Hayek’s Challenge: An Intellectual Biography of F.A. Hayek

Published by EH.NET (July 2004)

Bruce Caldwell, Hayek’s Challenge: An Intellectual Biography of F.A. Hayek. Chicago: University of Chicago Press, 2004. xii + 484 pp. $55 (cloth), ISBN: 0-226-09191-0.

Reviewed for EH.NET by D.E. Moggridge, Department of Economics, University of Toronto.

Bruce Caldwell of the University of North Carolina at Greensboro, the general editor of The Collected Works of F.A. Hayek, has carved out for himself a substantial and deserved reputation as a student of methodology and of Hayek’s work. In this book, the two streams merge into an intellectual biography concentrating on the development of Hayek’s methodological thinking. That this is the volume’s main thrust is not apparent from the dust-jacket description or laudatory blurbs from colleagues. It becomes slightly clearer on page 11 when he states: “In my intellectual biography of Hayek … I trace the development of Hayek’s ideas, focusing on the development of his ideas regarding methodology as a unifying theme.” One gets a bit more suspicious when one comes to Prices and Production (1931) and finds the author always referring to the revised and enlarged 1935 edition. But it becomes starkly clear on pages 178 and 179 when, in reference to the Keynes/Hayek debates of the 1930s and the evolution of The Pure Theory of Capital (1941), he notes that while “these stories are of considerable independent interest, they bear less directly on our account of the development of Hayek’s methodological thought and … will be touched on only briefly here” and in the attached footnote adding that “were this a comprehensive intellectual biography, the effort [of relating Hayek’s monetary and capital theories and their development in the 1930s] would be warranted, but this was never my goal.” So much for truth in advertising!

After a brief introduction, the book proceeds in three stages. First, before Hayek comes on to the scene on page 133, there is Part I – “The Austrian School and Its Opponents — Historicists, Socialists and Positivists” — with wonderfully stimulating chapters on Menger’s Principles, the rise of the German historical school, the methodenstreit, Max Weber and the decline of the historical school, positivism and socialism. This sets the stage for Part II – “Hayek’s Journey” from Vienna to the puzzle of the final volume The Fatal Conceit (1988). Although there are references to monetary matters at the beginning, as already noted, the treatment is perfunctory for the 1930s and they are completely ignored after 1960, as are his public activities in the 1970s and 1980s. There is also a rather light treatment of Law, Legislation and Liberty (1973-79). The study ends with Part III – “Hayek’s Challenge” — a chapter on Hayek’s legacies and the author’s own meditation on twentieth-century economics which concludes with a consideration of the author’s own sub-discipline, the history of economics — an important part of Hayek’s teaching and publishing activities from the mid-1930s to the 1970s oddly ignored in the book itself.

The volume rests on an immense secondary literature and Hayek’s own published works. It is not archive-based: there are fourteen references to documents in the Hayek papers at the Hoover Institution and one from the University of Chicago. (In one sense this is a blessing, because the publisher’s favored author/date format for references can survive a few such items but would have probably proved less useful if the author had tried to learn and convey more of, say, Hayek in the 1930s from his correspondence with Machlup and Haberler deposited at the Hoover Institution.) Caldwell’s command of the secondary literature is breathtaking. Nonetheless, Zeus occasionally nods in the surrounding details as when he muddles the process by which Hayek became Tooke Professor at LSE so that he has to have him reappointed in 1932 (p. 174, note 7) and has Nicky Kaldor providing an appendix to the 1942 Beveridge Report on social services rather than Beveridge’s 1944 book Full Employment in a Free Society (p. 175, note 9). Fortunately these nods are relatively few.

Caldwell’s reliance on the existing secondary literature leaves the story somewhat one-sided. It means, as a start, that Caldwell adds nothing to our biographical knowledge of Hayek: indeed the book is remarkable for its paucity of biographical information. But there is another problem it shares with the other products of the Hayek “industry.” Hayek was an academic. He taught, took part in seminars and had colleagues and students, some of whom became quite distinguished. Yet this world seems to have had relatively little effect on Hayek’s intellectual development after Vienna (and he seems to have had surprisingly little effect on those around him). Caldwell makes one very good attempt to trace Hayek’s possible influence on Lionel Robbins in the transition from the first to the second editions of the latter’s An Essay on the Nature and Significance of Economic Science (1932/35) but there is no attempt to consider influences running the other way. The discussion of the socialist calculation debate and related papers such as his March 1933 inaugural lecture “The Trend of Economic Thinking,” is carried on with a sample of the relevant literature that is more limited than Hayek’s own evolving reading lists for his course “The Problems of a Collectivist Economy” offered from 1933-34 until 1939-40 and published in the LSE Calendar. In the same context, there is no mention of the Robbins/Hayek/Plant seminar of 1932-33 which, according to the Calendar, “will be chiefly devoted to discussions of Collective Economics. Attention will be given to the theoretical problems of pure collectivism and to applied problems of mixed economies.” Given that one of the members of and a frequent contributor to that seminar was Abba Lerner, who was writing a Ph.D. thesis on “The Economics of Control and the Price System of a Socialist State” under Hayek’s supervision, one wonders about possible influences and interactions, as did Alan Sweezy visiting his brother Paul in April 1933 when he speculated in a letter to Gottfried Haberler on the reactions of Robbins, Hicks, Kaldor and Hayek to a paper by Lerner on “The Optimum Price” scheduled to be delivered to the seminar on 1 May. Similarly, in the discussions of the origins of the abuse of reason project, part of which included The Road to Serfdom (1944), we get mention of Karl Mannheim, then an LSE sociologist but not, surprisingly, of his colleague Evan Durbin, who was intellectually closer to Hayek and whose lecture course on “Economic Planning in Theory and Practice” was listed immediately below Hayek’s “The Problems of a Collectivist Economy” in the LSE Calendar from 1935-36 onwards. Durbin later became a Labour junior minister.

One could mention other frustrations that might irk other readers, but one should congratulate Caldwell on a finely nuanced addition to the literature of which he has such a fine command. The study represents a landmark in studies of Hayek and the development of Austrian economics for either of which it will long remain essential reading.

D.E. Moggridge is Professor of Economics at the University of Toronto. He is currently engaged on an edition of the correspondence of D.H. Robertson for the Royal Economic Society and a biography of Harry Johnson.