other luminous economists—P. T. Bauer, James Buchanan, Israel Kirzner, Ludwig von Mises (Hayek’s teacher), Joseph Schumpeter. I relished their works; I learned from them all. But to this day, Hayek remains for me the premier economist of this century.
Hayek’s Revolutionary Ideas
Even in the late 1970s—still active and more than a decade away from his death in 1992—pictures of Hayek revealed a very old man. Here, after all, was a man who once challenged Keynes for the position of most prominent economist of the 1930s. Here was a scholar whose most famous book, The Road to Serfdom, was published fourteen years before I was born.
And yet whenever I read his words, I felt understanding being poured lavishly into my mind. These weren’t the words of an old man, a man whose time had long ago passed. No, these words conveyed deep and timeless insights into the nature of economics, law, and politics. These were revolutionary words, for to understand Hayek is to understand not only that government cannot improve upon the operation of free markets, but also that government cannot even be relied upon to supply money and law—the very stuff that most economists unthinkingly assume can be supplied only by the state. Moreover, Hayek’s explanations of government’s inherent limitations—and of the market’s marvelous ability to peacefully coordinate human activity into a productive powerhouse—are all grounded upon enduring truths rather than upon clever algebra or bumper-sticker maxims.
Finding Hayek was, for me, finding the most superb intellectual guide that I could dream of.
By my junior year I’d already devoured several of Hayek’s books and essays. It was then that I tackled what I still regard as his finest work, the three-volume Law, Legislation and Liberty. In this work, Hayek most clearly and fully develops his idea of spontaneous order.
In Law, Legislation and Liberty, Hayek also explains why common-law methods of law making are far better than legislative methods. To this day, following Hayek’s example, I cannot bring myself to use the word “law” to describe legislation. The latter is fundamentally distinct from the former, and, because of Hayek’s influence, I believe that our loose habit of calling legislation “law” gives to legislatures an authority that they do not deserve. Legislators are not law makers; if accuracy is to be served, far better to call legislators “law breakers” rather than “law makers.” Legislation disrupts the common-law rules that embody patterns of expectations built into the law over the years and through long practice. And why do legislatures upend this law? To plunder the politically weak for the benefit of the politically strong.
Hayek wrote enduring treatises in economics and political and legal philosophy. But he also wrote short, laser-like articles focused on dispelling prevailing nonsense. One of Hayek’s best-known articles of this kind is his 1961 answer to John Kenneth Galbraith’s notion of the “dependence effect.” Galbraith argued that in modern society consumer wants are created by advertising. Hence, because these wants are artificial, the market ought not to be applauded for satisfying them.
Hayek skewered Galbraith’s argument, pointing out that nearly all of our wants—with or without Madison Avenue—are greatly influenced by our cultural environment. There is nothing unique or sinister about Madison Avenue that renders as unworthy of satisfaction the desires that it helps to shape. Indeed, said Hayek, far better to have lots of producers use advertising to compete for consumer patronage than to have government coercing people to spend their incomes according to the fancy of the political elite.
On May 8 I will celebrate—along with all friends of liberty and truth—the centennial of Hayek’s birth. First I’ll call my old professor, Bill Field, and thank him again for introducing me to Hayek’s works. Afterward, I’ll re-read “The Use of Knowledge in Society” and reflect on the ocean of knowledge that this one Austrian-born British citizen contributed to the cause of human freedom.
Happy birthday, Professor Hayek.