For most of his career, economist Friedrich Hayek was the proverbial “voice in the wilderness” with his championing of free market capitalism over socialism. Then an amazing thing happened – socialistic thought was soundly defeated, at least everywhere but the higher reaches of many American elite universities. His breakthrough work was The Road to Serfdom in 1944 which, at the time, was overshadowed by the central planning theories of John Maynard Keynes, but won a Nobel Prize for Hayek thirty years later. In 1960, he wrote The Constitution of Liberty, a favorite of Margaret Thatcher. As late as 1988, he wrote The Fatal Conceit, which stressed the evolutionary nature of capitalism. Hayek’s central theme is that only markets, through the pricing system, can properly produce the necessary information flows to ensure economic prosperity and preserve liberty. His view of capitalism as an organic and spontaneous information processing system was one of the 20th century’s compelling ideas. It followed that central planning was doomed to failure because it denies sufficient information to coordinate social behavior, and it led him to the conviction that capitalism is an absolute prerequisite for democracy. He never accepted the view that fascism was a capitalist phenomenon, but that Stalin and Hitler were “two peas in the same pod” of collectivism. His thought spawned a network of libertarian groups and inspired many currently prominent thinkers. He died earlier this year, but thankfully his ideas proved superior to the competition and will live on. We’re going to need them to counter such foolishness as central planning of the health care and pharmaceutical markets.
