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Thursday, April 28, 2011

Hayek’s Nobel, Our Victory?

Today’s document is an October 9th, 1974 letter in which Leonard E. Read congratulates F. A. Hayek for winning the Nobel Prize in economics. Hayek was awarded the prize, along with Gunnar Myrdal, “for their pioneering work in the theory of money and economic fluctuations and for their penetrating analysis of the interdependence of economic, social and institutional phenomena.”

At the time Hayek’s Nobel prize in economics came as quite a surprise. Hayek was the leading proponent of the Austrian school of economics (Ludwig von Mises had passed away a year earlier), which by this point had fallen out of the mainstream (in fact, Hayek’s Nobel win and a Institute for Humane Studies conference in June of 1974 on Austrian economics held in South Royalton, VT are often considered the two main catalysts for the revival of the Austrian school at that time).

Friedrich A. Hayek was a leading critic of the overuse of mathematical formalization, which had come to dominate the economic discipline. Not to mention, Hayek was popularly known, mostly thanks to his book The Road to Serfdom, as overtly a free market economist. This was why Read expressed shock that he shared the prize with Myrdal, who was notorious for his left-wing anti-market views. It is often believed that sharing of 1974 Nobel prize in economics occurred because the Royal Swedish Academy of science recognized the need for some balance.

Regardless, Hayek’s recognition has been extremely important to the development of economics. He has become one of the most cited winners of the Nobel Prize by other Nobel laureates in economics and his influence on them is undeniable, from James M. Buchanan, Ronald Coase, Douglas North, Vernon Smith, Robert Lucas, Edmond Phelps, Leonid Hurwicz, and Elinor Ostrom, and even to Joseph Stiglitz, just to name a few.

The economic discipline in the 20th century is often viewed as a battle of ideas between Hayek and John Maynard Keynes, where, as the rap song Fear the Boom Bust (a new one, <

  • Nicholas Snow is a Visiting Assistant Professor at Kenyon College in the Department of Economics, and previously a Senior Lecturer at The Ohio State University Economics Department. His research focuses on the political economy of prohibition.