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Friedrich Hayek and Freedom

Although Friedrich Hayek is the political philosopher most closely associated with Thatcherism he does not call himself a conservative. He says he is a liberal. To understand why he does this I want us to look at two different concepts of liberalism: Roger Scruton's and Bertrand Russell's.

Roger Scruton says that conservatism is mainly about authority, whilst liberalism is about freedom. Using this definition we can ask ourselves what kind of freedom is Hayek concerned about?

Freedom comes in different shapes. I like to draw attention to four varieties:

political freedom. The freedom from arbitrary arrest, for example. This depends on limits to the state's freedom being set by law. (One of Locke's main concerns)

intellectual freedom, which includes the freedom to criticise those in power or develop ideas that might undermine their authority. (The other of Locke's main concerns)

personal freedom, (John Stuart Mill's main concern) and

economic freedom, Adam Smith's main concern and also Hayek's. Hayek wants a) freedom for enterprise, b)freedom from state control.

According to Hayek, all other freedoms depend on economic freedom. If a society concentrates economic power in the state it will soon loose political and intellectual freedom.

Bertrand Russell says that liberalism is about individualism as opposed to collectivism. Hayek considers liberalism to be the defence of individuals from the collectivist state. This does not mean, however, that he is in favour of a weak state. A strong state is necessary to defend individual rights, especially economic rights.


Born 8.5.1899 in Vienna, Austria. He was the son of the Professor of Botany at the University of Vienna, where he became a student.

1921-1926 An Austrian civil servant

1927-1931 Director of the Austrian Institute for Economic Research and (from 1929) lecturer in economics at the University of Vienna.

Hayek is an exponent of the Austrian School of Economics founded by Karl Menger (1840-1921). Menger had been Professor of Economics at Vienna.

1931-1950 Tooke Professor of Economic Science and Statistics at the London School of Economics. He was a leading opponent of the theories of John Maynard Keynes that required government intervention to balance the economy.

1931 Prices and Production

1933 Monetary Theory and the Trade Cycle

1935 Edited Collectivist Economic Planning

1938 Naturalized British

1941 The Pure Theory of Capital

1944 The Road to Serfdom Argued that the totalitarianism experienced in Nazi Germany was the end result of economic planning, not, as marxist commentators argued, the final stage of capitalism. Lord Blake (in The Conservative Party from Peel to Thatcher) links this book to a revival of free-market thinking in intellectual circles after the second world war.

1948 Individualism and the Economic Order

1950-1962 Professor of Social and Moral Science at the University of Chicago, USA, where Milton Friedman had been Professor of Economics since 1948. Hayek and Friedman are considered to have been the two main ideological influences on Mrs Thatcher's economics.

1950 John Stuart Mill and Harriet Taylor

1952 The Counter Revolution of Science andThe Sensory Order

1954 Editor of Capitalism and the Historians (a criticism of socialist historians)

1955 The Political Ideal of the Rule of Law

1955 or 1957: The Institute of Economic Affairs was founded in London. This organisation propagated the ideas of Friedman, Hayek and the "public choice school". All, in different ways, pro- market.

1960 The Constitution of Liberty

1962-1969 Professor of Economics at the University of Freiburg im Breisgau, Badenwurttemberg, West Germany.

1967 Studies in Philosophy, Politics and Economics

1968 The Confusion of Language in Political Thought (IEA pamphlet)

1973 Law, Legislation and Liberty: volume one: Rules and Order

1974 Joint Nobel Prize in Economics. (Milton Friedman was awarded the prize in 1976)

1975 Full Employment at Any Price? (IEA pamphlet) and (with others) Rent Control: A Popular Paradox

1976 Law, Legislation and Liberty: volume two: The Mirage of Social Justice; and The Road to Serfdom re-issued

1978 De-nationalization of Money - The Argument Refined (IEA pamphlet) and New Studies in Philosophy, Politics, Economics and the History of Ideas.

1979 Law, Legislation and Liberty: volume three: The Political Order of a Free People

1983 Made a Companion of Honour. (An Order of Chivalry restricted to 65 members at any one time)

1984 1980's Unemployment and the Unions (IEA)

1989 The Fatal Conceit

Died 1992


From the long list of Hayek's books I want to highlight four:

1944 The Road to Serfdom: This argues that a mixed economy is a stepping stone on an inevitable decline into totalitarianism.

After many years in the political wilderness, this book was re-published twice in 1976.

1960 The Constitution of Liberty This argues the importance of law to a free society. The law, however, must maintain negative freedoms (freedom to do anything not prohibited) and not try to establish positive freedoms (giving people the power to do things).

1976 The Mirage of Social Justice This argues that social justice has to be an illusion and an interference with freedom. I.e. any measures to re-distribute wealth should be resisted.

1989 The Fatal Conceit This argues that all forms of socialism are a throw back to an earlier, more primitive, form of society.

A good overview of all of Hayek's work will be found in The New Right (1987) by David Green. This is a sympathetic account written by someone who agrees with Hayek. It compares Hayek to Scruton on certain points.


In the 1930's and 1940's, when Hayek first became famous, belief in the benevolence of the market was rapidly being replaced by a belief in the benevolence of state intervention. Hayek disagreed.

Hayek's two general themes are that the managed society does not work and that it is incompatible with freedom.

He argues that there are two types of order:

CONSTRUCTED ORDER (example: government planning)

SPONTANEOUS ORDER (prime example: the market)

Hayek, believes that whilst the role of the state's constructed order is important, it has to be limited. This is a position very like Adam Smith's and you will find it useful to compare Hayek and Smith.

Hayek says that constructed order generally goes wrong if it does any more than provide favourable conditions for spontaneous order. The most important favourable condition to spontaneous order is the rule of law.


Hayek agrees with Adam Smith that self-interest and the market meet human need more effectively than benevolence or planning:

And he also believes that planning threatens political liberties. Government planning, he argues, puts governments in a position where "to support themselves they are obliged to be oppressive and tyrannical".

In a market decisions are de-centralized. They are located in billions of consumer demands. With planning they are concentrated in the state. This is economically in-efficient, but it also has political consequences, because the power is concentrated.


In his recent works Hayek argues that spontaneous order has been discovered in the course of evolution and that it's great merit is that it works despite our ignorance. Hayek says that we can never have the data necessary to plan society. Spontaneous order works without a plan.

The Road to Serfdom

In The Road to Serfdom Hayek argued that planning threatens political liberties and that any amount of state intervention is the slippery slope to "totalitarianism". Marxists, he said, had blamed Fascism on capitalism, but the true culprit is state intervention.

Free market prices of goods and services give us instructions about what society wants.

If government intervenes to stop the market operating, government instructions replace free-market information. This means that instead of individuals deciding what they want, the government decides what they should have.

The extreme case of this is the totally planned economy : As there is no market billions of decisions previously made when individuals decided to buy or sell something now have to be centrally planned. This is economically inefficient, but it also has political consequences. All that power is taken away from individuals and concentrated in the planning authorities. Under such a system, Hayek argues, there cannot be any freedom.

Freedom depends on the market

Hayek argues that the mixed economy gives the worst of all possible worlds. Planning and the market do not mix. Given that his book was a criticism of what was happening in Britain, this is a crucial argument. But the argument itself is difficult to find in his book, and even more difficult to follow.


Most, if not all, liberal theorists include law in their idea of freedom. They contrast law with arbitrary will:

Arbitrary will: If, as in Hobbesian society, I must obey every whim of the ruler, I am not free. [Hobbes argument that liberty of the subject is consistent with the unlimited power of the sovereign is not accepted by liberals]

Law: If, as in Lockean society, the will of the sovereign is made known as general rules (law) that apply equally to everyone, then I am free because I can do anything within the law without any fear of the sovereign. This applies whether the sovereign power is one person or the whole people.

Hayek restates the liberal position on law so as to exclude the kind of laws that socialists might want to pass! Let us see how he does this.

The law according to Hayek must only maintain negative freedoms and not try to establish positive freedoms . [The distinction between positive and negative freedoms was made by Isaiah Berlin. (1958 Two Concepts of Liberty)]:

negative freedom is the freedom to do anything not prohibited

positive freedom is giving people the power to do things

If, for example, a poor person is hungry he or she is still free to eat in the sense that there is no law prohibiting it. That is a negative freedom. Positive freedom would be the power to eat that comes through having food.

Berlin (and Hayek) argue that the idea of positive freedom is a confusion of language. Freedom and power should not be confused. "Everything", Berlin says "is what it is: liberty is liberty, not equality or fairness or justice or human happiness or a quiet conscience."

Freedom, according to Hayek, is the absence of coercion. It is a situation in which the individual is not dependent on the arbitrary will of another. So called "positive freedoms", Hayek claims, mean that people cease to be equal before the law and are subject to the arbitrary will of the government.

Let us say, for example, that in the interests of social justice we decide to tax rich people in order to pay for the education of poor children. That means that the state is deciding that one class of people should pay tax and another class should receive benefits from the tax. There is nothing just or impartial about this, Hayek argues. It is analogous to the arbitrary will of the sovereign that law was intended to curb.


Since 1957 the Institute of Economic Affairs has promoted the ideas of Hayek in Britain. It has also promoted the monetarist ideas of Milton Friedman. For many years Friedman and Hayek were academic colleagues at the University of Chicago. Their ideas, though compatible, are not identical.

The Centre for Policy Studies was set up by Sir Keith Joseph and Margaret Thatcher in 1974. It is a free-market conservative think-tank separate from official Conservative Party research organs.

The Adam Smith Institute started in America in 1978. The British institute started in 1981. It promotes the privatization of public services. Hayek is chair of its academic board. One of its projects was The Omega File in 1984 which drew a picture of an almost completely privatized society.

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Constructed order

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