In this exclusive video, Nobel-laureate F. A. Hayek discusses the evolution of morality and social norms, arguing that they result from unplanned, emergent processes. He contrasts this conclusion with other philosophical accounts of law and morality.
Friedrich August Hayek CH, or Friedrich August von Hayek, was an economist and philosopher best known for his defense of classical liberalism. In 1974, Hayek shared the Nobel Memorial Prize in Economic Sciences (with his political rival, Gunnar Myrdal) for his “pioneering work in the theory of money and economic fluctuations and… penetrating analysis of the interdependence of economic, social and institutional phenomena.” He considered the efficient allocation of capital to be the most important factor leading to sustainable and optimal GDP growth, and warned of harms from monetary authority manipulation of interest rates. Interest rates should be set naturally by equilibrium between consumption of goods or capital stock.
Hayek is considered to be a major economist and political philosopher of the twentieth century. Along with his mentor Ludwig von Mises, he was an important contributor to the Austrian school of economic thought. Hayek’s account of how changing prices communicate information which enable individuals to coordinate their plans is widely regarded as an important achievement in economics. He also contributed to the fields of systems thinking, jurisprudence, neuroscience and the history of ideas.
The Austrian School of economics is a school of economic thought which advocates a methodological individualist approach to economics called praxeology, the theory that money is non-neutral, the theory that interest rates and profits are determined by the interaction of diminishing marginal utility with diminishing marginal productivity of time and time preferences, the theory that the capital structure of economies consists of heterogeneous goods that have multispecific uses which must be aligned, and emphasizes the organizing power of the price mechanism.
Whereas mainstream economists generally use economic models and statistical methods to model economic behavior, Austrian School economists argue that they are a flawed, unreliable, and insufficient means of analyzing economic behavior and evaluating economic theories. Instead, they advocate deriving economic theory logically from basic principles of human action, a study called praxeology.
Furthermore, whereas experimental research and natural experiments are often used in mainstream economics, Austrians generally hold that testability in economics and precise mathematical modeling of an economic market are virtually impossible. They argue that modeling a market relies on human actors who cannot be placed in a lab setting without altering their would-be actions. Supporters of using models of market behavior to analyze and test economic theory argue that economists have developed numerous experiments that elicit useful information about individual preferences.
Many theories developed by early Austrian economists have been absorbed by mainstream economics. Austrian theories have also significantly influenced theories in mainstream economic thought, including the subjective theory of value, marginalism, and the economic calculation debate. Its reputation rose in the mid-1970s, after Austrian economist Friedrich Hayek shared the 1974 Nobel Prize in Economics.
Hayek served in World War I and said that his experience in the war and his desire to help avoid the mistakes that had led to the war led him to his career. Hayek lived in Austria, Great Britain, the United States and Germany, and became a British subject in 1938. He spent most of his academic life at the London School of Economics (LSE), the University of Chicago, and the University of Freiburg.