Hayek; A Life, 1899–1950 Hayek; A Life, 1899–1950 , by Bruce Caldwell and Hansjörg Klausinger, Chicago, University of Chicago Press, 2022, 824 pp., US$50. ISBN: 9780226816821

Abstract

Click to increase image sizeClick to decrease image size Notes1 An exception is when bravely trying succinctly to explain Hayek’s macroeconomic theory of the business cycle, viewed through the lens of capital theory and intertemporal equilibrium, and with its mysterious tangle of not only the distortions in the structure of capital, but also the importance of ‘forced saving’ and the rolling effects claimed to result from money creation. Kahn’s pointed question (282–3) about whether buying an overcoat would, as Hayek reasoned, worsen the 1931 slump was highly to the point. However, it’s not fully clear whether it was posed in the theoretical context of the upper turning point of an unsustainable boom or instead during the deflationary overshooting of the contraction phase, ‘the secondary contraction’. If the former, Hayek might make some sense, but not in the latter. Rejecting an indiscriminate use of Keynesian stimulus suggests that discriminating use is potentially acceptable (267).2 Titbits include the possibility raised by Crauford Goodwin that Keynes’s economics came to America before 1936 via Walter Lippman (452). Mythbusting: 277–8, on how Robbins supposedly invited Hayek to the LSE ‘to serve as a counterweight to Keynes’; 284–5, on Hayek predicting the Great Depression; 495–6, on how Keynes and Hayek stood together as air raid wardens on the roof of King’s College.3 Indeed, Richard W. Staveley, who taught at the University of Queensland and influenced several of its graduates in the latter decades of the last century, regarded Keynes’s allusions to business and political practicalities as evidence of a firm Aristotelian grounding for Keynes’s economics, politics, and philosophy.4 Keynes’s sympathetic, though qualified, assessment (531) of Hayek’s 1944 The Road to Serfdom invites the firm inclusion of Keynes (of 1945) in the progressive liberal camp (455), especially given his defence of free trade when an effective global financial architecture had been devised. Indeed, I wonder whether Hayek might have invited Keynes to Mt Pelerin had Keynes lived.