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Why is it the Mises Institute and not the Hayek Institute?

UnknownHans-Hermann Hoppe very clearly explains in this article.  Below is an excerpt:

My thesis is that Hayek’s greater prominence has little if anything to do with his economics. There is little difference in Mises’s and Hayek’s economics. Indeed, most economic ideas associated with Hayek were originated by Mises, and this fact alone would make Mises rank far above Hayek as an economist. But most of today’s professed Hayekians are not trained economists. Few have actually read the books that are responsible for Hayek’s initial fame as an economist, i.e., his Monetary Theory and the Trade Cycle and his Prices and Production. And I venture the guess that there exist no more than 10 people alive today who have studied, from cover to cover, his Pure Theory of Capital.

Rather, what explains Hayeks greater prominence is Hayek’s work, mostly in the second half of his professional life, in the field of political philosophy — and here, in this field, the difference between Hayek and Mises is striking indeed.

My thesis is essentially the same one also advanced by my friend Ralph Raico: Hayek is not a classical liberal at all, or a “Radikalliberaler” as the NZZ, as usual clueless, has just recently referred to him. Hayek is actually a moderate social democrat, and since we live in the age of social democracy, this makes him a “respectable” and “responsible” scholar. Hayek, as you may recall, dedicated his Road to Serfdom to “the socialists in all parties.” And the socialists in all parties now pay him back in using Hayek to present themselves as “liberals.”

Now to the proof, and I rely for this mostly on the Constitution of Liberty, and his three volumeLaw, Legislation, and Liberty which are generally regarded as Hayek’s most important contributions to the field of political theory.

According to Hayek, government is “necessary” to fulfill the following tasks: not merely for “law enforcement” and “defense against external enemies” but “in an advanced society government ought to use its power of raising funds by taxation to provide a number of services which for various reasons cannot be provided, or cannot be provided adequately, by the market.” (Because at all times an infinite number of goods and services exist that the market does not provide, Hayek hands government a blank check.)

Among these goods and services are: ‘protection against violence, epidemics, or such natural forces as floods and avalanches, but also many of the amenities which make life in modern cities tolerable, most roads … the provision of standards of measure, and of many kinds of information ranging from land registers, maps and statistics to the certification of the quality of some goods or services offered in the market.’

Additional government functions include “the assurance of a certain minimum income for everyone”; government should “distribute its expenditure over time in such a manner that it will step in when private investment flags”; it should finance schools and research as well as enforce “building regulations, pure food laws, the certification of certain professions, the restrictions on the sale of certain dangerous goods (such as arms, explosives, poisons and drugs), as well as some safety and health regulations for the processes of production; and the provision of such public institutions as theaters, sports grounds, etc.”; and it should make use of the power of “eminent domain” to enhance the “public good.”

Moreover, it generally holds that “there is some reason to believe that with the increase in general wealth and of the density of population, the share of all needs that can be satisfied only by collective action will continue to grow.”

Further, government should implement an extensive system of compulsory insurance (“coercion intended to forestall greater coercion”), public, subsidized housing is a possible government task, and likewise “city planning” and “zoning” are considered appropriate government functions — provided that “the sum of the gains exceed the sum of the losses.” And lastly, “the provision of amenities of or opportunities for recreation, or the preservation of natural beauty or of historical sites or scientific interest … Natural parks, nature-reservations, etc.” are legitimate government tasks.

In short, Hayek is respectable because he’s largely just a run of the mill social democrat type. Of course, he made vital contributions to Austrian Economic theory, especially relating to the Austrian Business Cycle Theory. But economics is not political theory. In fact, in some ways, his name can do libertarians harm. After all, once we explain the true libertarian position on issues like Universal Basic Income (a common issue these days) both non-libertarians and left-libertarians will say: “well but even Hayek was for it!” Of course he was; he wasn’t a pure private-property libertarian. Thus, it is for this reason that he is a respectable Austrian, not an extremist like Mises!

And besides this, I think, another reason for mainstream approval of Hayek (at least 10 years ago) was the fact that his epistemology was different than Mises’. Hayek adhered to the modern “logical positivism” epistemology, which, being an empirical school is acceptable where Mises’ “radical apriorism” is not. Rationalism is definitely out of favor today, as the philosophical establishment decries logic and instead embraces “science” and “observation.” This was part of the very “revolt against reason” against which Mises stood firm. Mises is considered here again as an extremist, not beholden to the modern god of “Science.” That is, he accepted apriori statements as discoverable and true and even as the foundation for all economic laws.

Published in C.Jay Engel