When the Institute for New Economic Thinking funded with $50 million from George Soros convenes its inaugural conference April 8 at King's College, Cambridge University, speaking at the opening night dinner will be Bruce Caldwell, who is the director of Duke University's Center for the History of Political Economy, the general editor of The Collected Works of F.A. Hayek, and the author of Hayek's Challenge: An Intellectual Biography of F.A. Hayek.
FutureOfCapitalism.com interviewed Professor Caldwell by phone this week. I began by asking him about the recent surge of interest in Friedrich Hayek, the Austrian economist who died in 1992. I mentioned the rap video of actors playing Hayek and John Maynard Keynes that has attracted more than 700,000 YouTube views, the establishment of an annual Hayek Lecture at the Manhattan Institute with a $50,000 honorarium, a Bloomberg News column by Amity Shlaes pronouncing the years ahead to be "The Decade of Hayek," and the annual letter from the chairman of Sears Holdings Corporation, Edward Lampert, in which Mr. Lampert wrote, "The two most important books that any student of current events should be reading in this environment are both by Friedrich Hayek, the esteemed Austrian economist." I could have also mentioned John Stossel's latest column, Hurtling Down the Road to Serfdom.
"It all started with the fall of the East Bloc and Soviet Union," Mr. Caldwell said. Until then, though Hayek's Road To Serfdom had been a bestseller when it was published in 1944 and Hayek had won the Nobel prize in 1974, "the Austrians were not taken seriously" by the rest of the economics profession. But after the Soviet Union collapsed, things started to change, both in university economics departments and in the popular press. The New Yorker ran two articles on Hayek, one by Robert Heilbroner saying Hayek had been right about the Soviet Union and another by John Cassidy saying, "it is hardly an exaggeration to refer to the twentieth century as the Hayek century." Public television broadcast a series, Commanding Heights, based on a book by Daniel Yergin and Joseph Stanislaw, that devoted its first episode to the debate between Hayek and Keynes.
Pressed about the more recent interest in Hayek, Mr. Caldwell might have responded with a line from his book – that demand for the services of economists, as for those of undertakers and therapists, is highest when times are bad. He did say that with the landscape of the United States littered with houses that no one will live in and no one will buy, it makes sense for there to be heightened interest in the Austrian theory of the business cycle, starting with the basic point that interest rates below a "natural rate" lead to mal-investment.
I asked how progress is proceeding on the publication of Hayek's collected works. Mr. Caldwell said he spent the first few years after taking over as general editor of the project in 2002 trying to raise money to pay honoraria to volume editors. With backing from the Earhart Foundation and the Goodrich Foundation, six different editors are now toiling away on individual volumes, and Mr. Caldwell said he hoped that within five years the entire set will be complete. Ten of the projected 19 volumes have already been issued. Coming soon: Hayek's Constitution of Liberty in an edition edited by Ronald Hamowy, who was a student of Hayek's at the University of Chicago when Hayek was writing the original. Mr. Caldwell said he hopes the book will be out by year-end, which will make it 50 years since Constitution of Liberty was originally published in 1960. Each volume in the collected works includes a scholarly editor's introduction putting the work in context, as well as explanatory footnotes. The top seller is Road to Serfdom, which has sold more than 40,000 copies since the Collected Works edition was issued in 2007. (The Hayek Estate and Mr. Caldwell split the royalties, he said.)
The "Big Four" Hayek works, Mr. Caldwell said, are Fatal Conceit, Road to Serfdom, Constitution of Liberty, and Law, Legislation, and Liberty. I asked him what he'd recommend for someone interested in Hayek who had already read Fatal Conceit and Road to Serfdom, and he recommended chapters from Constitution of Liberty and Law, Legislation, and Liberty, as well as Hayek's essay The Use of Knowledge in Society, which Mr. Caldwell called "brilliant." For Hayek's business cycle theory, Mr. Caldwell said readers may be better off reading a description of it written by someone else, such as Roger Garrison's book Time and Money.
For those interested in exploring Austrian economics beyond Hayek, Mr. Caldwell suggested Ludwig von Mises's book Human Action, as well as the Web sites of the Von Mises Institute and the Online Library of Liberty.
What would Hayek have thought of ObamaCare? "He, of course, would have opposed it," Mr. Caldwell replied. F.A. Hayek's son Laurence was a physician in Britain, and Caldwell last saw him in 2004 "just railing about the National Health Service over there." Though Mr. Caldwell also pointed out, "Hayek always said there should be a safety net."
Mr. Caldwell's own interest in Hayek came not through political thought but through Hayek's work on the limits of economics. Hayek is known for his critique of socialism and his understanding of how a market system coordinates dispersed knowledge. But he also had the insight that, when dealing with complex phenomena, social science can make pattern predictions, but not precise predictions.
Mr. Caldwell gave up a tenured position at the University of North Carolina, Greensboro in the Summer of 2008 to come to Duke and start a center for the history of political economy with a five-year grant from the John W. Pope Foundation. "I'm actually among the group that thinks getting rid of tenure isn't a bad idea," Mr. Caldwell said. Duke was a good fit because it already had four other people working on the history of economics, it was home to the journal History of Political Economy, and its library is home to the Economists' Papers Project, which includes the papers of Paul Samuelson, the American Economic Association, Douglass North, Kenneth Arrow, Carl Menger, and many other eminent economists.
I asked whether Austrians popular on the political right with names like Friedrich and von Mises are faced with popular resistance. "You run into it all the time," Mr. Caldwell chuckled. He supplied two anecdotes. Though Hayek spent World War II in England risking Nazi bombs, after the war, Britain's Labor opposition attacked Winston Churchill by saying Churchill is getting his advice from Friedrich Von Hayek, emphasizing the Germanic aspects of the name, as if Churchill himself were somehow under fascist influence. Another time, Mr. Caldwell was seated at a conference next to a woman who asked, "Was Hayek supportive of the fascists?" Mr. Caldwell explained that, actually, Hayek had been quite critical of the Nazis. "She gives me one of those long looks, like, 'Oh, really.'"
Said Mr. Caldwell: "The best way to counter it is to talk about liberalism, classical liberalism."
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