Friedrich August Hayek has been hailed as one of the preeminent economists from the latter half of the twentieth century. His work on monetary theory and the interdependence of economic, social, and institutional phenomena won him a Nobel Prize in 1974, and his writings from the early twentieth century is still read heavily by graduate economic students today.
Besides his Nobel Prize work on monetary theory and interdependence, Hayek was one of the pioneers and strongest advocates for the Austrian school of economics, along with Gottfried Haberler and Fritz Machlup. Furthermore, after becoming the director of the Austrian Institute of Business cycle research, Hayek became a professor at the London School of Economics.
Beginning in the 1920s, and progressing through the 1940s, Hayek’s work on business cycles, capital theory, and monetary theory as well as the connection between the three brought him international acclaim. According to Hayek, markets evolve due to people- that is to say, markets were never planned, they came to be due to the actions of people involved in the markets. His theories on business cycles caused him to become well acquainted with the work of John Meynard Keynes.
The two battled over the differences in their economic theories, with Keynes an obvious proponent of Keynesian policies, while Hayek believed Keynes’s policies to combat unemployment would inevitably lead to unemployment.
Following his work on business cycles, Hayek turned to the study of social planning, concluding it could not work, as data is necessary to create a functioning market, but it is the markets themselves that generate data. If there were no markets, there would be no data. Hayek turned to combat the growing socialist sentiment in Britain following WW2, in his book The Road to Serfdom (Which you can read for free here, provided by the Mises Institute). It was then one of his strongest opponents, Keynes, who gave him the most praise for his anti-socialism work.
Following his Nobel Prize win in 1974, Hayek became more radical and began to advocate for the denationalization of money, as an early proponent for the idea behind digital assets. Hayek argued privatized enterprises distributing currency would incentivize them to keep up their purchasing power, as users could choose between different currencies. Hayek pioneered the ideas behind the denationalization of currencies, and his theories can be seen in use today across digital assets.
You can watch his take on the denationalization of money here:
Originally published at https://blog.ampleforth.org on May 21, 2019.