You said that he noticed that "when economies were in a recession central banks often artificially injected more money and credit". But actually he noticed that such injection happened *before* the recession, during the so-called boom. His theory of business cycle explains how easy money and credit by central bankers creates such artificial and unsustainable booms, and thus contributes to business cycles (rather than alleviates them).
He says essentially that the Central Bank sets interests rates low, inject unnecessary capital which gets confused for real funds that they borrow at then often injected into poor Investments.
@@MTCoblivsicas12345 which is exactly what's been happening for years nowadays and we have ended up with a corporate bond market of over 60% in the speculative-grade (Baa Moody's and/or BBB S&P) range, a first ever in history (if I'm not mistaken about the latter). For sure the worst ever in the past few decades.
***** It mentioned so much "neoliberalism", an ideology which Hayek rejected: for him, he was a classical liberal in the tradition of Locke, Smith and Hume.
Just fyi there are better justifications for your point. It is a gross simplification that Hitler "came" to power... it is well documented that the WP/Nazis seized it by force and intimidation.
@@commentconnoisseur1001 You need A*AA if you're in the UK and a very good Personal statement. My PS had lots of smart economic history references that show a great depth of knowledge.
Wrong, I have only met professors at the LSE (with the exception of one individual), which were very proud of the Fabian Society. If they mentioned Hayek, they critizised many of his ideas.
K. It's not free. You don't want it to be free, by the way. It's created in a environment of minimal barriers, so that a huge number of people get to watch a content you choose. It's called advertising space. It works poorly for AAA videogames, for example, but works wonderfully for the kind of content that is offered at youtube. It feels like free and it makes a lot of great content available to millions of people. It' extremely clever.
Went to my university's library today. An entire shelf dedicated to Marx's works. Not one copy of On the Road to Serfdom in the entirety of the economics and political theory sections.
As someone who has read everything by Hayek, let me correct you. He was never comfortable with authoritarian dictators as long as they left the market free, his stance was that if Rule of Law and not of men. Dictators are not compatible with that vision, only democracy is, a democracy restrained by Laws.
1913 , Vienna park , the old emperor is having his usual morning parade , a wretched artistic vagrant sit next to a swarthy foreigner ....the vagrant said , there is cops watching you ....I know my name is Hitler , I want to go to the art academy , what is yours just call me Stalin , I want to blow the world
Honestly, that’s probably the way it was. So many would assume that they had this weighty private debate through the night, when it’s just as likely they chatted about rationing, professional gossip, and their health.
"Capitalism is awful!"--they said watching a RUclips video, on their Apple laptop, sitting in their two story home, feeling the cool breeze of the air conditioner, before entering their pantry filled hundreds of food items
And perfected by innovative entrepreneurs in Silicon Valley where 17 companies are producing revenue in the billions and working more efficiently than any state-operated initiatives
Nishanth K Of course. Even if you don't agree with everything he says, to dismiss him as "Hayek for cunts" is completely ignorant and condescending. Mises was truly a brilliant intellectual.
This is unexpected to me. Pleased to see TSOL taking some thinkers from all over the political spectrum. Good choice and may you guys do this more often.
Mtn. K. Yes, there was a time long ago when we could discuss things with people whom we disagreed with, without it breaking down into screaming ad hominems at one another. I know, sounds crazy but it’s true.
I was born in Romania, my parents are from a working class and I am from a working class family, yet I find it amazing that I get to live in Vienna and even study at the University of Vienna, such an honor trully.
I find Hayek interesting. He has a very different idea of liberty to myself, but it is good to understand this viewpoint, because it then enables you to see why so many people argue around this idea of 'liberty' - because there are so many competing different ideas of what it means.
Manos Biermann So did Hayek. He still believed into a safety net. And the assumption that believers of free markets simply hate the poor is both myopic and insulting.
Eric B Friedman was not ok with the poor dying in fact his ideologies on competitive capitalism helped keep people from becoming poor... before you make such a bias statement I would suggest knowing what your talking about : )
@@condaquan9459 Yes! Friedman's ideologies are about fostering a strong society where the poor get out of poverty with generations of endeavors. Financially helping the poor is cheap help, which only fulfills the poor's materialism without enhancing their minds. Ironically, the living standards of the poor in America is pretty high.
Overall a fair review of Hayek, although I do take issue with your statement that he was comfortable with dictators in some way or another, which is clearly not true. It is a different matter to say that a dictator who let's markets work to a greater degree than one who does not is clearly better, but in no way is that *good*.
@@pocojoyo Sure his book is titled "The Road to Serfdom" and his other book was called "The constitution of liberty" , but he doesn't care about freedom.
@@happy_thinking he cares...about freedom of markets being a fundamentalist. The freedom of people through markets is a laughable idea. And yes Hayek oposed only the authoritarian left. not in fact every authoriatarian political figure. austrian economic cult is about being a hypocrite
@@Doomlike7 I don't think we have the same view on Hayek. If you read his book The Road to Serfdom you will agree that Hayek was a man who thought and cared deeply about freedom and like other libertarians he thought that political freedom is not possible without economic freedom. I think many people, you included don't see the whole picture when discussing Hayek. Hayek doesn't say that free markets are the cure for everything wrong in the world, what he does say is that free-market capitalism is a prerequisite for freedom. This still means you need to have a reasonable code of conduct or in other words respect for the law and constitution of the country, but this is very hard or impossible in collectivist societies or societies which are capitalist in name only. P.S There are other things worth mentioning, but i will stop here.
@@happy_thinking dictators that hayek didnt oppose whatsoever had a respect for the law and constitution; In defence of dictatorship Woodcut from a Diggers document by William Everard. Wikimedia Commons. Hayek intended his writings to serve as a wake-up call to defenders of liberalism. When such defenders took actions in support of private property, Hayek was unashamed in his support for them. In 1973, General Pinochet launched a coup against the democratically elected socialist government of Salvador Allende in Chile, and instituted a dictatorship under which thousands of trade unionists were tortured and murdered. Hayek wrote an infamous letter to The Times defending the coup in the following terms: “I have not been able to find a single person even in much maligned Chile who did not agree that personal freedom was much greater under Pinochet than it had been under Allende.” Hayek later described Allende’s administration as the only totalitarian government in Latin America. He couched his defence of Pinochet in a broader context of supporting democracy only insofar as it contributes to the formation and maintenance of a liberal market order: “In Modern times there have of course been many instances of authoritarian governments under which personal liberty was safer than under democracies”. He offers Salazar’s “early government” in Portugal as an example and suggests that there are many democracies in Eastern Europe, Africa, South America and Asia that fail to protect personal liberty. Hayek influenced Margaret Thatcher, and via her, many contemporary conservative party politicians and ideologues including those at the helm of the current conservative party in Britain. In another letter to The Times entitled “the dangers to personal liberty”, he endorsed Thatcher whilst restating his claim that the marketplace is “indispensable for individual freedom” while the ballot box “is not”. To be sure, conservative neoliberals in advanced capitalist countries such as the UK and USA did not use military coups to undermine democracy. They were able to use the parliamentary structures established during the previous century to do so. Hayek sees liberalism and democracy as potentially compatible. But he also sees the former as compatible with authoritarianism. “It is at least possible in principle that a democratic government may be totalitarian and that an authoritarian government may act on liberal principles”. Liberalism does not, therefore, require democracy. For modern liberals the protection of private property and the ability to do with it what one wishes is paramount, while political democracy is desirable but not essential. “The progressive displacement of the rules of conduct of private and criminal law [i.e. negative freedoms] by a concept derived from public law [positive freedoms] is the process by which existing liberal societies are progressively transformed into totalitarian societies.” (Hayek, 1966). For him trade unions represented the greatest threat to the implementation and operation of liberal principles: The “monopolistic practices which threaten the functioning of the market are today much more serious on the side of labour than on the side of enterprise.” Hayek’s opposition to organized labour was expressed through his support for dictatorships. Two traditions of liberalism Hayek begins by contrasting two traditions of liberalism. The first, his favoured one, emerged in the England of the Old Whigs from the mid to late seventeenth century and was fortified by the theories of Edmund Burke, John Locke and Adam Smith. The second was a continental European product elaborated theoretically by writers such as Voltaire and Rousseau. The first tradition of liberalism is “inseparable from the institution of private property”. It has its roots in human nature. It is superior to any form of centralized state planning. It: “[D]erives from the discovery of a self-generating or spontaneous order in social affairs…an order which made it possible to utilize the knowledge and skill of all members of society to a much greater extent than would be possible in any order created by central direction…” (Hayek, 1966). For Hayek, the second, continental tradition of liberalism advanced by writers such as Voltaire and Rousseau points in a fundamentally different direction. There is a straight line from it, to what he labels, the totalitarian politics of the French revolution and modern socialism. Through democratic practice, this tradition attempts to subordinate society to a set of political/normative objectives. Under such conditions, individuals are no longer free to do as they please, and certainly not free to use (or even own) their property in ways they see fit. Hayek argued that this tradition of liberalism “has in effect become democratism rather than liberalism and, demanding unlimited powers of the majority, has become essentially anti-liberal”. Hayek’s concern was to defend the first tradition of liberalism in a global context of increasing state intervention and control over the economy, in which he argued, it was being increasingly undermined. To do so he distinguishes between what are often labelled negative and positive freedoms. The former refers to freedom from constraint, the latter to a process whereby individuals are enabled to fulfil their potential. The roots of Hayek’s liberalism Hayek posits that whilst a liberal market order is paramount, it does not require political democracy: “Liberalism and democracy, although compatible, are not the same. The first is concerned with the extent of governmental power, the second with who holds this power". Hayek identifies the roots of what can be labelled private property-based liberalism as emerging in England following its “glorious” revolution in the mid-seventeenth century. This was a period when the Old Whigs’ political party was politically and ideologically dominant. During the English revolution they had sided with parliament against the King, Charles I, and his feudal supporters. They were opposed to Charles’ attempts to raise taxes arbitrarily. They wanted tax raising powers to be more fully subordinated to parliament, which was itself dominated by the landed gentry. In short, they aimed to limit the state’s ability to interfere in the private affairs, and the property of, the emergent agrarian capitalist class. The Old Whigs sought to justify intellectually the strengthening of private property rights over previous forms of property, including common property. The latter, for example, granted peasants access to public lands, without requiring them to have a defined individual property right over them. Private property in land granted the rapidly expanding landlord class rights to do with the land what they pleased, free from state interference. More significantly, it freed them from any obligations to the peasantry and emerging agricultural labour forces, which had previously worked and depended upon the land for their subsistence. The strengthening of private property in land was achieved through mass enclosures of previously common land, the expulsion of its inhabitants, and its transformation into private property. The Old Whigs fought tooth and nail against political organisations such as the Levellers and agrarian socialists such as the Diggers during the mid-seventeenth Century. These organisations aimed to establish equality before the law, equitable land reform and an expansion of public common land. They also aimed to establish political democracy, to ensure the rule of the majority for the majority. Such a system would guarantee that public land (amongst other things) could not be transformed into private property. For the Old Whigs these visions of popular democracy were antithetical to private property. The Old Whig antipathy to popular democracy on the one hand, and support for private property rights on the other, stands at the core of Hayek’s political philosophy. From this starting point he theoretically de-links liberalism and democracy. This move is designed to a) explain how liberalism can exist without democracy, and b) to limit, significantly, democratic influence over a liberal private property based market order. Hayek’s advocacy for negative freedoms over positive freedoms logically limits democratic content. If governments want to guarantee a liberal market order then they must guarantee negative but not positive freedoms. By default then, they are precluded from implementing widespread social programmes designed, for example, to redistribute wealth, power and property towards the poor. These policies would necessitate imposing obligations upon society in order to pursue a designated outcome. Such actions, according to Hayek, represent the first steps towards totalitarianism. Liberal freedoms would be undermined as society is forced to submit to an 'artificial' (i.e. planned) overarching objective, as opposed to benefitting from the free play of the natural, spontaneous market order. Hayek was "pro-freedom" only when it suited his ultra-conservative narrative and markets fundmendalism. Nothing more nothing less. A hypocrite Austrian like the rest of them. P.S i have read road to serfdom twice. enjoyed it...it has nothing to do about the real meaning of freedom.
Hayek's work is important for the discussion of economics and politics. Personally he was not such a nice man. I have first hand knowledge of this because my father (+) was his lawyer in Hayek's Austrian years. The professor wanted to make some money selling a part of his library to the University of Salzburg (not a very good university, even now). The transaction did not happen also because it would have been extremely complicated. The famous professor did not believe this and he did not believe my dad explaining it in detail to him. Some nasty remarks were exchanged. I still remember when Dad came home, completely exhausted from the discussion with Professor Hayek. Conclusion: The reality is not always like lovers of theory want it to be. It bites even great minds.
@Levis. H I'd say "some aspects of socialism" is actually an understatement. The only difference between Hitler and Mussolini against Stalin is that having lost the war, their scope in the eyes of history limits to defeated warlords, but the truth is, if they had won, roles would be inverted, placing Hitler as a major socialism trademark.
@Levis. H The video puts Mussolini's face there, and is half right. At the beginning of the fascist regime Mussolini indeed did support laissez faire. But of course to hold a strong grip over a nation, especially in times of preparation for a war, he had to change his strategy and go back to his "old" view (socialism) and he ended applying the most important social reforms in Italy of last century, with one of the highest levels of state intrusion in the economy ever seen by Italians. To push for nationalism, he even ended up promoting autarchy, which for many reasons was unachievable in Italy.
@@necroyoli08 I think you're wrong. What you are doing is assuming there really only are capitalism and socialism and no third position. Hitler actually won an intern strive in the Nazis party AGAINST hardcore socialists who wanted to totally expropriate businesses and transform Germany into an socialist farming society (The Strasserist wing as well as the Röhm wing of the SA). Therefore all of the top business owners in Germany actually SUPPORTED Hitler because they feared a takeover of the communists wether they were in the communist party or in the NSDAP itself. IF Hitler would have been a radical socialist he could have never rise to power.
@@Lolux1701 The fact that Hitler didn't support a communist party doesn't make him any less communist. Moreover, in a free enterprise system the market is clear from state intervention, in contrast to communist societies like Nazi Germany according to your own argument. The deal with Hitler wasn't to expropriate buisness because party members owned most of them and could easily control the rest through state force. Same animal, different name.
To anyone who is not that big a fan of markets, please don't be turned off by Hayek. Even if you don't agree with him, he is still a very stimulating thinker. People from many disciplines and political backgrounds have enormous respect for his work. He is very much worth looking into.
I decided to abandon economics after my undergrad degree because it was so utterly clear that the field disregards Austrian thinking as a sort of quackery...or simply irrelevant. Fundamentally it's the only school I agree with, and still don't understand why no serious academic institute takes it seriously. I suppose it's because economics is tied to political outcome, and since WWII we've moved more and more into Keynesian territory? Very sad for me still, it's works like the Road to Serfdom that made me love the subject in the first place!
It's because its very incomplete, its assumptions questionable, and it's aversion to mathematical models means it doesnt incorporate the latest discoveries well if at all.
Austrian school of thought is very important in economics, practically it hasn't been applied but it's a very important topic for economics students and in capitalism too. The one that is ignored in economics is those Marxism, socialism kinda stuff
Hell I’m somewhat sympathetic to Keynes but the mainstream idea to simply disregard the opposition is itself utter quackery. Hayek and others within the Austrian school of economics make valid points about not only the economy but also the drawbacks contemporary politics could have on it and thus should essential to at least be familiar with their train of thought. The problem with Academia, at least from my perspective, is has devolved into some sort of dogmatism that stifles the debate which in the end is ultimately counterproductive.
@@yydd4954 I’m studying economics right now and I’m telling you, at least where I’m at, Marxism and Socialism are not being ignored whilst I had to study Hayek in my free time
@@geminix365 central banks are supposed to supervise the banking system and draw levers like manipulating interest rates and printing currency when there's a need to do so. Negative interest rates came to be (as far as I have gathered) because sovereign debt would become unsustainable if the rates were still "real" (aka positive). This creates a torrent of other distortions like capital allocation to startup companies (most of which end up bankrupt) and zombie companies refinancing their unsustainable business models and corporate debt. That's where we are now.
@@C_R_O_M________ ok, then again, better for banks to keep their billions for themselves, instead of attempting to reactivate the economy You take bankrupcy as the main scenario, while it's a small %
Market failure necessitates the creation of public goods and spending to motivate demand during recessions. But Hayek is right as well, if there is an economic downturn and all the government did was to pump money into the economy without seeing that output is increased the resulting consequence would only be inflation. For me Keynes and Hayek are both right. But the fundamental error most economists and policy makers make is the extreme devotion to a set of ideas or philosophy. The real world is not an economic textbook, it is a place with dynamic and ever changing problems that require its specific solutions. for example the policy needs of China 50 years ago and now are very different and a commitment to a single set of ideas for the 50 years will not be helpful
But that's the beauty of Hayek's line of thinking. Economies evolve much faster than governments, and the solutions government agencies manage to arrive at quite often become too little too late. This is the best case scenario. Worse still is when they are being swayed by an entrenched cadre of too big to fail corporations. By propping up bad business you turn a once thriving capitalistic system into a tumorous mess of unsustainable persistence.
+MalicProductions And the fundamental error in Hayek's line of thinking is that he treats markets and economies as "natural" while they're utterly created and/or caused by man. Man can't change the laws of nature, but man can change the way the markets operate by simply making or changing his own laws,rules and regulations. Businesses that control huge numbers of people's money can really grow to big to fail if you as a government let them because you fail to regulate them properly, so you really have to bail them out if you don't want huge numbers of people to end up in poverty.
But then what happens if, or rather when, those businesses fail and their isn't enough money to prop them up? What if, after decade after decade of government guarantees, the country that invests so heavily into these failing dying things happens to collapse. What happens when you start to run everything on bailouts and the bailouts dry up? I'd rather take the potential chance that poverty spikes (though the political theory in this video heavily disagrees with this assertion, as the lack of excessive upward wealth acquisition would result in better pay for middle and lower class people) rather than witness recession after recession. Bailouts are like giving chocolate to schoolyard bullies and expecting them to play ball. In a true capitalist society the schoolyard bully would be devoured by smaller children, who would themselves one day be devoured by other small children. It allows the market, or the bully ecosystem, to blossom into a more spontaneous and customer pleasing mess. Without the threat of consumption the bully will never need to change his ways, and instead elect to get fatter and fatter on candy bars until their is none left for the rest of the school. The only regulations I support are the ones that directly protect people from physical harm, either through injury or poor environmental planning. Everything else should be left up to the market. Couple that with an education that produces high quality consumers rather than what we have today and you wouldn't have hardly any of the problems we face today.
+MalicProductions If there isn't enough money we print more, we're the government so spending more money than we own is business as usual. After we've bailed them out, we should regulate them and split them up so they're no longer too big to fail. Not splitting them up after bailing them out so the same scenario can happen again and they'll be able to put the poverty-gun to our head again is a huge mistake. Bailouts are more like you live in the desert besides a river and you have to pay the big guy upstream for not polluting the river with nuclear waste. In your society of very limited regulations there wouldn't be a free market at all because you simply don't have the regulations in place to enable such a thing. Everybody would be free to mislead, cheat and rob each other blind (all on paper without any physical violence of course).
Markets are natural. For example we all need to eat, so someone has to provide food for us and we thus have to buy food. The need for you to eat causes you to find a job or do something that will allow you to produce something that will be exchanged for food. Money is just the vehicle that drives these exchanges. The issue of too big to fail is one economist have not really looked into. But whether banks are big or small if you allow the financial sector to crash you will destroy the entire economy. The singular bankruptcy and extinction of Lehmann Brothers was the straw that broke the camel's back. Had Goldman, JP Morgan Chase, Morgan Stanley, Citi and other big banks been allowed to fail, America would still be in recession and the camel would be in a coma. Regulating banks better, Cutting bonuses, exec pay and seeing that profits are shared with the rest of the workers will help fight inequality and promote long term planning and not short term gambling
Mussolini: All within the state, nothing outside the state, nothing against the state. Hayek: Beware of totalitarian big goverments. The School of Life : Oh they must like eachother.
I mean, Hayek supported the dictatorship of Pinochet in Chile (you know, the regime that got over 40,000 people disappeared, amongst other things), he even said about that “You can have economic freedom without political freedom, but you cannot have political freedom without economic freedom.”
@@IPere54 So in order to prevent a socialist dictatorship that would end up in violence, death and suffering we just had to install a cruel "liberal" dictatorship that also ended with violence, death and suffering. So basically the deaths and the lack of democracy and civil liberties (you can't say there were liberties when there was exiles, no free speech against the crimes of the regime and murdering by the state apparatus) don't matter as long as there's free markets. So you really don't care about the suffering socialism was going to bring with Allende, you just care that the ideology you oppose dies regardless of the devastating consequences of Pinochet's regime. Good to know that, nice one, pal.
@@shredermn The free market policies that Pinochet allowed which were kept during the democracy after Pinochet leaved made Chile the richest country with the highest standard of living in latin america, and proportion matters, its preferable a few thousands of deaths over millions even if both are bad, real life is not perfect sometimes you have to pick the least bad option.
@@IPere54 Richest country? 45% poverty rate, bottom-rock average economic growth, an embarassing recession due to too much financial deregulation (and he even had to outright nationalize some banks), 30% unemployment rate, an even worse inflation rate than under Allende, and this was despite Pinochet having kept Codelco, the copper state-owned corporation nationalized under Allende, in the hands of the state (which provived the Chilean economy with 85% of all revenue derived from exports), and not decreasing public action for the improvement of childcare (which were largely maintained at the time). Also, did you know Mussolini had sexual relationships with a laissez-faire manchesterian, which was Alberto de Stefani? Jesus, Austrian ignorance still baffles me...
@@PedroTomeVlogs El tipo te dijo que chile era el pais mas rico en LATIN AMERICA. Que pais en america latina vio mas progreso qe chile (o progreso tan constante?) Que modelo fue superior al chileno? Y cual propones vos? Podrias ejemplificarlo con un caso en la realidad?
Hayek drew the line at providing a legal framework where entrepreneurs can engage with free markets, can someone explain to me examples of this? Current or past policies, or political stances that was/is based on hayek's recommendation. Thank you very much
I can agree with Hayek's opinion on how the interference of states distort and wounds economies, but I wish he had said more about the influence of huge corporations (many of them are like states in size and power) in controlling markets. I think that's a huge issue for today's economies.
The greatest contribution of the Austrian school was subjective value theory (Menger). It's what eventually leads to the socialist calculation problem (Mises/Hayek). Something that isn't really refutable. The price system is a heuristic for decision making. It incorporates subjective preferences from actors within the market economy and feeds them back to people at a low transaction cost. Central control over aspects of the economy will then distort the price system and cause misallocations of resources. "T]he extent of socialism in the present-day world is at the same time underestimated in countries such as the United States and overestimated in Soviet Russia. It is underestimated because the expansion of government lending to private enterprise in the United States has been generally neglected, and we have seen that the lender, regardless of his legal status, is also an entrepreneur and part owner. The extent of socialism is overestimated because most writers ignore the fact that Russia, socialist as she is, cannot have full socialism as long as she can still refer to the relatively free markets existing in other parts of the world. In short, a single socialist country or bloc of countries, while inevitably experiencing enormous difficulties and wastes in planning, can still buy and sell and refer to the world market and can therefore at least vaguely approximate some sort of rational pricing of producers’ goods by extrapolating from the market. The well-known wastes and errors of this partial socialist planning are negligible compared to what would be experienced under the total calculational chaos of a world socialist state. " -Murray Rothbard
Unfortunately, economics as taught today is too crude to be useful. It makes big claims, but fails to deliver benefits for all. That should be its job, not just pandering to the Capitalists.
@Y T Lol, who hurt you so much? Edit: Btw, reading and citing Rothbard is a waste of time, and the subjective theory of value leads to circular thinking. The Austrian school can offer interesting debates in the context of the twentieth century but not a functional epistemological framework.
@Y T Me refiero a la praxeología como propuesta científica, la cual no es más que basura epistemológica. No acepto lecciones de lectura de un payaso que reparte insultos gratuitos en lugar de aportar algo, aunque sea una crítica, en sus comentarios.
@Y T La epistemología es el estudio del conocimiento, y la praxeología es una metodología pseudocientífica porque no presenta sustento empírico a sus proposiciones asumidas. El término ontología aquí es tan irrelevante como no excluyente. Ni idea qué tienen que ver los comunistas en una discusión sobre la escuela austriaca, ni idea qué aporta para usted el ad hominem y la proyección salvo a mostrarme el nivel en el que discuten personas sobreideologizadas e irrespetuosas de su calaña. Buenas noches/dias.
Hayek didn’t believe that liberty was to be reduced to a market logic. That doesn’t seem right. He consistently develop liberty under Kant’s influence. For Hayek liberty consist in the recognition of the objective value of the individual that should not be use as a mere means for the ends of others. He is more than a free marketeer, I don’t think you give him enough credit for his intricate philosophical system of thought. He was an economist, a lawyer and a deep political thinker. Also, he defended a market economy because he didn’t believe in social engineering or a planed economy. For him that didn’t made sense cause it was not feasible. In the other hand, he argued that a centralized single authority whose purpose is the redistribution of wealth is, as a model, incompatible with democracy. All centralized economies, even those that were approved by democratic methods, would end up giving a lot of power to the State, and therefore, putting a lot of stress in the effective limits of political power.
This video is spectacularly wrong at time stamp 4:30 onward. The fact is despite their theoretical differences, Hayek and Keynes were very good friends, and had great mutual respect. Hayek and Keynes did not meet "one time." They spent a good deal of time together.
I don't think we should ever loose sight of egalitarianism. The free market centralizes wealth and power over time making it harder for someone born at the bottom of society to become an entrepreneur. The less people can afford to own land, go to university or start a competitive business, the more capitalism begins to look like just another kind of feudalism.
Tell that to Carnegie. University has increased in price because the demand for it is so inelastic and the government continually attempts to subsidize it. A BA is a signalling mechanism, not a form of human capital. Thus, a college degree is suppose to be limited in its ubiquity. If everyone has it, then it becomes meaningless like a high school diploma. As for land, it is not necessary to have land in order to become wealthy. I don't see Steve Jobs tilling any soil. Anyway, land is dirt cheap in the U.S.
David Liddelow I meant to say cheap in rural areas of the country. You can go out there and buy much more land per dollar than any other country in the world. As for cities like New York, yes, its more expensive, but that's basic supply and demand.
Daniel Baskakov I think people just read the surface of her philosophy without going into the details of it, so people immediately hate her. When you're actually open to her ideas, they really are eye opening.
Your videos are really well explained. BUT you should make subtitles for foreign users... it is sometimes quite difficult to understand economy in an other language !
Like many You Tube channels, we allow users to add subtitles in the languages they are interested in. Sadly we don't have the budget to translate our films into the world's languages ourselves.
Hayek is not quite as negative to government as stated here. He actually divides into two sorts of "planning". The market forces cannot work without the ground rules and infrastructure provided by government (e.g. currency, laws against theft etc.). But a "planned economy" where the government directs investment is what he was against. He likened it to the government building roads (laying the groundwork=good) on one hand vs telling everyone where to go on the other (planning too much and taking away freedom=bad).
🎉🎊 Hayek! Wonderful video, I would say that the idea of Hayek being comfortable with any of the 20th century dictators I can think of as slightly absurd. Primarily because dictators tend to take laissez faire lightly and because they roll over individual liberty which was Hayek's most quintessential concerns. As a classical liberal (free minds and free markets) I was starting to think this channel got it only half right.
I know this comment is from 7 years ago, but c'mon. The only reason why Hayek could destroy my country's economy and social rights system, was because back then Chile was a dictatorship. Famous is the letter Tatcher wrote to Hayek on why she couldn't, even though she super liked, use fully his economics models on the UK; since the UK was a democracy, the model was impossible to implement cause it went against the people's interests.
8 лет назад+11
Please do an episode on Alan Watts, Eric Hoffer, and or Erich Fromm.
Well I'm glad that this video wasn't colored by socialist undertones as they usually are. It's refreshing and relieving to have a balance between ideologies.
Since you'll be around portuguese literature, how about Saramago? And some brazilians, too! Machado de Assis on literature, Darcy Ribeiro on Sociology, Paulo Freire on Political Theory... And so on!
How could they possibly say Hayek might have been ok with dictatorships. It's completely contradictory to his philosophy. It's implied, hence why Keynes wanted clarification as to how Hayek wasn't just arguing for anarchy
@@KarmasAB123 I've read the entire collected works of Hayek (besides the pure theory of capital) that would be a huge contradiction of his philosophy, as he lays out in constitution of liberty, and all 3 volumes of law legislation and liberty.
I kind of remember reading back in 1974 that when the Nobel Prize in Economics was awarded to Gunnar Myrdal and Friedrich Hayek, one was astounded that he (Myrdal) had to share the prize and the other was surprised that he (Hayek) was even given it.
Dear The School of Life, you are stating that Hayek was comfortable with dictators. I believe you are making false statements about Hayek, can you please back up your claim and provide one statement or quote from Hayek were he states that he was comfortable with dictators?
I have read a lot of Hayek, and while he absolutely appreciates the value of personal liberty, he is not a strict democrat (small d). He was openly supportive of dictators like Pinochet in Chile (hence his picture along with Than Shwe at 7:20), saying in a 1979 interview with the New York Times: "In that much condemned country, Chile... the restoration of only economic freedom and not political freedom has led to an economic recovery that is absolutely fantastic." When he was asked to follow-up on that in regard to political freedom, he said, “You can have economic freedom without political freedom, but you cannot have political freedom without economic freedom.” - Source: www.nytimes.com/1979/05/07/archives/new-vogue-for-critic-of-keynes-von-hayek-still-abhors-big.html He also leaves the possibility open that democracy is not always a necessity for his ideal if liberty. He says: "Liberalism (in the European nineteenth- century meaning of the word, to which we shall adhere throughout this chapter) is concerned mainly with limiting the coercive powers of all government, whether democratic or not, whereas the dogmatic democrat knows only one limit to government- current majority opinion. The difference between the two ideals stands out most clearly if we name their opposites: for democracy it is authoritarian government; for liberalism it is totalitarianism. Neither of the two systems necessarily excludes the opposite of the other: a democracy may well wield totalitarian powers, and it is conceivable that an authoritarian government may act on liberal principles." [Hayek, The Constitution of Liberty, 166.] So, granted using a shorthand of being comfortable with dictators may not be fully representative of Hayek's views, it is not without merit.
@@ThreeJaw been following up on your useful comments and found this interesting quote from FA Harper: “Anyone who will defend his liberty must guard against the argument that access to the ballot, ‘by which people get whatever they want,’ is liberty. It would be as logical to assert that liberty in the choice of a wife is assured to a person if he will put it to the vote of the community and accept their plurality decision, or that liberty in religion is assured if the state enforces participation in the one religion that receives the most votes in the nation.”
Inequality.... I don't like Thatcher, but when she said "You'd like to be poorer, provided that the rich had less than they have now". Left Wing Economics is a crusade against the Rich, nothing less, nothing more.
+The School of Life Leaving my personal sentiments aside on Hayek's work. I must say that this was one of the best videos, if not the best, you have uploaded so far! Well done mate!
Actually after the crisis of 2008 influential governments prefered to use kayne`s ideias instead of Hayek`s. Basically the whole economic policy of Barack Obama`s government was built around Kaynes ideas. The thought of a 100% free market is losing strenght among economists and schoolars around the world. Other countries(such as Brazil, my homeland) are facing the exact same problem from 2008 basically because the did not ''draw the line'' where government would not interfere with free market.
+guinotrool pois... and actually, the economical crisis Brazil is undergoing now is EXACTLY because neoliberal, austerity measures were implemented. (Dá uma olhada no manifesto "Por um Brazil Justo e Democrático" do Le Monde & outros. Muito bom).
Are you crazy? Brazil's crisis took place because of the "New Economic Matrix", which spent billions and billions in public construction. This money was injected in the economy by the bank BNDES, completelly controlled by the state. This money was artificial, because of the "magical" creation of money by fractional reserves of banking.
Guilherme Resende I know that. But this was not enough to create the crisis we are in now. When economy growth (because it was still growing) started lowering its pace, we should have tried different approaches (check the manifest I mentioned) and they probably would, with some effort, correct the "over" spending problems and the slow growth as well. However, we decided for an archaic austerity "kit" that further complicated our situation, making the living standards of workers (and middle class) lower a lot and also diminishing the purchasing power of our society, making the crisis deeper and deeper. And then came the unemployment, the regression of social rights, the precarious conditions of our universities (at mine there was a 4 MONTH strike last year because with the cuts we didn't have money to pay not even for light, gas, and the workers!!!), etc etc. It just made everything worse, as it obviously would. Austerity must be overcome, URGENTLY. And all of the neoliberal nonsense too.
The United States stuck to Keynesian ideas, but Europe embraced Hayek and austerity. Eight years later, U.S. unemployment rate is down to 5% and Europe is a dumpster fire.
You may enjoy reading Ha Joon Chang's book "Economics: the user's guide." It's very readable for the ordinary person. (However you may not be ordinary???)
As we can see in the modern West, when the "free market" is allowed to effectively regulate itself, it falls back into a feudal structure very quickly (≈ 2 generations). It would have been interesting to examine in more depth where exactly Hayek placed those lines around gov't involvement in the market, and what, if any, limits he proposed to prevent the massive concentration of wealth at the top 1% (or even the top 0.1%) of both the populace and the business ecology. I do hope that you will do as in-depth an examination of Keynes as a counter-argument. My criticisms notwithstanding, thank-you for your videos, and the obvious care you take in crafting them.
Hayek did not support laissez-faire. See this: marginalrevolution.com/marginalrevolution/2013/10/hayeks-liberaltarian-essay-free-enterprise-and-competitive-order.html
"In my opinion it is a grand book [...] Morally and philosophically I find myself in agreement with virtually the whole of it: and not only in agreement with it, but in deeply moved agreement." - Keynes on Hayek's 'The Road To Serdom' ...it's not that they disagreed on EVERYTHING.
And then goes on to torpedo that whole book's central argument with: "But as soon as you admit that the extreme is not possible, and that a line has to be drawn, you are, on your own argument, done for since you are trying to persuade us that as soon as one moves an inch in the planned direction you are necessarily launched on the slippery path which will lead you in due course over the precipice."
3:48 - That was quite a funny detail, when a picture of the movie "12 Angry Men" was shown as the narrator said "Hayek's colleagues at the London School of Economics"
Great information, thanks! What about a video on Keynes? But not about his economical theory, rather about his theories on human collective behavior. The "animal spirits" and how this idea changed social sciences. How science in general can be a metaphor of humans and how by taking this approach we can discover amazing things.
Friedrich Hayek was a second rank intellectual who was brought to England by J.M. Keynes, his mentor. He was brought to Cambridge by Keynes. Later, Hayek found his place among the conservatives of Britain by adopting the extreme position that government should not at all intervene in the marketplace, even to rescue a society from economic stagnation. This extremism was and still is applauded by wealthy conservatives who will oppose any effort to have them pay taxes to support the society that has elevated them beyond their merit.
I dont understand the point about him being comfortable with dictatorships. The statement comes in at around the 7 minute mark. Is there an academic source for that assertion ?
I think you have to view Hayek works as a testament against central planning of economies, as seen in the USSR during the communist era. However, for a modern economies in which central planning is not done, Hayek idea are often incorrect. Indeed, Hayek views are based on the concept that the market is perfect. However, modern economic theory and empirical analysis clearly shown that the market are far from perfect and hence it is very important to have government intervention to address those imperfection. From pollution to monopoly, modern economies are awash in imperfect markets that require significant government intervention to address. Furthermore, the recent economic crisis have clearly shown that Hayek view on macroeconomic are not just erroneous but dangerous to the long term welfare of a nation. The line that Hayek have drawn is hence far from the free market as one should believe.
We are currently in the longest peacetime economic expansion in history, because the response to the 2008 crisis - the us government took a full Keynesian response. I opposed TARP at the time and did not believe anyone who said the money would be paid back with interest. But look at ProPublicas database on TARP. It was. All of it. I was skeptical about ARA too, but now here we are over a decade later with the longest economic growth we've ever had. When we hit recession, and we will probably soon, I'm putting my bet on Keynesian policy.
It was Keynesianism for the rich. Regular people are still waiting for their bailout. Wages have stagnated/declined and U6 Unemployment never went below 6%, and that is somewhat flawed given that part-time workers have given up looking for full-time work.
I tried resisting the urge to comment, but it seems I have failed. I admit that I am not nearly as studied in economic theory(or theories) as I would like to be, but that being said, I have some serious criticisms of Hayek's ideas (assuming they are presented accurately here). I consider myself a proponent of free markets, but in my view real free markets are antithetical to Hayek's neoliberalism. First of all, corporations are highly bureaucratic, and very likely could not survive the competition of an actual free market. Second, dictatorships are inherently incompatible with free markets, because the state intervenes to protect "private" interests and uses violent force to suppress organized labor/opposition. A real free market requires that individuals have relatively equal social power; everyone must have a home/land of their own, generally determined by occupation and use. Neoliberalism, on the other hand, is overwhelmingly characterized by a history of land theft/expulsion. Not to mention government licensing, subsidies to corporations, intellectual property laws and patents, all of which contribute to capitalist protectionism. In short, the thing Hayek, Reagan, and Thatcher referred to as "free" markets was in reality quite the opposite. Similarly, I believe the banking crisis was the result of protectionism, rather than actual free markets.
I have a few issues with your take: 1) Corporations are highly bureaucratic, and very likely could not survive the competition of an actual free market. - Technically, a corporation is simply a means of organizing a business (you could have a corporation of five people), but one assumes you are referring to the modern concept of corporations: Walmart and the like. I agree that a lot of them could not survive the competition of an actual free market If they were suddenly thrown into a total free market due to some radical shift in the law, a lot would be destroyed, but I think some could find the foresight to muddle their way through. 2) A real free market requires that individuals have relatively equal social power. - I disagree. I would say you could have a free market simply with people who have literally anything to trade, even their time (how do think employment works?). You trade or invest your time for the purpose of gaining something else, hopefully acquiring more that you can trade or invest, increasing your value as a contributor. 3) Intellectual property laws, while they can go too far, are ultimately purposed to protect the economic investment of creators, of both their time and money. If someone developed a great work, say a book, and then some asshat copied their idea and managed to get their knockoff book printed first, thereby claiming the idea for their own, one could argue that the second individual has stolen the potential earnings of the first, not just the sales from the book, but also the recognition of the idea and everything that would follow from that.
As an inhabitant of Cambridgeshire I am constantly amused by the university’s ability to churn out entrepreneurs in the sciences along with the political economists to hobble them. That said, of course, Oxford has nearly exclusively produced our political class that has presided over our rendering unto serfdom. Governments do very little well. Their fondness for”one size fits nobody” policies ensures that they never will do. For this reason alone, keeping government small, like a bonsai tree, is always a good idea. The current “great white hope” of AI making national socialist central planners infallible is illusory but this has not prevented government bloating even in the face of ample current evidence of their catastrophic failure. It could, however, be said that the markets themselves are an AI computer of near infinite subtlety that no political economists might hope to better. The quote from Atlas Shrugged springs to mind and seems most apt, “get out of the way”!😂
I agree with your comment at the end. Markets themselve are the most refined concoction humanity has created to distribute, administer and produce. Possibly the most "democratic" institution today? Individual input is automatically assimilated, analyzed and used for the next cycle of production, efficiently allocating resources and efforts. But, if the final purpose of this growth is only growth and more concentration of capital, we are doomed. I think the evidence to this point is clear, the market left to its own will keep predating humanity and nature, pushing us to global collapse. We are a cancer on this planet. Nation states with all their false democratic rhetoric (including socialists) have shown themselves incapable of stopping the train. China and Russia, historically considered the two major proponents and developers of a secondary way to capitalism, end up today intrinsically ruled at its core by a market logic. The nation-state with its unending thirst for centralization and control, has simply understood market logic is the most efficient, but is a train without brakes. I believe the only way to correct this is with true democracy ultimately funded, overseer and administered by popular sovereignty, even if this method is not as efficient as the market logic.
@@robinwells8879 but also, capitalism how we know it couldnt exist without states, it is through the structure of the state and the body of law that capitalism generate the largest monopolies. We have only taste the dead hand of state-regulation. In theory states ultimatelly rest in popular soverignty, that is how far we need to rethink this, we cant be subjected to an oppresive system that rest in inequality and centralization of capital, specially if that means pushing humanity and nature to global collapze. It is madness.
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You said that he noticed that "when economies were in a recession central banks often artificially injected more money and credit". But actually he noticed that such injection happened *before* the recession, during the so-called boom.
His theory of business cycle explains how easy money and credit by central bankers creates such artificial and unsustainable booms, and thus contributes to business cycles (rather than alleviates them).
He says essentially that the Central Bank sets interests rates low, inject unnecessary capital which gets confused for real funds that they borrow at then often injected into poor Investments.
Well, of course, before AND after, as it is in a cycle forever
The Boom leads to the Bust
@@MTCoblivsicas12345 which is exactly what's been happening for years nowadays and we have ended up with a corporate bond market of over 60% in the speculative-grade (Baa Moody's and/or BBB S&P) range, a first ever in history (if I'm not mistaken about the latter). For sure the worst ever in the past few decades.
Well that makes more sense
Not a single mention of Mises? He was a huge influence on Hayek.
***** It mentioned so much "neoliberalism", an ideology which Hayek rejected: for him, he was a classical liberal in the tradition of Locke, Smith and Hume.
Just fyi there are better justifications for your point. It is a gross simplification that Hitler "came" to power... it is well documented that the WP/Nazis seized it by force and intimidation.
Two of the most horrible humans ever lived. Their theorries have caused disasters in the world.
John Elmot Their theories were never applied
+Guilherme Resende Reagan, Thatcher, Pinochet, the IMF. 🤔basically all neoliberals.
As an LSE student, I can confirm the professors still brag about Hayek being alumni.
EconBuz Economics 😂😂😂😂
I know I am late to the party here, but I would highly appreciate some advice on getting in to LSE, as it is a serious prospect for me at present.
@@commentconnoisseur1001 what A-levels and grades do you have
@@commentconnoisseur1001 You need A*AA if you're in the UK and a very good Personal statement. My PS had lots of smart economic history references that show a great depth of knowledge.
Wrong, I have only met professors at the LSE (with the exception of one individual), which were very proud of the Fabian Society. If they mentioned Hayek, they critizised many of his ideas.
his voice is so clear and well spoken that even the auto generated subtitles are getting it right
Thank you The School of Life for creating free content for the community. I hope you realise how much people appreciate your videos and work :)
K. It's not free. You don't want it to be free, by the way. It's created in a environment of minimal barriers, so that a huge number of people get to watch a content you choose. It's called advertising space. It works poorly for AAA videogames, for example, but works wonderfully for the kind of content that is offered at youtube. It feels like free and it makes a lot of great content available to millions of people. It' extremely clever.
K. And
@@Renato84Br Dude he was complimenting them. You pay for internet access, but you're not paying directly for the creation of this video through that.
Actually. They get paid.
Commies are... something.
Went to my university's library today. An entire shelf dedicated to Marx's works. Not one copy of On the Road to Serfdom in the entirety of the economics and political theory sections.
it was for a reason, one is a titan, another is just an ant.
And they had to make the ant bigger than the titan.
People who think Marx was something don't understand the time value of money neither people's subjective time preferences.
That's weird, my uni has lots of stuff about Hayek, and during lessons in philosophy and political science his name is brought up multiple times.
Jonnathan Crane can say the same thing about yourself xddd
As someone who has read everything by Hayek, let me correct you. He was never comfortable with authoritarian dictators as long as they left the market free, his stance was that if Rule of Law and not of men. Dictators are not compatible with that vision, only democracy is, a democracy restrained by Laws.
Exactly, very well pointed!
Laws protecting life, liberty and property.
A lot of videos on this channel take a political stance. It's clear that the school of life is not neutral in it's videos.
@@jasonbourne9819 "protecting life"
Does that include healthcare?
@@leeoreilly6797 healthcare is your own responsibility and choice.
On bombing watch:
"That tie looks stupid"
"So does your hair"
someone needs to do a comedy sketch of that night..
There is a 2 round rap battle between them. Funny as he'll. Just search youtube Keynes vs Hayek rap battle
1913 , Vienna park , the old emperor is having his usual morning parade , a wretched artistic vagrant sit next to a swarthy foreigner
....the vagrant said , there is cops watching you
....I know
my name is Hitler , I want to go to the art academy , what is yours
just call me Stalin , I want to blow the world
Honestly, that’s probably the way it was. So many would assume that they had this weighty private debate through the night, when it’s just as likely they chatted about rationing, professional gossip, and their health.
"Capitalism is awful!"--they said watching a RUclips video, on their Apple laptop, sitting in their two story home, feeling the cool breeze of the air conditioner, before entering their pantry filled hundreds of food items
"Capitalism is evil" they said as they used goods created by labor
"The state is awful!" they said using the internet and other government funded technology like the iPhone...
message sent via satellites invented by Soviet communists...:-)
And perfected by innovative entrepreneurs in Silicon Valley where 17 companies are producing revenue in the billions and working more efficiently than any state-operated initiatives
+Jonah Davis actually perfected in publicly funded universities like M.I.T.
:P
Ludwig Von Mises, Milton Friedman please
@Monster Mash Hayek for cunts.
@@honved1 shut up
Micky Cripplejohn Mises was a great intellectual, much better than Hayek imo.
@@OrthoHoppean will read, thanks for recommendation
Nishanth K Of course. Even if you don't agree with everything he says, to dismiss him as "Hayek for cunts" is completely ignorant and condescending. Mises was truly a brilliant intellectual.
This is unexpected to me. Pleased to see TSOL taking some thinkers from all over the political spectrum. Good choice and may you guys do this more often.
I'm really grateful for such a relaxed and reasonable take on this very political laden topic.
Please do a philosophy video on Diogenes.
yes
Yeeees!
He didn't bring much to the table when it comes to philosophy, or did he?
+Favourite Douchebag lol
Andy M lol
They (Keynes and Hayek) actually met regularly. Hayek sais so himself in the interviews made with him
Mtn. K. Yes, there was a time long ago when we could discuss things with people whom we disagreed with, without it breaking down into screaming ad hominems at one another. I know, sounds crazy but it’s true.
@@matthewlucas4142 Except Keynes agreed with Hayek on many things.
Yes, they were actually quite cordial and complimentary towards each other.
@@user-ks1hp2pb5g Keynes would have disagreed with neo-keynsians see "Keynes vs the Keynesians" by T.W. Hutchison.
@@C_R_O_M________ Care to give a specific excerpt showing this?
I was born in Romania, my parents are from a working class and I am from a working class family, yet I find it amazing that I get to live in Vienna and even study at the University of Vienna, such an honor trully.
awesome! How is life going?
Best to you
Okey ? And what does that have to do with this video part from Hayek beong viennese ?
I find Hayek interesting. He has a very different idea of liberty to myself, but it is good to understand this viewpoint, because it then enables you to see why so many people argue around this idea of 'liberty' - because there are so many competing different ideas of what it means.
3:17 its Murray Newton Rothbard
lmao
You spelt Cancer wrong.
+Eternity Snipin anarchocapitalism :)
i thought it was funny how randomly placed he was
Do Milton Friedman :)
Manos Biermann So did Hayek. He still believed into a safety net. And the assumption that believers of free markets simply hate the poor is both myopic and insulting.
Eric B Friedman was not ok with the poor dying in fact his ideologies on competitive capitalism helped keep people from becoming poor... before you make such a bias statement I would suggest knowing what your talking about : )
@@condaquan9459 Yes! Friedman's ideologies are about fostering a strong society where the poor get out of poverty with generations of endeavors. Financially helping the poor is cheap help, which only fulfills the poor's materialism without enhancing their minds. Ironically, the living standards of the poor in America is pretty high.
Will Cheung I agree to the highest extent thank you
@@cch312 Is that why the USA has so many homeless people sleeping on the streets?
Overall a fair review of Hayek, although I do take issue with your statement that he was comfortable with dictators in some way or another, which is clearly not true. It is a different matter to say that a dictator who let's markets work to a greater degree than one who does not is clearly better, but in no way is that *good*.
THATS BECAUSE YOU ARE AN AMERICAN LIBERTARIAN. HAYEK DIDNT CARE ABOUT POLITICAL REGIME, HE ONLY CARED ABOUT ECONOMIC REGIME.
@@pocojoyo Sure his book is titled "The Road to Serfdom" and his other book was called "The constitution of liberty" , but he doesn't care about freedom.
@@happy_thinking he cares...about freedom of markets being a fundamentalist. The freedom of people through markets is a laughable idea. And yes Hayek oposed only the authoritarian left. not in fact every authoriatarian political figure. austrian economic cult is about being a hypocrite
@@Doomlike7 I don't think we have the same view on Hayek.
If you read his book The Road to Serfdom you will agree that Hayek was a man who thought and cared deeply about freedom and like other libertarians he thought that political freedom is not possible without economic freedom.
I think many people, you included don't see the whole picture when discussing Hayek.
Hayek doesn't say that free markets are the cure for everything wrong in the world, what he does say is that free-market capitalism is a prerequisite for freedom.
This still means you need to have a reasonable code of conduct or in other words respect for the law and constitution of the country, but this is very hard or impossible in collectivist societies or societies which are capitalist in name only.
P.S There are other things worth mentioning, but i will stop here.
@@happy_thinking dictators that hayek didnt oppose whatsoever had a respect for the law and constitution;
In defence of dictatorship
Woodcut from a Diggers document by William Everard. Wikimedia Commons. Hayek intended his writings to serve as a wake-up call to defenders of liberalism. When such defenders took actions in support of private property, Hayek was unashamed in his support for them. In 1973, General Pinochet launched a coup against the democratically elected socialist government of Salvador Allende in Chile, and instituted a dictatorship under which thousands of trade unionists were tortured and murdered. Hayek wrote an infamous letter to The Times defending the coup in the following terms:
“I have not been able to find a single person even in much maligned Chile who did not agree that personal freedom was much greater under Pinochet than it had been under Allende.”
Hayek later described Allende’s administration as the only totalitarian government in Latin America. He couched his defence of Pinochet in a broader context of supporting democracy only insofar as it contributes to the formation and maintenance of a liberal market order: “In Modern times there have of course been many instances of authoritarian governments under which personal liberty was safer than under democracies”. He offers Salazar’s “early government” in Portugal as an example and suggests that there are many democracies in Eastern Europe, Africa, South America and Asia that fail to protect personal liberty.
Hayek influenced Margaret Thatcher, and via her, many contemporary conservative party politicians and ideologues including those at the helm of the current conservative party in Britain.
In another letter to The Times entitled “the dangers to personal liberty”, he endorsed Thatcher whilst restating his claim that the marketplace is “indispensable for individual freedom” while the ballot box “is not”.
To be sure, conservative neoliberals in advanced capitalist countries such as the UK and USA did not use military coups to undermine democracy. They were able to use the parliamentary structures established during the previous century to do so.
Hayek sees liberalism and democracy as potentially compatible. But he also sees the former as compatible with authoritarianism. “It is at least possible in principle that a democratic government may be totalitarian and that an authoritarian government may act on liberal principles”.
Liberalism does not, therefore, require democracy. For modern liberals the protection of private property and the ability to do with it what one wishes is paramount, while political democracy is desirable but not essential.
“The progressive displacement of the rules of conduct of private and criminal law [i.e. negative freedoms] by a concept derived from public law [positive freedoms] is the process by which existing liberal societies are progressively transformed into totalitarian societies.” (Hayek, 1966).
For him trade unions represented the greatest threat to the implementation and operation of liberal principles: The “monopolistic practices which threaten the functioning of the market are today much more serious on the side of labour than on the side of enterprise.”
Hayek’s opposition to organized labour was expressed through his support for dictatorships.
Two traditions of liberalism
Hayek begins by contrasting two traditions of liberalism. The first, his favoured one, emerged in the England of the Old Whigs from the mid to late seventeenth century and was fortified by the theories of Edmund Burke, John Locke and Adam Smith. The second was a continental European product elaborated theoretically by writers such as Voltaire and Rousseau.
The first tradition of liberalism is “inseparable from the institution of private property”. It has its roots in human nature. It is superior to any form of centralized state planning. It:
“[D]erives from the discovery of a self-generating or spontaneous order in social affairs…an order which made it possible to utilize the knowledge and skill of all members of society to a much greater extent than would be possible in any order created by central direction…” (Hayek, 1966).
For Hayek, the second, continental tradition of liberalism advanced by writers such as Voltaire and Rousseau points in a fundamentally different direction. There is a straight line from it, to what he labels, the totalitarian politics of the French revolution and modern socialism. Through democratic practice, this tradition attempts to subordinate society to a set of political/normative objectives. Under such conditions, individuals are no longer free to do as they please, and certainly not free to use (or even own) their property in ways they see fit. Hayek argued that this tradition of liberalism “has in effect become democratism rather than liberalism and, demanding unlimited powers of the majority, has become essentially anti-liberal”.
Hayek’s concern was to defend the first tradition of liberalism in a global context of increasing state intervention and control over the economy, in which he argued, it was being increasingly undermined. To do so he distinguishes between what are often labelled negative and positive freedoms. The former refers to freedom from constraint, the latter to a process whereby individuals are enabled to fulfil their potential.
The roots of Hayek’s liberalism
Hayek posits that whilst a liberal market order is paramount, it does not require political democracy: “Liberalism and democracy, although compatible, are not the same. The first is concerned with the extent of governmental power, the second with who holds this power".
Hayek identifies the roots of what can be labelled private property-based liberalism as emerging in England following its “glorious” revolution in the mid-seventeenth century. This was a period when the Old Whigs’ political party was politically and ideologically dominant. During the English revolution they had sided with parliament against the King, Charles I, and his feudal supporters. They were opposed to Charles’ attempts to raise taxes arbitrarily. They wanted tax raising powers to be more fully subordinated to parliament, which was itself dominated by the landed gentry. In short, they aimed to limit the state’s ability to interfere in the private affairs, and the property of, the emergent agrarian capitalist class.
The Old Whigs sought to justify intellectually the strengthening of private property rights over previous forms of property, including common property. The latter, for example, granted peasants access to public lands, without requiring them to have a defined individual property right over them.
Private property in land granted the rapidly expanding landlord class rights to do with the land what they pleased, free from state interference. More significantly, it freed them from any obligations to the peasantry and emerging agricultural labour forces, which had previously worked and depended upon the land for their subsistence. The strengthening of private property in land was achieved through mass enclosures of previously common land, the expulsion of its inhabitants, and its transformation into private property.
The Old Whigs fought tooth and nail against political organisations such as the Levellers and agrarian socialists such as the Diggers during the mid-seventeenth Century. These organisations aimed to establish equality before the law, equitable land reform and an expansion of public common land. They also aimed to establish political democracy, to ensure the rule of the majority for the majority. Such a system would guarantee that public land (amongst other things) could not be transformed into private property.
For the Old Whigs these visions of popular democracy were antithetical to private property.
The Old Whig antipathy to popular democracy on the one hand, and support for private property rights on the other, stands at the core of Hayek’s political philosophy. From this starting point he theoretically de-links liberalism and democracy. This move is designed to a) explain how liberalism can exist without democracy, and b) to limit, significantly, democratic influence over a liberal private property based market order.
Hayek’s advocacy for negative freedoms over positive freedoms logically limits democratic content. If governments want to guarantee a liberal market order then they must guarantee negative but not positive freedoms. By default then, they are precluded from implementing widespread social programmes designed, for example, to redistribute wealth, power and property towards the poor. These policies would necessitate imposing obligations upon society in order to pursue a designated outcome. Such actions, according to Hayek, represent the first steps towards totalitarianism. Liberal freedoms would be undermined as society is forced to submit to an 'artificial' (i.e. planned) overarching objective, as opposed to benefitting from the free play of the natural, spontaneous market order.
Hayek was "pro-freedom" only when it suited his ultra-conservative narrative and markets fundmendalism. Nothing more nothing less. A hypocrite Austrian like the rest of them.
P.S i have read road to serfdom twice. enjoyed it...it has nothing to do about the real meaning of freedom.
Hayek's work is important for the discussion of economics and politics.
Personally he was not such a nice man. I have first hand knowledge of this because my father (+) was his lawyer in Hayek's Austrian years.
The professor wanted to make some money selling a part of his library to the University of Salzburg (not a very good university, even now). The transaction did not happen also because it would have been extremely complicated. The famous professor did not believe this and he did not believe my dad explaining it in detail to him. Some nasty remarks were exchanged. I still remember when Dad came home, completely exhausted from the discussion with Professor Hayek.
Conclusion: The reality is not always like lovers of theory want it to be. It bites even great minds.
yuuki hoffner - thanks for sharing your story.
So interesting
yuuki hoffner It is well-known that he was viewed as an unpleasant person given how he treated his wife.
@Y T Best comment, regardless of political bend. And I have many friends who are lawyers.
Could you do a video on Noam Chomsky? Perhaps not on his politics but on the philosophical implications of his cognitive science?
Mussolini a free market dictator? Seriously?
Yes he was a fascist.
@Levis. H I'd say "some aspects of socialism" is actually an understatement. The only difference between Hitler and Mussolini against Stalin is that having lost the war, their scope in the eyes of history limits to defeated warlords, but the truth is, if they had won, roles would be inverted, placing Hitler as a major socialism trademark.
@Levis. H The video puts Mussolini's face there, and is half right. At the beginning of the fascist regime Mussolini indeed did support laissez faire. But of course to hold a strong grip over a nation, especially in times of preparation for a war, he had to change his strategy and go back to his "old" view (socialism) and he ended applying the most important social reforms in Italy of last century, with one of the highest levels of state intrusion in the economy ever seen by Italians. To push for nationalism, he even ended up promoting autarchy, which for many reasons was unachievable in Italy.
@@necroyoli08 I think you're wrong. What you are doing is assuming there really only are capitalism and socialism and no third position. Hitler actually won an intern strive in the Nazis party AGAINST hardcore socialists who wanted to totally expropriate businesses and transform Germany into an socialist farming society (The Strasserist wing as well as the Röhm wing of the SA). Therefore all of the top business owners in Germany actually SUPPORTED Hitler because they feared a takeover of the communists wether they were in the communist party or in the NSDAP itself. IF Hitler would have been a radical socialist he could have never rise to power.
@@Lolux1701 The fact that Hitler didn't support a communist party doesn't make him any less communist. Moreover, in a free enterprise system the market is clear from state intervention, in contrast to communist societies like Nazi Germany according to your own argument. The deal with Hitler wasn't to expropriate buisness because party members owned most of them and could easily control the rest through state force. Same animal, different name.
3:17 heyyyy that's not Hayek... that's Rothbard
To anyone who is not that big a fan of markets, please don't be turned off by Hayek. Even if you don't agree with him, he is still a very stimulating thinker. People from many disciplines and political backgrounds have enormous respect for his work. He is very much worth looking into.
I decided to abandon economics after my undergrad degree because it was so utterly clear that the field disregards Austrian thinking as a sort of quackery...or simply irrelevant. Fundamentally it's the only school I agree with, and still don't understand why no serious academic institute takes it seriously. I suppose it's because economics is tied to political outcome, and since WWII we've moved more and more into Keynesian territory?
Very sad for me still, it's works like the Road to Serfdom that made me love the subject in the first place!
It's because its very incomplete, its assumptions questionable, and it's aversion to mathematical models means it doesnt incorporate the latest discoveries well if at all.
Austrian school of thought is very important in economics, practically it hasn't been applied but it's a very important topic for economics students and in capitalism too. The one that is ignored in economics is those Marxism, socialism kinda stuff
Hell I’m somewhat sympathetic to Keynes but the mainstream idea to simply disregard the opposition is itself utter quackery. Hayek and others within the Austrian school of economics make valid points about not only the economy but also the drawbacks contemporary politics could have on it and thus should essential to at least be familiar with their train of thought. The problem with Academia, at least from my perspective, is has devolved into some sort of dogmatism that stifles the debate which in the end is ultimately counterproductive.
@@yydd4954 I’m studying economics right now and I’m telling you, at least where I’m at, Marxism and Socialism are not being ignored whilst I had to study Hayek in my free time
@@zackkilgore528 oh that's sad bro
Maybe in future I might have to study it
But for now I have mainly studied classical and Keynes
Lol, wonder what Friedrich would have to say about Negative Interest Rates...
You have to be crazy to support negative interest rates.
@@099Nitro I mean, yeah, better for the Banks to keep their money in the central bank than investing it, right?
@@geminix365
You mean the money they get for selling things they couldnt sell to a bank that can print money.
Real fuckin genius that one mate
@@geminix365 central banks are supposed to supervise the banking system and draw levers like manipulating interest rates and printing currency when there's a need to do so. Negative interest rates came to be (as far as I have gathered) because sovereign debt would become unsustainable if the rates were still "real" (aka positive). This creates a torrent of other distortions like capital allocation to startup companies (most of which end up bankrupt) and zombie companies refinancing their unsustainable business models and corporate debt. That's where we are now.
@@C_R_O_M________ ok, then again, better for banks to keep their billions for themselves, instead of attempting to reactivate the economy
You take bankrupcy as the main scenario, while it's a small %
Market failure necessitates the creation of public goods and spending to motivate demand during recessions. But Hayek is right as well, if there is an economic downturn and all the government did was to pump money into the economy without seeing that output is increased the resulting consequence would only be inflation. For me Keynes and Hayek are both right. But the fundamental error most economists and policy makers make is the extreme devotion to a set of ideas or philosophy. The real world is not an economic textbook, it is a place with dynamic and ever changing problems that require its specific solutions. for example the policy needs of China 50 years ago and now are very different and a commitment to a single set of ideas for the 50 years will not be helpful
But that's the beauty of Hayek's line of thinking. Economies evolve much faster than governments, and the solutions government agencies manage to arrive at quite often become too little too late. This is the best case scenario.
Worse still is when they are being swayed by an entrenched cadre of too big to fail corporations. By propping up bad business you turn a once thriving capitalistic system into a tumorous mess of unsustainable persistence.
+MalicProductions And the fundamental error in Hayek's line of thinking is that he treats markets and economies as "natural" while they're utterly created and/or caused by man. Man can't change the laws of nature, but man can change the way the markets operate by simply making or changing his own laws,rules and regulations. Businesses that control huge numbers of people's money can really grow to big to fail if you as a government let them because you fail to regulate them properly, so you really have to bail them out if you don't want huge numbers of people to end up in poverty.
But then what happens if, or rather when, those businesses fail and their isn't enough money to prop them up?
What if, after decade after decade of government guarantees, the country that invests so heavily into these failing dying things happens to collapse. What happens when you start to run everything on bailouts and the bailouts dry up?
I'd rather take the potential chance that poverty spikes (though the political theory in this video heavily disagrees with this assertion, as the lack of excessive upward wealth acquisition would result in better pay for middle and lower class people) rather than witness recession after recession.
Bailouts are like giving chocolate to schoolyard bullies and expecting them to play ball. In a true capitalist society the schoolyard bully would be devoured by smaller children, who would themselves one day be devoured by other small children. It allows the market, or the bully ecosystem, to blossom into a more spontaneous and customer pleasing mess. Without the threat of consumption the bully will never need to change his ways, and instead elect to get fatter and fatter on candy bars until their is none left for the rest of the school.
The only regulations I support are the ones that directly protect people from physical harm, either through injury or poor environmental planning. Everything else should be left up to the market. Couple that with an education that produces high quality consumers rather than what we have today and you wouldn't have hardly any of the problems we face today.
+MalicProductions If there isn't enough money we print more, we're the government so spending more money than we own is business as usual.
After we've bailed them out, we should regulate them and split them up so they're no longer too big to fail. Not splitting them up after bailing them out so the same scenario can happen again and they'll be able to put the poverty-gun to our head again is a huge mistake. Bailouts are more like you live in the desert besides a river and you have to pay the big guy upstream for not polluting the river with nuclear waste.
In your society of very limited regulations there wouldn't be a free market at all because you simply don't have the regulations in place to enable such a thing. Everybody would be free to mislead, cheat and rob each other blind (all on paper without any physical violence of course).
Markets are natural. For example we all need to eat, so someone has to provide food for us and we thus have to buy food. The need for you to eat causes you to find a job or do something that will allow you to produce something that will be exchanged for food. Money is just the vehicle that drives these exchanges. The issue of too big to fail is one economist have not really looked into. But whether banks are big or small if you allow the financial sector to crash you will destroy the entire economy. The singular bankruptcy and extinction of Lehmann Brothers was the straw that broke the camel's back. Had Goldman, JP Morgan Chase, Morgan Stanley, Citi and other big banks been allowed to fail, America would still be in recession and the camel would be in a coma. Regulating banks better, Cutting bonuses, exec pay and seeing that profits are shared with the rest of the workers will help fight inequality and promote long term planning and not short term gambling
Oh, and the entire Austrian school deserves videos of their own.
@@JinjaOnHere why?
@@JinjaOnHere They didn't actually invent it by themselves, but what are your criticisms of praxeology?
@@JinjaOnHere why is that a criticism?
@@JinjaOnHere why is rejecting empiricism bad
@@JinjaOnHere if is a "soft" science, by which I think you mean social science, why are you using empirical tools?
thank you for being honest when covering Hayek. I did not expect that
I loved that cameo of Murray Rothbard. Great video by the way.
Now do Murray Rothbard. You even put his photo in there at one point so you know it follows from this
Mussolini: All within the state, nothing outside the state, nothing against the state.
Hayek: Beware of totalitarian big goverments.
The School of Life
: Oh they must like eachother.
I mean, Hayek supported the dictatorship of Pinochet in Chile (you know, the regime that got over 40,000 people disappeared, amongst other things), he even said about that “You can have economic freedom without political freedom, but you cannot have political freedom without economic freedom.”
@@IPere54 So in order to prevent a socialist dictatorship that would end up in violence, death and suffering we just had to install a cruel "liberal" dictatorship that also ended with violence, death and suffering. So basically the deaths and the lack of democracy and civil liberties (you can't say there were liberties when there was exiles, no free speech against the crimes of the regime and murdering by the state apparatus) don't matter as long as there's free markets. So you really don't care about the suffering socialism was going to bring with Allende, you just care that the ideology you oppose dies regardless of the devastating consequences of Pinochet's regime.
Good to know that, nice one, pal.
@@shredermn The free market policies that Pinochet allowed which were kept during the democracy after Pinochet leaved made Chile the richest country with the highest standard of living in latin america, and proportion matters, its preferable a few thousands of deaths over millions even if both are bad, real life is not perfect sometimes you have to pick the least bad option.
@@IPere54 Richest country? 45% poverty rate, bottom-rock average economic growth, an embarassing recession due to too much financial deregulation (and he even had to outright nationalize some banks), 30% unemployment rate, an even worse inflation rate than under Allende, and this was despite Pinochet having kept Codelco, the copper state-owned corporation nationalized under Allende, in the hands of the state (which provived the Chilean economy with 85% of all revenue derived from exports), and not decreasing public action for the improvement of childcare (which were largely maintained at the time).
Also, did you know Mussolini had sexual relationships with a laissez-faire manchesterian, which was Alberto de Stefani?
Jesus, Austrian ignorance still baffles me...
@@PedroTomeVlogs El tipo te dijo que chile era el pais mas rico en LATIN AMERICA. Que pais en america latina vio mas progreso qe chile (o progreso tan constante?) Que modelo fue superior al chileno? Y cual propones vos? Podrias ejemplificarlo con un caso en la realidad?
The narrator has the most soothing voice ever
if u like the british accent..
Hayek drew the line at providing a legal framework where entrepreneurs can engage with free markets, can someone explain to me examples of this? Current or past policies, or political stances that was/is based on hayek's recommendation.
Thank you very much
Reaganomics
@@MetroplexBiasReaganomics is utterly incompatible with Hayek as the government still has control over the currency
Hayek at last! Do another video on his cultural evolution and philosophy of science, please!
I can agree with Hayek's opinion on how the interference of states distort and wounds economies, but I wish he had said more about the influence of huge corporations (many of them are like states in size and power) in controlling markets. I think that's a huge issue for today's economies.
The greatest contribution of the Austrian school was subjective value theory (Menger). It's what eventually leads to the socialist calculation problem (Mises/Hayek). Something that isn't really refutable. The price system is a heuristic for decision making. It incorporates subjective preferences from actors within the market economy and feeds them back to people at a low transaction cost. Central control over aspects of the economy will then distort the price system and cause misallocations of resources.
"T]he extent of socialism in the present-day world is at the same time underestimated in countries such as the United States and overestimated in Soviet Russia. It is underestimated because the expansion of government lending to private enterprise in the United States has been generally neglected, and we have seen that the lender, regardless of his legal status, is also an entrepreneur and part owner. The extent of socialism is overestimated because most writers ignore the fact that Russia, socialist as she is, cannot have full socialism as long as she can still refer to the relatively free markets existing in other parts of the world. In short, a single socialist country or bloc of countries, while inevitably experiencing enormous difficulties and wastes in planning, can still buy and sell and refer to the world market and can therefore at least vaguely approximate some sort of rational pricing of producers’ goods by extrapolating from the market. The well-known wastes and errors of this partial socialist planning are negligible compared to what would be experienced under the total calculational chaos of a world socialist state. " -Murray Rothbard
Unfortunately, economics as taught today is too crude to be useful. It makes big claims, but fails to deliver benefits for all. That should be its job, not just pandering to the Capitalists.
@Y T Well, I wasted 15 seconds reading your comment and another minute writing this. No addition here but unnecessary insults.
@Y T Lol, who hurt you so much?
Edit: Btw, reading and citing Rothbard is a waste of time, and the subjective theory of value leads to circular thinking. The Austrian school can offer interesting debates in the context of the twentieth century but not a functional epistemological framework.
@Y T Me refiero a la praxeología como propuesta científica, la cual no es más que basura epistemológica. No acepto lecciones de lectura de un payaso que reparte insultos gratuitos en lugar de aportar algo, aunque sea una crítica, en sus comentarios.
@Y T La epistemología es el estudio del conocimiento, y la praxeología es una metodología pseudocientífica porque no presenta sustento empírico a sus proposiciones asumidas. El término ontología aquí es tan irrelevante como no excluyente. Ni idea qué tienen que ver los comunistas en una discusión sobre la escuela austriaca, ni idea qué aporta para usted el ad hominem y la proyección salvo a mostrarme el nivel en el que discuten personas sobreideologizadas e irrespetuosas de su calaña. Buenas noches/dias.
You have to do Friedman now! The two economic giants of the last century.
Hayek didn’t believe that liberty was to be reduced to a market logic. That doesn’t seem right. He consistently develop liberty under Kant’s influence. For Hayek liberty consist in the recognition of the objective value of the individual that should not be use as a mere means for the ends of others. He is more than a free marketeer, I don’t think you give him enough credit for his intricate philosophical system of thought. He was an economist, a lawyer and a deep political thinker.
Also, he defended a market economy because he didn’t believe in social engineering or a planed economy. For him that didn’t made sense cause it was not feasible. In the other hand, he argued that a centralized single authority whose purpose is the redistribution of wealth is, as a model, incompatible with democracy. All centralized economies, even those that were approved by democratic methods, would end up giving a lot of power to the State, and therefore, putting a lot of stress in the effective limits of political power.
This video is spectacularly wrong at time stamp 4:30 onward. The fact is despite their theoretical differences, Hayek and Keynes were very good friends, and had great mutual respect. Hayek and Keynes did not meet "one time." They spent a good deal of time together.
I don't think we should ever loose sight of egalitarianism. The free market centralizes wealth and power over time making it harder for someone born at the bottom of society to become an entrepreneur. The less people can afford to own land, go to university or start a competitive business, the more capitalism begins to look like just another kind of feudalism.
I feel another revolution coming on ;)
No, it does not. You didn't explain why, so I won't even bother.
Tell that to Carnegie.
University has increased in price because the demand for it is so inelastic and the government continually attempts to subsidize it. A BA is a signalling mechanism, not a form of human capital. Thus, a college degree is suppose to be limited in its ubiquity. If everyone has it, then it becomes meaningless like a high school diploma. As for land, it is not necessary to have land in order to become wealthy. I don't see Steve Jobs tilling any soil. Anyway, land is dirt cheap in the U.S.
If land is cheap in the U.S. then why does anybody rent? Maybe its only cheap to people who are already rich.
David Liddelow I meant to say cheap in rural areas of the country. You can go out there and buy much more land per dollar than any other country in the world. As for cities like New York, yes, its more expensive, but that's basic supply and demand.
Can you make a video on Ayn Rand?
Can you imagine the comment section shitstorm?
i asked that once and they literally answered no, im not kidding they did and everyone who answered after was debating it XD
Daniel Baskakov I think people just read the surface of her philosophy without going into the details of it, so people immediately hate her. When you're actually open to her ideas, they really are eye opening.
her philosophy? oo c'mooon
@@DolphinPain Ayn "I know the only absolute truth and once your smart enough you will agree with me" Rand
Your videos are really well explained. BUT you should make subtitles for foreign users... it is sometimes quite difficult to understand economy in an other language !
Like many You Tube channels, we allow users to add subtitles in the languages they are interested in. Sadly we don't have the budget to translate our films into the world's languages ourselves.
How can we do that? I whink lot of us would love to colaborate.
When you look at the CC/subtitles option one of the options is add subtitles/cc
The School of Life I would settle with English subtitles!
I eagerly look forward to these weekly shows. 'Oh, is it Friday already? I wonder who they'll highlight this week,' I ask myself. Keep it up!
Hayek is not quite as negative to government as stated here. He actually divides into two sorts of "planning". The market forces cannot work without the ground rules and infrastructure provided by government (e.g. currency, laws against theft etc.). But a "planned economy" where the government directs investment is what he was against. He likened it to the government building roads (laying the groundwork=good) on one hand vs telling everyone where to go on the other (planning too much and taking away freedom=bad).
🎉🎊 Hayek! Wonderful video, I would say that the idea of Hayek being comfortable with any of the 20th century dictators I can think of as slightly absurd. Primarily because dictators tend to take laissez faire lightly and because they roll over individual liberty which was Hayek's most quintessential concerns. As a classical liberal (free minds and free markets) I was starting to think this channel got it only half right.
I know this comment is from 7 years ago, but c'mon. The only reason why Hayek could destroy my country's economy and social rights system, was because back then Chile was a dictatorship. Famous is the letter Tatcher wrote to Hayek on why she couldn't, even though she super liked, use fully his economics models on the UK; since the UK was a democracy, the model was impossible to implement cause it went against the people's interests.
Please do an episode on Alan Watts, Eric Hoffer, and or Erich Fromm.
Well I'm glad that this video wasn't colored by socialist undertones as they usually are. It's refreshing and relieving to have a balance between ideologies.
Thanks for the video, hope modern politicians find some inspiration in Hayek's ideas.
In short, for Hayek, Freedom = Free market
Great video, as per, Alain and TSOF team! Any chance you could do a video on the Portuguese genius Fernando Pessoa?
Since you'll be around portuguese literature, how about Saramago? And some brazilians, too! Machado de Assis on literature, Darcy Ribeiro on Sociology, Paulo Freire on Political Theory... And so on!
CELSO FURTADO on economy!
apoiado
+The School of Life Yaaaay!
+1 on pessoa, and maybe dylan thomas ?
Great to see you finally did a video on this intellectual giant. You should do a video on individualism vs collectivism.
How could they possibly say Hayek might have been ok with dictatorships. It's completely contradictory to his philosophy. It's implied, hence why Keynes wanted clarification as to how Hayek wasn't just arguing for anarchy
Maybe he was initially okay with them (I haven't read his stuff yet)?
@@KarmasAB123 I've read the entire collected works of Hayek (besides the pure theory of capital) that would be a huge contradiction of his philosophy, as he lays out in constitution of liberty, and all 3 volumes of law legislation and liberty.
As usual. RUclips videos have their Fairshare of bias. Most are left leaning.
Hayek supported Pinochet
@@theomitchell416 Hayek supported Pinochet because he was a capitalist
I kind of remember reading back in 1974 that when the Nobel Prize in Economics was awarded to Gunnar Myrdal and Friedrich Hayek, one was astounded that he (Myrdal) had to share the prize and the other was surprised that he (Hayek) was even given it.
Dear The School of Life, you are stating that Hayek was comfortable with dictators. I believe you are making false statements about Hayek, can you please back up your claim and provide one statement or quote from Hayek were he states that he was comfortable with dictators?
the road to serfdom decries totalitarianism on almost every page...to think that people will just swallow this video without checking up...
I have read a lot of Hayek, and while he absolutely appreciates the value of personal liberty, he is not a strict democrat (small d).
He was openly supportive of dictators like Pinochet in Chile (hence his picture along with Than Shwe at 7:20), saying in a 1979 interview with the New York Times:
"In that much condemned country, Chile... the restoration of only economic freedom and not political freedom has led to an economic recovery that is absolutely fantastic." When he was asked to follow-up on that in regard to political freedom, he said, “You can have economic freedom without political freedom, but you cannot have political freedom without economic freedom.” - Source: www.nytimes.com/1979/05/07/archives/new-vogue-for-critic-of-keynes-von-hayek-still-abhors-big.html
He also leaves the possibility open that democracy is not always a necessity for his ideal if liberty. He says:
"Liberalism (in the European nineteenth- century meaning of the word, to which we shall adhere throughout this chapter) is concerned mainly with limiting the coercive powers of all government, whether democratic or not, whereas the dogmatic democrat knows only one limit to government- current majority opinion. The difference between the two ideals stands out most clearly if we name their opposites: for democracy it is authoritarian government; for liberalism it is totalitarianism. Neither of the two systems necessarily excludes the opposite of the other: a democracy may well wield totalitarian powers, and it is conceivable that an authoritarian government may act on liberal principles." [Hayek, The Constitution of Liberty, 166.]
So, granted using a shorthand of being comfortable with dictators may not be fully representative of Hayek's views, it is not without merit.
@@ThreeJaw another layer of the onion, thanks josh!
@@ThreeJaw been following up on your useful comments and found this interesting quote from FA Harper: “Anyone who will defend his liberty must guard against the argument that access to the ballot, ‘by which people get whatever they want,’ is liberty. It would be as logical to assert that liberty in the choice of a wife is assured to a person if he will put it to the vote of the community and accept their plurality decision, or that liberty in religion is assured if the state enforces participation in the one religion that receives the most votes in the nation.”
Economy had nothing to do which why those countries were dictatorships.
Wow! this explains everything- rising inequality, debt/credit trap, worthless products, rising property prices. Thank you so much!
All blamed on the free market to add insult to injury.
Inequality.... I don't like Thatcher, but when she said "You'd like to be poorer, provided that the rich had less than they have now". Left Wing Economics is a crusade against the Rich, nothing less, nothing more.
+The School of Life Leaving my personal sentiments aside on Hayek's work. I must say that this was one of the best videos, if not the best, you have uploaded so far! Well done mate!
Actually after the crisis of 2008 influential governments prefered to use kayne`s ideias instead of Hayek`s. Basically the whole economic policy of Barack Obama`s government was built around Kaynes ideas. The thought of a 100% free market is losing strenght among economists and schoolars around the world. Other countries(such as Brazil, my homeland) are facing the exact same problem from 2008 basically because the did not ''draw the line'' where government would not interfere with free market.
+guinotrool pois... and actually, the economical crisis Brazil is undergoing now is EXACTLY because neoliberal, austerity measures were implemented. (Dá uma olhada no manifesto "Por um Brazil Justo e Democrático" do Le Monde & outros. Muito bom).
Are you crazy? Brazil's crisis took place because of the "New Economic Matrix", which spent billions and billions in public construction. This money was injected in the economy by the bank BNDES, completelly controlled by the state. This money was artificial, because of the "magical" creation of money by fractional reserves of banking.
Guilherme Resende I know that. But this was not enough to create the crisis we are in now. When economy growth (because it was still growing) started lowering its pace, we should have tried different approaches (check the manifest I mentioned) and they probably would, with some effort, correct the "over" spending problems and the slow growth as well. However, we decided for an archaic austerity "kit" that further complicated our situation, making the living standards of workers (and middle class) lower a lot and also diminishing the purchasing power of our society, making the crisis deeper and deeper. And then came the unemployment, the regression of social rights, the precarious conditions of our universities (at mine there was a 4 MONTH strike last year because with the cuts we didn't have money to pay not even for light, gas, and the workers!!!), etc etc. It just made everything worse, as it obviously would. Austerity must be overcome, URGENTLY. And all of the neoliberal nonsense too.
The United States stuck to Keynesian ideas, but Europe embraced Hayek and austerity. Eight years later, U.S. unemployment rate is down to 5% and Europe is a dumpster fire.
Wasn't it the other way around? Europe embracing Keynesian and the USA embracing Hayek?
Excellent!!! Thank you for this video.
This is one of your best videos. Absolutely fantastic and very enlightening.
Also , suggest viewing The School of Life's video on John Locke .
I'd love a video on John Maynard Keynes, or even a whole series on economics!
You may enjoy reading Ha Joon Chang's book "Economics: the user's guide." It's very readable for the ordinary person. (However you may not be ordinary???)
I dont think anyone could have explained Hayek better in only 12 minutes
As we can see in the modern West, when the "free market" is allowed to effectively regulate itself, it falls back into a feudal structure very quickly (≈ 2 generations). It would have been interesting to examine in more depth where exactly Hayek placed those lines around gov't involvement in the market, and what, if any, limits he proposed to prevent the massive concentration of wealth at the top 1% (or even the top 0.1%) of both the populace and the business ecology.
I do hope that you will do as in-depth an examination of Keynes as a counter-argument.
My criticisms notwithstanding, thank-you for your videos, and the obvious care you take in crafting them.
Hayek did not support laissez-faire. See this: marginalrevolution.com/marginalrevolution/2013/10/hayeks-liberaltarian-essay-free-enterprise-and-competitive-order.html
"In my opinion it is a grand book [...] Morally and philosophically I find myself in agreement with virtually the whole of it: and not only in agreement with it, but in deeply moved agreement." - Keynes on Hayek's 'The Road To Serdom' ...it's not that they disagreed on EVERYTHING.
And then goes on to torpedo that whole book's central argument with: "But as soon as you admit that the extreme is not possible, and that a line has to be drawn, you are, on your own argument, done for since you are trying to persuade us that as soon as one moves an inch in the planned direction you are necessarily launched on the slippery path which will lead you in due course over the precipice."
3:48 - That was quite a funny detail, when a picture of the movie "12 Angry Men" was shown as the narrator said "Hayek's colleagues at the London School of Economics"
Great information, thanks!
What about a video on Keynes? But not about his economical theory, rather about his theories on human collective behavior. The "animal spirits" and how this idea changed social sciences. How science in general can be a metaphor of humans and how by taking this approach we can discover amazing things.
This is a great video please make more videos like this even for other disciplines. I got hooked to School of life because of these types of videos.
By the way, The School of Life has thus far been an excellent source of useful learning material.
The picture at 3:22 is of Murray Rothbard an Anarcho-Capitalist (basically an extreme libertarian)
Yes. And AnCap's do not like Hayek very much.
You stated there was a line drawn but didn't mention what/where the line was, you moved into what Margret Thatcher said.
Satoshi's spiritual grandfather. Divine ideas turned into divine code few decades later.
Divine Love
0:56 Hayek was descended from Franklin Pierce?
It seems impossible to talk about Hayek without mentioning Keynes.
The Political Theory videos never fail to disappoint!!
Finally, someone who understands economy
Do one on Mises!
When is an episode on James Joyce coming? Amazing content by the way.
Thank you!
it is hard for any plan to work when behind the scenes it is dysfunction by design.
Friedrich Hayek was a second rank intellectual who was brought to England by J.M. Keynes, his mentor. He was brought to Cambridge by Keynes. Later, Hayek found his place among the conservatives of Britain by adopting the extreme position that government should not at all intervene in the marketplace, even to rescue a society from economic stagnation. This extremism was and still is applauded by wealthy conservatives who will oppose any effort to have them pay taxes to support the society that has elevated them beyond their merit.
I dont understand the point about him being comfortable with dictatorships. The statement comes in at around the 7 minute mark. Is there an academic source for that assertion ?
I would love to see a video on Peter Kropotkin.
9:30 why is Enrico Fermi in there?
Czqhn 87
Thought I recognized someone
I very much appreciate how you always (atleast for the german names) pronounce them correctly
Brasil loves the School of Life. Thank you so much for all great leassons. Keep at it.
Adam Smith -> Hayek -> Friedman - > Sowell. Read these if you want to make sense of the world.
7:50 gururlandım :')
aynen ahahsha beklemiyodum
I think you have to view Hayek works as a testament against central planning of economies, as seen in the USSR during the communist era.
However, for a modern economies in which central planning is not done, Hayek idea are often incorrect.
Indeed, Hayek views are based on the concept that the market is perfect. However, modern economic theory and empirical analysis clearly shown that the market are far from perfect and hence it is very important to have government intervention to address those imperfection.
From pollution to monopoly, modern economies are awash in imperfect markets that require significant government intervention to address. Furthermore, the recent economic crisis have clearly shown that Hayek view on macroeconomic are not just erroneous but dangerous to the long term welfare of a nation.
The line that Hayek have drawn is hence far from the free market as one should believe.
Please can you do a video on Ayn Rand?
We are currently in the longest peacetime economic expansion in history, because the response to the 2008 crisis - the us government took a full Keynesian response. I opposed TARP at the time and did not believe anyone who said the money would be paid back with interest. But look at ProPublicas database on TARP. It was. All of it. I was skeptical about ARA too, but now here we are over a decade later with the longest economic growth we've ever had. When we hit recession, and we will probably soon, I'm putting my bet on Keynesian policy.
It was Keynesianism for the rich. Regular people are still waiting for their bailout. Wages have stagnated/declined and U6 Unemployment never went below 6%, and that is somewhat flawed given that part-time workers have given up looking for full-time work.
Who is the third dictator that appears in 7:23?
Finally a video on Hayek!
I'm sorry Hayek, looks like we're on "The Road to Serfdom" as we speak. :-(
so to speak*
This is exactly right. We are!
@@MasterNeiXD a man of culture I see
Check out Rothbard at 3:17
2022 is shitting on this consensus with many governments now thinking deeply about “industrial policy” and state planning.
Keynes and Hayek= Greatest bromance
lol
It's funny that Macri appears at the end like an example of politician who accepts hayek's ideas when he and all his team are keynesians
I was just thinking this ! and argentina remains, unfortunately, in the shitter
I tried resisting the urge to comment, but it seems I have failed. I admit that I am not nearly as studied in economic theory(or theories) as I would like to be, but that being said, I have some serious criticisms of Hayek's ideas (assuming they are presented accurately here). I consider myself a proponent of free markets, but in my view real free markets are antithetical to Hayek's neoliberalism. First of all, corporations are highly bureaucratic, and very likely could not survive the competition of an actual free market. Second, dictatorships are inherently incompatible with free markets, because the state intervenes to protect "private" interests and uses violent force to suppress organized labor/opposition.
A real free market requires that individuals have relatively equal social power; everyone must have a home/land of their own, generally determined by occupation and use. Neoliberalism, on the other hand, is overwhelmingly characterized by a history of land theft/expulsion. Not to mention government licensing, subsidies to corporations, intellectual property laws and patents, all of which contribute to capitalist protectionism. In short, the thing Hayek, Reagan, and Thatcher referred to as "free" markets was in reality quite the opposite. Similarly, I believe the banking crisis was the result of protectionism, rather than actual free markets.
I have a few issues with your take:
1) Corporations are highly bureaucratic, and very likely could not survive the competition of an actual free market.
- Technically, a corporation is simply a means of organizing a business (you could have a corporation of five people), but one assumes you are referring to the modern concept of corporations: Walmart and the like. I agree that a lot of them could not survive the competition of an actual free market If they were suddenly thrown into a total free market due to some radical shift in the law, a lot would be destroyed, but I think some could find the foresight to muddle their way through.
2) A real free market requires that individuals have relatively equal social power.
- I disagree. I would say you could have a free market simply with people who have literally anything to trade, even their time (how do think employment works?). You trade or invest your time for the purpose of gaining something else, hopefully acquiring more that you can trade or invest, increasing your value as a contributor.
3) Intellectual property laws, while they can go too far, are ultimately purposed to protect the economic investment of creators, of both their time and money. If someone developed a great work, say a book, and then some asshat copied their idea and managed to get their knockoff book printed first, thereby claiming the idea for their own, one could argue that the second individual has stolen the potential earnings of the first, not just the sales from the book, but also the recognition of the idea and everything that would follow from that.
I approve this message.
We do not need to trade any more ! We need to share and help eachother if we are to survive on this planet!
As an inhabitant of Cambridgeshire I am constantly amused by the university’s ability to churn out entrepreneurs in the sciences along with the political economists to hobble them.
That said, of course, Oxford has nearly exclusively produced our political class that has presided over our rendering unto serfdom.
Governments do very little well. Their fondness for”one size fits nobody” policies ensures that they never will do. For this reason alone, keeping government small, like a bonsai tree, is always a good idea.
The current “great white hope” of AI making national socialist central planners infallible is illusory but this has not prevented government bloating even in the face of ample current evidence of their catastrophic failure. It could, however, be said that the markets themselves are an AI computer of near infinite subtlety that no political economists might hope to better. The quote from Atlas Shrugged springs to mind and seems most apt, “get out of the way”!😂
I agree with your comment at the end. Markets themselve are the most refined concoction humanity has created to distribute, administer and produce. Possibly the most "democratic" institution today? Individual input is automatically assimilated, analyzed and used for the next cycle of production, efficiently allocating resources and efforts. But, if the final purpose of this growth is only growth and more concentration of capital, we are doomed. I think the evidence to this point is clear, the market left to its own will keep predating humanity and nature, pushing us to global collapse. We are a cancer on this planet. Nation states with all their false democratic rhetoric (including socialists) have shown themselves incapable of stopping the train. China and Russia, historically considered the two major proponents and developers of a secondary way to capitalism, end up today intrinsically ruled at its core by a market logic. The nation-state with its unending thirst for centralization and control, has simply understood market logic is the most efficient, but is a train without brakes. I believe the only way to correct this is with true democracy ultimately funded, overseer and administered by popular sovereignty, even if this method is not as efficient as the market logic.
@@otrogonzalez there’s only one thing worse than a free market and that is the dead hand of regulation.
@@robinwells8879 but also, capitalism how we know it couldnt exist without states, it is through the structure of the state and the body of law that capitalism generate the largest monopolies. We have only taste the dead hand of state-regulation. In theory states ultimatelly rest in popular soverignty, that is how far we need to rethink this, we cant be subjected to an oppresive system that rest in inequality and centralization of capital, specially if that means pushing humanity and nature to global collapze. It is madness.