Hayek A Life, 1899-1950, Bruce Caldwell & Hansjoerg Klausinger, University of Chicago Press, Chicago & London, 2022, 840pp, HB, reviewed by Leslie Jones
Friedrich August Hayek’s family was conservative, “culturally German” but only nominally Christian. Both parents belonged to the Viennese lower nobility or “second society”. His father August (1871-1928) was a district physician. August’s grandfather Heinrich had squandered the family fortune. The upshot was that August’s academic ambitions (his “passion was botany”) were thwarted, although he was awarded an extraordinary professorship in 1916, albeit unpaid. Friedrich (henceforth Hayek) evidently owed his love of German literature and of the theatre to his father – ditto his interest in natural science. He became a convinced Darwinian in his middle teens. His mother Felicitas von Juraschek was the daughter of a wealthy university professor and civil servant. Her inherited wealth helped pay for the servants, private schooling etc considered obligatory in these circles.
Hayek was intellectually precocious. Easily bored, his performance at school was dismal. Like other members of the Viennese bourgeoisie, he attended a gymnasium. At the Franz-Joseph Real Gymnasium, where he was enrolled from 1909-1911, scientific subjects were emphasised. Ancient Greek and Latin had been replaced by modern foreign languages.
In November 1918, Hayek enrolled in the faculty of law at the University of Vienna. He eschewed both racist nationalism (the race war) but also Marxism (the class war). With his close friend Herbert Fürth, he helped organise the German Democratic Student’s Union (DDHV). Jewish students were active therein. Hayek, then, was aligned with the progressive/liberal elements in the Viennese bourgeoise. In this context, his involvement in an informal discussion group in the early 1920’s, nicknamed the Geistkreis (‘circle of the spirits’) was pivotal. Its members “belonged mostly to the best type of Jewish intelligentsia…” (Hayek, quoted C & K, p152).
The growth of fin de siècle anti-Semitism in Austria-Hungary, facilitated by the extension of the franchise leading to the rise of mass parties, is a prominent theme in Hayek a Life. Georg von Schönerer’s pan-German party excluded those of Jewish descent, as did Karl Lueger’s Christian Social Party. Anti-Semitism, supposedly now scientific, was rife in Austrian universities. Indeed, August Hayek was a founder member of a section of the Verein deutscher Ärzte in Österreich (Association of Doctors). The Verein’s Aryan paragraph restricted membership to those of “German lineage”. Caldwell and Klausinger (henceforth C & K) acknowledge the anti-Semitism at the heart of Hayek’s family but they magnanimously conclude that August was not irredeemably tainted. Note, however, that both Hayek’s mother and his brother Heinz subsequently supported Hitler. Even Hayek himself was not entirely immune to anti-Semitism. Interviewed in 1983 by W. W. Bartley 111, in preparation for a prospective biography of Hayek, the latter described his onetime psychology lecturer Siegmund Kornfeld as “…a rather comic Jewish figure…” (C and K, p. 130). In similar vein, in 1939, Hayek wrote to Beveridge, the former Director of the LSE, on behalf of economist Karl Forchheimer, dismissed from his position in the Austrian Ministry of Social Affairs, stating that although Forchheimer was “I understand, fully Jewish, he is not pronouncedly so and I should have hardly known he was a Jew” (C & K, p. 396).
Hayek turns to economics.
Appropriately enough, Hayek A Life was showcased at the Adam Smith Institute on 26 April 2023. On August 1, 1932, Hayek became Tooke Professor of Economic Science and Statistics in the University of London. In his inaugural lecture delivered at the LSE on March 1, 1933, Hayek lauded Adam Smith for identifying “a mechanism that coordinates economic activity” but which arose spontaneously. This was the so-called “invisible hand”, referred to just once in Wealth of Nations (vol II, restraints upon importation). Carl Menger, appointed Professor of Political Economy at Vienna in 1879, was the founder of Austrian School of Economics and a critic of the Historical School of Economics. In his Grundsätze or Principles of Economics (1871) Menger elaborated an idea analogous to the “invisible hand”, to wit, the “spontaneous generation of institutions”. Hayek read the Grundsätze in 1921 and said that the conception of the “spontaneous generation of institutions is worked out more beautifully there than in any other book I know” (quoted C & K, p138).
In his Observer review of Hayek’s The Road to Serfdom (1944), George Orwell pithily opined, “Capitalism leads to dole queues, the scramble for markets, and war. Collectivism leads to concentration camps, leader worship, and war”. C & K’s contention, however, is that Hayek sought a middle way between these extremes. For them, The Road was ultimately a defence of the beleaguered liberal values which he shared with his mentor, Ludwig von Mises – notably reason and tolerance – rather than a celebration of laissez-faire per se. Given that “scarcity will always be with us” (the economic problem) whose needs are to be satisfied and what is a just wage for any given occupation? Thus, the economic problem is also a social and political problem. For Hayek, socialism, whether of the left or right, cannot be combined with freedom because it has dispensed with “decentralisation plus automatic coordination”. Socialism must eventually impose as arbitrary set of values in order to address the economic problem.
“Toutes les familles heureuses se ressemblent”. C & K understandably hesitated to deal with Hayek’s acrimonious divorce of his wife Hella, the mother of his two children, and his subsequent marriage to Linerl, his first love. Volume 1 of Hayek, a Life concludes with this episode, painful for all concerned, but nonetheless a compelling read.
Alumni of the London School of Economics will enjoy the depiction of the Senior Common Room in the 1930’s. Professor Lionel Robbins, for one, recalls in his autobiography the “friendly badinage between Tawney and Gregory on the merits and demerits of the free-enterprise system…” . Anthropologist Bronislaw Malinowski and historian Elie Halévy, likewise, occupied what Hayek called the “Sardonic Corner”, expatiating on “the folkways of English academics”. When the planned second volume is complete, this will become, as the authors intended, “the definitive full biography of F A Hayek”.
Dr Leslie Jones, PhD LSE, is the Editor of Quarterly Review.