Friedrich Hayek Quotes

The illiterate expression ‘given data’ constantly recurs in Lange. It appears to have an irresistable attraction to mathematical economists because it doubly assures them that they know what they do not know. It seems to bewitch them into making assertions about the real world for which they have no empirical justification whatever.

We do not owe our morals to our intelligence: we owe them to the fact that some groups uncomprehendingly accepted certain rules of conduct — the rules of private property, of honesty, and of the family — that enabled the groups practising them to prosper, multiply, and gradually to displace the others.

Since only actions aimed at perceived benefit to others were, to Aristotle's mind, morally approved, actions solely for personal gain must be bad. That commercial considerations may not have affected the daily activities of most people does not mean however that over any prolonged period their very lives did not depend on the functioning of a trade that enabled them to buy essentials. That production for gain which Aristotle denounced as unnatural had -- long before his time -- already become the foundation of an extended order far transcending the known needs of other persons.

Altruism is an instinct we've inherited from the small society where we knew for whom we work, whom we serve. When you pass from this, as I like to call it, 'concrete society', where we are guided by what we see, to the abstract society which far transcends our range of vision, it becomes necessary that we are guided not by the knowledge of the effect of what we do, but by some abstract symbols. Now, the only symbol which tells us where we can make the best contribution is profit. And in fact by pursuing profit, we are as altruistic as we can possibly be, because we extend our concern to people who are beyond our range of personal conception. This is a condition which makes it possible to produce what I call an extended order, an order which is not determined by our aim, by our knowing what are the most urgent needs, but by an impersonal mechanism which by a system of communication puts a label on certain things which is fully impersonal.

Our whole modern society, based on a far-ranging division of labour, is, however, essentially dependent on two factors that conflict with our natural instincts. The first is the assumption, implicit but not understood, that we can do more good to unknown people if we follow the impersonal signals of the market, which enable us to serve the needs of people whom we do not know and to make use of opportunities and facilities with which we have no direct acquaintance. The second is that for this purpose we can follow our own individual aims with freely chosen associates and are not bound to serve the concrete ends of the group into which we were born.

What all this amounts to, then, is that the Rule of Law requires that administrative discretion in coercive action (i.e., in interfering with the person and property of the private citizen) must always be subject to review by an independent court which is not an instrument of, or even privy to, the aims of current governmental policy; that its review must in all such instances extend to the substance of the administrative act and not merely to the question whether it was infra or ultra vires; and that, if such a court finds that the rights of private citizens have been infringed, it will assess damages just as if the right of this person had been violated by another private citizen. This, in addition to the familiar requirements of generality, equality, and certainty of the law is really the crux of the matter, the decisive point on which it depends whether the Rule of Law prevails or not.

There is no salvation for Britain unless the special privileges granted to the trade unions in 1906 are revoked. The average level of real wages of British workers would undoubtedly be higher, and their chances of finding employment better, if the wages of different occupations were again determined by the market and all limitations on the work an individual is allowed to do were removed.

My life has been dominated by my differences with John Maynard Keynes. That turns almost wholly on the - I believe, false - conviction that there is a simple relationship between aggregate demand for consumer goods and the volume of employment. Keynes was one of the most intelligent people I knew but he understood very little economics. He must not be blamed for his disciples. He knew the danger of inflation.

Since the value of freedom rests on the opportunities it provides for unforeseen and unpredictable actions, we will rarely know what we lose through a particular restriction of freedom.

The newfangled word monetarism means of course no more than the good old “quantity theory of money”, as it was formulated in modern times by the late Professor Irving Fisher and reformulated by Professor Milton Friedman. Of this I said nearly 50 years ago in the first lecture I delivered in this country that “from a practical point of view, it would be one of the worst things which could befall us if the general public should ever again cease to believe in the elementary propositions of the quantity theory”. This was, however, unfortunately brought about by the seductive theories of Lord Keynes. I then said that it was in many respects a crude over-simplification, but the irrefutable chief content is still that inflation is always and everywhere the effect of an excessive supply of money and that it can be cured only by a restriction of its supply.

I am now profoundly convinced of what I had only hinted at before, namely, that the struggle between the advocates of a free society and the advocates of the socialist system is not a moral but an intellectual conflict. Thus socialists have been led by a very peculiar development to revive certain primitive instincts and feelings which in the course of hundreds of years had been practically suppressed by commercial or mercantile morals, which by the middle of the last century had come to govern the world economy.

What I expect is that inflation will drive the Western countries into a planned economy via price controls. Nobody will dare to stop inflation because to discontinue inflation will inevitably cause extensive unemployment. So assuming inflation stops it will quickly be resumed. People will find they can't live with constantly rising prices and will try to control it by price controls and that of course is the end of the market system and the end of the free political order. So I think it will be via the attempt to regress the effects of a continued inflation that the free market and free institutions will disappear. It may still take ten years, but it doesn't matter much for me because in ten years I hope I shall be dead.

The treatment of the South Tirolese by the Italians, even before the advent of Fascism worse than anything known until then in modern times in any part of Western or Central Europe, has made the population more unwilling than ever to endure it further.

Both altruism and solidarity are very strong instincts which guided man in the small group. We were serving known other persons when his efforts were directed to the needs of familiar people. Now we have grown as rich as we are because we have replaced this by a system where we no longer work for the known needs of known other people, and no longer use the known assistance of other people, but where our effort is completely guided by price signals, which for the individual means that I must use my resources for the maximum success of what resources is sacrificed for the purpose, but the justification is not my benefit but in this way I benefit my fellow man most. So it does happen that so far as commercial activities economic activities are concerned we will benefit our fellow man most if we are guided solely by the striving for gain. We are then completely free how to use what we have earned and there of course the desire for being altruistic come in very strongly, but not in the ordering principle of our society.

The sentence, 'stopping the printing presses,' is a figurative expression, because it is being done now by creating credit by the Federal Reserve System. But this is government action — all inflation is ultimately the result of activities which government determines and can control. And all inflations have been stopped in the past by the government stopping creating money, or preventing the central bank from creating more money. May I add just one thing? See, all inflations have been stopped by people who created or believed in a very naive form of the Quantity Theory, and acted on that. It may be wrong, but it is the only adequate theory effective to stop an inflation.