Reading Hayek: A Biography alongside The Constitution of Liberty

Reading across time and space has a lovely quality. Some passages, when interpreted — even if the reading strays from what the author meant — can still bring insight and a jolt of awakening. Meditations is one example.

On the other hand, I've come to feel more and more that a person's thought and views have to be read against the backdrop of their era before you can truly grasp their weight.

Hayek's thought was born in a very particular period: around the First World War. It was the bygone age described in Zweig's The World of Yesterday — a peaceful, art-filled, intoxicating Vienna; the end of the Austro-Hungarian Empire; the collapse of the system of states; countries attacking one another, people of the same country attacking one another too; many intellectuals swept along by the times, shouting fanatically...

Thinking clearly in an age like that is incredibly hard — like pulling a single rope out of a tangled mess. As the introduction to this biography says:

From this Hayek: A Biography we learn that when he began to think seriously about social problems, it was around the time of the First World War. Europe at that point had two basic features. One was the major change in the social and political environment, symbolised by events including the Bolshevik Revolution of 1917, the abdication of Kaiser Wilhelm II in 1918, and, in the same year, the end of the Habsburgs' 700-year rule over Austria-Hungary. And Hayek's own hometown, Vienna, once a supremely flourishing cosmopolitan city, was about to become a city that was free but soon to decline. Linked to these political events was the gradual spread of universal suffrage across Western European countries, and the challenge that the resulting rise of mass parties posed to traditional parliamentary systems. This led traditionalists on the Continent to deeply doubt whether the elite liberalism of the nineteenth century could survive.

According to Hayek, intellectuals at the time widely believed that "socialism was the next stage of social development, both ethically and empirically." Spurred on by the October Revolution in the Soviet Union, this current of thought gradually moved beyond the study and the newspaper debate and began to enter the political processes of some countries; for example, after the First World War the governments of Germany and Austria passed nationalisation acts one after another. It is fair to say that in the first thirty years of the twentieth century, three great events — the First World War, the Russian Revolution and the Great Depression that followed — had sent the traditional liberalism of the first half of the nineteenth century into complete shock. The theory of the capitalist market, built on freedom of contract, was increasingly being replaced by rhetoric emphasising state intervention, and its most active champions were, of course, Europe's left-wing socialists.

That's why I really enjoyed reading these two books together.

Getting to know Hayek's life while starting on The Constitution of Liberty. Every time I read Hayek it's an intellectual challenge, but finishing it feels fantastic.

1. The historical backdrop and the state of people's minds at the time. Defeating ideas with ideas.

Anyone whose intellectual growth took place in the twentieth century must have a deep sense of socialism's unrivalled capacity for mobilising intellectuals. In leading people to care about broad social questions and inspiring them to display the strength of their moral courage, probably no other doctrine could come close. Moreover, because the newly emerging institutions of mass democracy made large-scale political mobilisation possible, countless intellectuals, faced with a capitalist world they regarded as sordid and disorderly, resolutely took the path of left-wing political activism.

— Translator's foreword (in lieu of a preface), Hayek: A Biography

2. The early Hayek was a "mild socialist," but the debates of his society let a young man, right from the start, explore back and forth between two completely different roads.

Like many young people of the time, Hayek was influenced by the spirit of the age. As a sensitive mind, he keenly felt the severe challenges facing the existing order amid the turmoil. Like many young people seeking a way forward for European civilisation, he became a "mild socialist." During the First World War, he used his spare time on the Italian front to read some "economics works of a mildly socialist character," and after the war, at university, he even immersed himself in socialist pamphlets during theology classes.

Just as Hayek was being drawn to socialism, Mises launched the great debate over the problem of economic calculation in planned economies. His attention to this debate, and his acquaintance with Mises soon after, became the first occasion that prompted him to reflect on the mainstream socialist thought of the day. In thinking seriously about the planned economy, he had to face a question that anyone who takes scientific research seriously would ask: could these so captivating socialist plans actually be realised? This line of thought launched Hayek's research into market information, so one could say that without this question, there would have been no later Hayekian economics built on a foundation of the theory of knowledge.

— Translator's foreword (in lieu of a preface), Hayek: A Biography

3. Liberalism is an important theoretical cornerstone of the market economy.

At a time when our country's specific economic institutions are all "converging" with those of developed countries, it is unthinkable not to study liberalism seriously as an important theoretical cornerstone of the economic institutions of developed countries. Some of liberalism's tenets are indeed at odds with our country's ideological system, but it must be admitted that, as an important theoretical foundation of the free market economy, liberal theory reflects and sums up the general laws of how a market economy operates. Our current economic reforms seek to establish a system of active market players, a unified and open market system, and a complete system of market economy laws and regulations; in fact, these goals are consistent with what liberalism advocates. Furthermore, demonstrating how our socialist market economy differs from Western market economies also requires us to study Western liberal theory systematically.

— Translator's preface, The Constitution of Liberty

4. Interesting — perhaps our fuzziness about liberalism and democracy is just like the West's inability to tell apart the teachings of Confucius and Mencius.

"Liberalism is a doctrine about what the law ought to be, democracy a doctrine about the manner of determining what will be the law."

There are some misconceptions in our understanding of liberalism. First, we have often treated Western liberal-democratic thought as an undifferentiated whole, and many people even think liberal thought and democratic thought are one and the same. In fact, modern Western liberal thought and democratic thought are two independent theoretical traditions: in terms of origins, liberal thought arose in England, while democratic thought arose in France. During the period of the European bourgeois revolutions, the two traditions showed a tendency to merge, and some French thinkers (such as Montesquieu and Tocqueville) preferred the English tradition, while some English thinkers (such as Hobbes) held the French tradition in the highest esteem. Nevertheless, the basic theoretical orientations of the two are entirely different, and the reason for this difference is that "the empiricist worldview once dominated in England, while the rationalist worldview once dominated in France."

— Translator's preface, The Constitution of Liberty

5. To sing against the tune of an entire era, and to lift that tune from academic economics up to the level of sociology and even philosophy — what a fighting spirit that person's heart must have had.

In an age when collectivism prevailed, a serious attitude towards the problem of knowledge within economics alone, without any sense of historical mission, would probably not have been enough to make a person resolve to devote a lifetime to building a comprehensive social philosophy. We see that, in fact, from the time Hayek entered economic research until the end of the 1930s, although he had moments in the limelight — his debate with Keynes in professional economics journals, for instance, won him wide renown and for a time meant that at the London School of Economics (LSE) almost "everyone became a Hayekian" — this fame remained confined to economics.

The second occasion that prompted Hayek's transformation from a professional economist into a social philosopher came at the end of the 1930s. By then, the economic crisis the capitalist world had just come through had long since made people stop caring about Hayek's theories of money, prices and business cycles. In Keynes's words, his economic theory was nothing but a "muddled hodgepodge of gibberish" and "rubbish." This plunged Hayek back into silence in academic circles.

Hayek did not abandon his convictions because his academic standing had been marginalised. He remained unwaveringly sceptical of those who believed the prescription of state intervention could save the West from its crisis.

This was first of all because he believed his theory of the division of knowledge had a solid scientific foundation. His isolation only made him more tenacious, and he began to think deeply about a phenomenon that went beyond pure economics. The purely epistemological question he had raised — whether the socialist planned economy could reach the ideal goals it had set for itself — began to evolve into a question of much broader scope: why, when thinking about how to improve their social condition, are human beings so commonly governed by mistaken ideas?