Economics & Political Science: Friedrich von Hayek Essay

Brief Biographical Sketch of the Friedrich von Hayek

Friedrich von Hayek was a great economist who was born on 8^th may in 1899 and died on 23^rd march in 1992 in Germany. He was a modern and prominent Austrian economist. His birthplace is Vienna a city of Austria. But he was a resident of Great Britain. At the time of the 1^st world war Hayek joined the Austro-Hungarian army. Just after world war, at the age of 19 he first came to the university. He admitted in the University as a student of Law but he has found his interest in Economics and Psychology. He joined the university of Vienna and get doctorate degree in 1921-1923. After taking doctorate degree he moved New York and here he spent one year. Hayek was in Vienna when joined as a first director of the Austrian Institute for Business Cycle Research in 1927. A famous research institute of Vienna where he worked up to 1931. He got an invitation from Lionel Robbins in 1931 who was an eminent Economist and teacher of London school of Economics. “He was a major figure in the Cambridge-London economics controversy with Keynes during the 1930s, first lectures at the School caused a sensation and were published as Prices and Production (1931)”. (LSE. 1931). Hayek started his research about monetary, capital and Business-cycle theory in the time of 1930s. In early of the 1940s his research work played a great role in different economic sector of Austria such as market process and methodological underpinnings. On that time Hayek become the second eminent and famous economist on the planet. The basic questions of economic policy, Professor Hayek of the London School of Economics and on the other hand Professor Keynes of Cambridge “University sparked a memorable confrontation between classical economics and the new-fangled “macroeconomics” of Lord Keynes’s 1936 General theory” (Hazlett, July 1992). When he was a student he always tried to improve the social condition of the country. Hayek was the great follower of Fabian and liberal socialism. He thought that society can be changed with the help of socialism. Fabian socialism changes a society day by day. And liberal socialism also helps to change society in a democratic way. Hayek has been decisively influenced by the liberal tradition in England. Hayek found international fame with the publication of The Road To Serfdom (1944), is a journal which tells about the democratic socialism. Again Hayek joined University of Chicago of USA for joining the committee on Social Thought. He developed the concept of social, Political and legal philosophy. His thought was very helpful on that time of USA. He passed a great time on there and his research work mainly developed on that time. After a successful time in USA in 1962 he got an appointment in the University of Freiburg, a leading University of West Germany. In Germany he passed successfully seven years for the improvement of Economic thoughts and methods. In 1969 he came Austria and joined University of Salzburg and he resided on there up to 1977.

Finally in1974, it was a great time of Hayek’s life. In this particular year Hayek was awarded by Nobel Prize in economics for pioneering work in the theory of money and economic fluctuations. When Hakes gets Nobel Prize in 1974 his acceptance in Austrian school increased suddenly and unexpectedly. Hayek’s theories were ignored in the end of 20^th centuries. Hakes used business cycle theory in terms of bank credit expansion and its transmission in terms of capital investments. Hakes published eighteen books, two hundred-thirty fives articles, twenty-five pamphlets and sixteen edited books about economics. He continued his producing The Fatal Conceit in 1988 and at the age of 89. Hayek died in 1992 in Freiburg, Germany.

Main Ideas and Contributions of the Economist to Economics

In the earlier discussion this study discussed about the biographical sketch of Friedrich Von Haykes. As it is known to everyone he was a famous and renowned economist, so he has some ideas which are implemented in the economics and he has also some contributions in economics. This part of study will clear everyone’s view about his ideas and contributions in economics. The main ideas and theories are discussed below:

1. Business cycle theory
2. Theory of money and economic fluctuations.
3. The pure theory of capital(Chicago,1941)
4. The Road to Serfdom(Chicago,1944)
5. A publication price and production (London, 1931).
6. Individualism and Economic Order (Chicago, 1948).
7. Monetary Theory and the Trade Cycle (London, 1933).
8. The Constitution of Liberty (Chicago, 1960).

Now a brief explanation of his above theories is discussed below:

Business-cycle theory

Business cycle is also known as economic cycle theory. It is the most accepted and widely regarded important theory of Hayek. Economic activity fluctuates all the year around. The work of business cycle theory is to analyze the causes of fluctuations. Business cycles are dated according to when the direction of economic activity changes. “Hayek showed how fluctuations in economy-wide output and employment are related to the economy’s capital structure” (Klein. n.d.). Biography

This is a graph which was the time of great depression in USA.

Theory of money and economic fluctuations

Hayek’s received Nobel Prize for it in 1974. It was his foremost theory from his invention. A theory which tells about how change of money is related with the economic condition. Money exchange rate is fixed in every country and it is fluctuated with the change of economic fluctuation of a country. We can change a currency to another country’s currency by dint of economic condition of a country. So when economy fluctuates then money also fluctuates.

The Road to Serfdom

The road serfdom is a great contribution of Hayek’s. It was published in 1944 by him. It was a journal which tells about the socialism in Europe on that time. It is historical context after sixty years. T. Road serfdom reveals the common commitment to the values of European liberalism which Keynes and Hayek shared.

The pure theory of capital

The Pure theory of capital is an important achievement of Hayek’s. it was published in 1941 in Chicago. Hayek’s says, The Pure Theory of Capital is a ‘highly abstract study of “a problem of pure economic theory’ that attempts to establish the ‘fundamentals’ that must serve ‘more concrete work on the processes which we observe in the real world’. It was a tuff and obscure theory by him.” (Barry. 2006).

Works of Hayek, F. A.

Hakes discuss price and production in his monetary cycle theory. It was published in London in 1931. We know that Price depends on demand. When demand raises or falls then price also raise or fall. Similarly production depends on demand and market price. When demand for a goods or commodity increases then production increases and opposite matter happens when demands decreases.

The constitution liberty law was made by Hayek’s in 1960 when he was in Chicago. It is a constitution shows freedom for all. Anyone who wants to a work he can choose his way to complete the work.

Monetary theory is a theory whose analysis is related with the money and business segments. He says that price of the product depends on the monetary policy of a country. If the money available in the market then the price of the product will be high and we will seen inflation on there. On the other hand if money is less in the market then products will be less and there will be seen deflation.

In this theory Hayek’s wants to clear about individuality in Economics. Hayek’s give priority on individual growth, individual production. This theory was published by him in 1948 in Chicago. A theory which reveals that individualism is better than groups.

Concluding Remarks

This study discussed about a great Economist Friedrich Von Hayek. He was a famous person in economics. A short biography of him shows how much he was prominent in his personal life and international level. Second part of this study shows his contributions in economics. His ideas were implemented in economics very successfully and till modern world running by using some of his economic thoughts and ideas.

References

Barry. Norman. (ed), Hayek’s The Pure Theory of Capital for The Elgar Companion to Hayekian Economic forthcoming 2006. Lancaster University: The Management School. Web.

Hayek, F. A. (1931). Prices and Production, London: Routledge & Sons.

Hayek, F. A. Monetary Theory and the Trade Cycle, London: Cape, 1933 (translation of Geldtheorie und Konjunkturtheorie, Wien 1929).

Hayek, F. A. (1948). Individualism and Economic Order. The University of Chicago Press. ISBN: 978-0-226-32093-9 (ISBN-10: 0-226-32093-6) 1996.

Hayek, F. A. (1960). The Constitution of Liberty. Chicago. ISBN: 978-0-226-32084-7 (ISBN-10: 0-226-32084-7).

Hazlett, W. Thomas (1992). The Road From Serfdom– Forseeing the Fall. 2008 Reason Magazine. Web.

Klein. G. Peter (n.d.). Biography F. A. Hayek (1899-1992). Ludwig von Mises Institute. Web.

LSE. 1931 Friedrich von Hayek. London School of Economics and Political Science 2000. Web.