Hayek: A Life, 1899–1950 by Bruce Caldwell & Hansjoerg Klausinger - review by Alan Ryan

Alan Ryan

The Road to Stardom

Hayek: A Life, 1899–1950

By

University of Chicago Press 824pp £35
 

Hayek ends on something of a cliffhanger. Friedrich Hayek is about to leave Britain and his recently divorced wife, Hella, in order to embark on a new career as part of the University of Chicago’s Committee on Social Thought with his second wife, Lenerl. The final few chapters of this often engrossing but often baffling book read, indeed, somewhat like a high-grade soap opera, with Hayek engaging in complicated manoeuvres to obtain a no-fault divorce – unobtainable in Britain at the time – from the absolutely unwilling Hella.

But we should begin at the beginning. Friedrich August von Hayek was born in Vienna to a family of the so-called ‘second society’ – upper middle class, but permitted to use the aristocratic ‘von’. His father was a state-employed physician and a professor of botany. As a boy, Fritz, as the authors call him throughout, was a far from exceptional student, usually languishing towards the bottom of the class. He was evidently bored, but he had no alternative outlet for his imagination.

He was not without resources, though. He was an accomplished ice skater, an excellent dancer and an avid climber. He had two younger brothers and they spent the summer months in the Tyrol, joined from time to time by their father, August. Among his dancing partners was Lenerl Bitterlich, a distant cousin with whom he became romantically involved after he returned from military service in the autumn of 1918.

The First World War had broken out as he was entering high school, and he ended his school career in 1917, in time to join the Austrian army on a relatively quiet part of the Italian front. Even so, as the authors say, it was something of a miracle that he survived. He volunteered to be an artillery spotter, which involved going up several thousand feet in a tethered balloon, at the mercy of enemy aircraft. What came closer to killing him, however, was the practice descents by parachute, during one of which he almost drowned in the folds of his parachute.

Fritz’s path to becoming an economist was indirect. Entering the University of Vienna in the autumn of 1918, he studied philosophy for two years, then turned to psychology. A passion for both subjects never left him. He eventually graduated with a degree in law, a subject in which the university was particularly strong. His interest in law also never waned; one of his contributions to the field was his argument that the common law was an example of a social institution that was the product of human actions but not of deliberate design and had survived because of its obvious usefulness.

Then came the shift in interest to economics, Hayek embarking on a second degree at the university in political sciences. The authors provide useful background to the genesis and development of the so-called Austrian School, of which Hayek would in due course become a prominent member. Its begetter was Carl Menger in the 1870s, but by the time Hayek had enrolled at the University of Vienna, its leading light was Ludwig von Mises, famous for arguing that it was impossible to make the sorts of calculations on which the centrally organised economy envisaged by Marxists would have to depend. The so-called ‘socialist calculation problem’ is still debated by allies and critics of the Austrian School, as well as by unaligned thinkers exploring the subject of economic planning.

Economics teaching at the University of Vienna was divided between members of the Austrian School, such as Friedrich von Wieser, and its fierce critics, such as Othmar Spann, a staunch adherent of the German historical school, which was institutionalist and anti-individualist in orientation. Hayek and a friend attended Spann’s seminars but after a while were asked to leave on the grounds that their sharp questioning disturbed the friendly atmosphere of the class.

Before embarking on a career as a lecturer, Hayek made a fifteen-month visit to the United States. It is not clear why he wanted to go, though he had earlier made contact with the American economist Wesley Clair Mitchell. He was constrained by a considerable shortage of money, which inhibited his social life and left him without the means to follow his passion for the theatre. He was saved from the necessity of finding work as a dishwasher by securing a fellowship at New York University. But he disliked America. He returned to Austria in 1924 and decided that he would much rather be in Britain.

The chance to move there came some seven years later. In the meantime, he discovered that Lenerl had married someone else, so he married his second choice, Hella. In 1931, Lionel Robbins invited him to give a set of lectures at the London School of Economics and the following year he was appointed Tooke Professor of Economic Science and Statistics there, beginning a career at the university that ended only in 1950, when he left for Chicago.

The authors’ account of Hayek’s career as an economist is not entirely easy to follow, since the intricacies of monetary theory are decidedly opaque, but the outline is simple enough. He and Robbins defended what was beginning to look like an old-fashioned individualist form of economics against ‘Cambridge economics’, or Keynesianism. It was at this time that Hayek began to think of writing a book on the ‘Abuse of Reason’. It would be a critique of what he came to call ‘scientism’, the misapplication of the methods and assumptions of the physical sciences to the social and human sciences. (A version of this project appeared in 1952 as The Counter-Revolution of Science, a short book that engagingly mixes social philosophy and the history of ideas.) Hayek’s period at the LSE also yielded his most famous and controversial book, The Road to Serfdom (1944), a bestseller in the United States when it was condensed in the Reader’s Digest.

Its polemical point was to combat what Hayek thought was ‘the spirit of the age’: an unreflecting faith in planning. Crudely put, the argument was that planning leads to totalitarianism. The argument only really holds good against what one might call total planning, in which all production, distribution and consumption is centrally controlled. The kind of milk and water planning engaged in by the Labour government elected in Britain in 1945 was far from that, but it was enough to make Hayek despair of the country he had idolised. Whether Hayek was guilty of ‘slippery slope’ reasoning is debatable, but in his less inhibited moments he seemed to think that it was the NHS on Saturday and the Gulag the following Friday. That he thought nothing of the sort in his calmer moments is evident from the long list of functions he ascribed to government in The Road to Serfdom, which included much of what any piecemeal welfare state would do.

Hayek was not destined to sit back and enjoy his success. He was obsessed with the thought of spending the rest of his life with Lenerl. On her side, matters were relatively easy. Her husband was willing to give her a divorce whenever she wished. Hella, however, was unwilling even to discuss the question. It is undeniable that Hayek behaved appallingly. Not merely was Hella the innocent party; she had also been an impeccable wife, looking after two children and making it possible for Hayek to be ‘the prof in the study’, sacrificing everything for his work. Now she was to be left alone, a foreigner in a strange country where she had never felt at home.

He alternated bullying with cajoling, driving himself as well as her to the edge of a nervous breakdown. In the end, Hella gave in. In 1949, Hayek took a visiting professorship in Arkansas, where divorce laws were more liberal than in the UK. The following year, he finalised his divorce, married Lenerl and headed for Chicago. It cost him the friendship of Robbins, who declared he never wanted to see Hayek again. It is an unlovely conclusion to an engrossing story.

Hayek is not perfect, in spite of the astonishing hard work and stamina of the authors. Caldwell and Klausinger have aimed at completeness, which leads them to preface accounts of just about any topic with long explanations of family genealogies, politics and conflicting allegiances. That tends to leave the reader struggling to pick up the main thread. This is especially true when it comes to economics, where we learn a lot about the dramatis personae but perhaps too little about the doctrines they were contesting. On the other hand, Caldwell and Klausinger provide as detailed an account of the first half of Hayek’s life as anyone could ask for.

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