Drakopoulos, Pan: Hayek and Wittgenstein

Hayek turned the prestige he had acquired to advantage –despite his young age– with the publication in 1925 in Britain of his work Money, Capital and Fluctuations; a prestige which was further boosted with his work Monetary Theory and Commercial Cycles in 1933. He had already acquired some adherents in the professional establishment, and he turned them to account by accepting a proposal for becoming a professor at the London School of Economics. So, he went there and gave four lectures, published them as a book under the title Prices and Production, and after that was appointed a professor in Economics and Statistics.

Friedrich Hayek portraitHayek was not only an ardent missionary, he was also a brave man: in the terrifying atmosphere of that economic catastrophe and while everybody clutched at the theories of the Professor of Economics in Cambridge, John Maynard Keynes, who advocated immediate government intervention so that the western economies might survive, the newcomer Hayek attacked Keynes’ theories, against the flow of the tide.

This was sacrilegious on two levels. First, he was a foreigner, a German with the most barbarous English (which his colleague Arnold Plant tried to amend by having long walks with him in Hamstead daily); and second, he challenged Keynes –one of the most favored young men of his day: Keynes –a doyen of high society, with perfect English, handsome, sensitive, a member of the Bloomsbury group whose Ophelia was Virginia Woolf, a Liberal, an aesthetic creature who, on the point of death in 1946, could only say: ” What a pity! I won’t drink champagne again!”. In short, he was the cream of British culture and society. But in the event that the British might overcome Hayek’s sacrilege, what did they hear from him? A hymn for the free market, the moment that the black was flourishing!

However, Hayek was a solitary crusader who paid no attention to the Saracens’ loud cries: he wrote two long articles where he systematically refuted Keynes’ Treatise on Money which was published in 1930. But when these two opponents met, Keynes, of course, enchanted the impulsive Austrian and, anyway, assured him that he was going to change a great part of his theory. So, in 1936, when his famous work The General Theory of Employment, Interest and Money came out it indeed differed from his Treatise of 1930 on many points but it was still very far from the theories of the Austrian Economic School. Hayek wrote nothing against it, hoping for a new revision after more marathon discussions. But that new revision never materialized.

I believe it was not only that Hayek expected a new revision, for Keynes showed particular regard towards the younger Hayek and when, because of the war, the London School of Economics moved temporarily to Cambridge, it was Keynes himself who ran to secure an appropriate flat for this same antagonist! Besides, how would it sound during the Anglo-German war if a prominent British economist were to be crushed by an Austrian-German? Moreover, Keynes knew the art of being a friend very well; and when in 1944 Hayek published his famous work The Road to Serfdom (which the author dedicated to him, not without a taunt: `to the socialists of all parties’), Keynes hastened to praise the book and recommend reading it although, as a point of honor, adding that the British tradition had followed a different course…

HAYEK HAD ALREADY made a name for himself among economists and the Austrian intelligentsia before the war and before having settled in England. His cousin Ludwig had apparently heard of his U-turn and his subsequent combative opposition to socialism. What was the philosopher’s stance now?

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