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

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Summary: Caldwell, B. Hayek's Challenge
Review: On the plane to and from the Southern Economic Association meetings in San Antonio (including a 3 hour delay in Dallas on the way home) in November I had the opportunity to read the best book written in Austrian economics in a generation -- Bruce Caldwell's Hayek's Challenge (University of Chicago Press, 2003). Caldwell, as to be expected, is a master historian of thought and constructs a narrative of Hayek's evolution of as a thinker that is simply better than any alternative account. And, in the process, Caldwell tells the story of the development of Austrian economics from Menger to today better than I have ever seen. This is a phenomenal work of scholarship and a beautifully written book. The book represents the history of economics as it should be written --- a subtle treatment of economic doctrine, contextualization of the evolution of argument within its broader history of philosophical, political and economic debates, and engagingly written. As far as economics goes, this book is a page turner. It is nothing short of a brilliant. Bruce Caldwell has written, in my opinion, the best book in economics for 2003.

Rating:
Summary: Amazing bio of an amazing thinker!
Review: Tasked with the need to understand a contemporary, conservative thinker in a doctoral course on social justice, I was enriched by the professor's suggestion that I focus on Hayek. In due course I came upon this book by Caldwell. I wish to echo the earlier reviewers praise - this book is everything an intellectual history should be. The reader will become intimately familiar with the historical antecedents to Hayek, the academic, cultural, and historical milieu in which he worked, and the likely future his ideas will have.

I approached this book as a complete novice. I had never heard of Hayek, and frankly, reading this book stretched my 18 hours of undergraduate economics about as far as they could be stretched, but I was left with an astonishing respect for this economist turned political theorist. How is it possible that Hayek could have escaped my notice for 50 years?

One hundred and thirty pages are devoted, not to Hayek, but to Austrian school economics (i.e. - subjective value, marginalism, entrepreneurship) and its founder Carl Menger. Caldwell introduces key figures in the Austrian school at length (Bohm-Bawerk, Wieser, and Mises) as well as the chief protagonists of the school (German historical, socialism).

Into this fray comes Hayek, an ambitious but not a particularly aggressive academic. Any attempt at summarizing Hayek's thought is easily criticized, but from my personal perspective, Hayek seems to have been a master at synthesis. He linked what today would be called cognitive psychology with philosophy to produce an epistemology that is foundational to all his subsequent work. Further, he linked this epistemology with social evolution to explain social advance, social stability, and social institutions and values.

Epistemologically, Hayek understood human beings to possess a subjective ignorance. He denounced the "rational economic man" as a fiction, but asserted the importance of the free market supply/demand pricing mechanism. Without this pricing mechanism, economic planning was doomed to inefficiency and competitive disadvantage while the individual was cast adrift without any objective anchors with which to make decisions. Without the freedom to pursue subjective goals, however ignorant, there was no individual liberty.

It was from the random and chaotic subjectively ignorant decisions of the individual that social institutions evolved (i.e. - order out of chaos). The fittest of these social constructs prevail over time and form the framework of stability essential for the maintenance of a free marketplace and for the subjective projection of future value.

Hayek was awarded a Nobel Prize for economics in 1974 and the American Medal of Freedom in 1992 by then president George Bush, Sr. After spending a semester reading about this man and his ideas, I have become convinced that Hayek is a foundational thinker undergirding the conservative resurgence in America during the past 40 years. It is unlikely that there will ever be a finer intellectual biography than that provided by Caldwell. Everyone interested in social policy, social justice, and contemporary trends should become familiar with this book.

One last warning, Caldwell writes as an academic for academics. Footnotes abound, and there are four appendices directed at specialists. A lay reader will frequently realize that he cannot appreciate all of the subtle points that Caldwell is making. Despite these facts, this is a readable book worth the effort.