This is a most welcome book. Friedrich August Hayek has long deserved a serious biography—he has not been well served by fans such as William W. Bartley III and Alan Ebenstein—and we have known for some time now that Bruce Caldwell wanted to write one and that he had solved the problem of Hayek's own request that his biographer should be a German speaker by inviting Hansjoerg Klausinger to join him—a particularly fortunate choice, as Klausinger has written several well-known articles in this journal as well as editing two volumes of The Collected Works of F. A. Hayek (of which Bartley was the founding editor and Caldwell, after Stephen Kresge, the general editor). Having reviewed (for HOPE) several of the volumes edited by Caldwell and Klausinger, I can vouch for their excellence. In writing this review I shall admit that my main interest in, and admiration for, Hayek's writings is his work in economics. I share David Laidler's (1999: 13) view that “far from being some hang-over from the classical economics of the nineteenth century . . . Austrian cycle theory was itself one of the newest and demonstrably most original bodies of doctrine developed in the inter-war years.” But, having written a biography of Hayek's longtime friend Lionel Robbins, I am very interested in his life. I met Hayek himself once, having sat next to him at a dinner after a meeting in 1966 of the British Society for the Philosophy of Science, to which he then belonged.

Hayek's interesting life falls (geographically) into four periods (Vienna, London, Chicago, Freiburg). The first two are the subject of this volume, which is divided into his family, his schooling, and his service in World War I; his university education and his first visit to the United States; “the making of an economist,” 1924–30; his years at the London School of Economics (LSE) in the 1930s; World War II; and 1945–50. He was “very much born into fin-de-siècle Vienna” (28), where, as his friend Herbert Fürth put it, “‘everybody’ in Vienna's small intellectual ‘elite’ knew ‘everybody’ else” (29). His father was a doctor, but with scientific interests, obtaining a doctorate and habilitation and an extraordinary professorship in botany, which was, however, unpaid. His three sons all became (paid) professors (in anatomy, chemistry, and economics). The authors provide useful detailed explanations of the Austrian class system, the Viennese school system, and Austrian politics and anti-Semitism (including the extent of the latter in the Hayek family). As they comment, “Any aversion that Austrian economists might feel toward a mathematical approach to their subject might well be due to the peculiarities of their Austrian gymnasium education” (46). Friedrich Hayek went first to the Franz-Joseph-Realgymnasium; he did not do well and transferred to a less prestigious school after two years, the Carl-Ludwig-Gymnasium, which offered a less modern curriculum, that is, less science and fewer modern languages, and Greek as well as Latin, where he spent five years, performing equally poorly. He moved finally to the Elisabeth-Gymnasium in 1917 but spent only seven months there, since pupils aged seventeen could after that time begin military training as an officer-cadet, returning after six months for one month to complete a final examination (Kriegsmatura). He left Vienna for the Italian front at the beginning of November 1917.

Italy's entrance into World War I on the Allied side in 1915 had led to a series of battles on the Isonzo River near the eastern Italian-Austrian border. Hayek just missed the twelfth battle, the defeat of the Italians at Caporetto with heavy losses, when the Allied forces (including Hayek's future LSE colleague Hugh Dalton, then a lieutenant in the Royal Artillery) had to retreat to the east bank of the Piave River, only fifty kilometers from Venice. (The description of Hayek's rank at this period is confusing: as a “sergeant-cadet” in November 1917 [72], as a “master corporal” and not a sergeant until February 1918 [78], and from March 1918 as an “officer-cadet, the lowest rank of (commissioned) officers” [78]; in English an officer-cadet is a cadet, not yet commissioned.) In June 1918 it was the Austrians' turn to retreat with heavy losses, in the second battle of the Piave. Hayek missed some of this when he got food poisoning and was allowed leave in Vienna; having returned to the front, he applied for pilot training, but nothing came of that, as the successful Allied offensive on the Piave began on October 24 and the war on the Italian front ended on November 3. Some of his “most exciting and dangerous days” came when he and others were “ordered to find their way home as quickly as possible” (83). He reached Vienna on November 12, three days after the proclamation of the new Austrian republic.

Hayek started studying law at the University of Vienna in November 1918, but the authors first devote a whole chapter to his family's life and holidays and his active social life in 1919–22; this includes his growing friendship with his distant cousin Helene (“Lenerl”) Bitterlich, who on her own admission (although not to him) had already fallen in love with him and wanted to marry him eventually (98). For those more interested in Hayek's life as an economist, the rest of this section and the following one will be the most informative part of the book. The late nineteenth- and early twentieth-century flowering of the University of Vienna and its decline in the interwar period are admirably explained (here and in a later chapter): “Perhaps the most sinister force working to undermine the university's progress was the increasing entanglement of academic with the political battles of the period and the growing influence of German nationalism and anti-Semitism” (104). The reader is introduced to many scholars in other disciplines as well as the members of the Vienna school of economics: Carl Menger, Friedrich von Wieser, Eugen von Böhm-Bawerk, Joseph Schumpeter, Ludwig von Mises, Gottfried Haberler, Fritz Machlup, Oskar Morgenstern, and Hans Mayer. As a law student and after passing the required state examinations for the Juris Doctor in 1921, Hayek chose the new (1919) program in Staatswissenschaften and completed the required thesis (on the problem of the theory of imputation) and final examinations for his second doctorate (D.rer.pol., or doctor of political science) in March 1923. He took the opportunity to attend lectures in other subjects, in particular philosophy, history, and biology. His reading included the physicist Ernst Mach, the philosopher (and founder of the Vienna circle of logical positivists) Moritz Schlick, and J. S. Mill and W. S. Jevons on logic. He turned to economics as only one of four subjects for his second set of examinations. The new professors in the subject were Othmar Spann (later a fierce critic of the Austrian school) and Wieser. At first Hayek was more impressed by Spann, but, as the authors show, it was his reading of Menger (recommended by Spann) along with Wieser that shifted his attention to the Austrian school. “I probably derived more from not only the Grundsätze [1871] but also . . . [Untersuchungen, 1883], not for what it says on methodology but for what it says on general sociology. This conception of the spontaneous generation of institutions is worked out more beautifully there than in any other book I know” (138; also Hayek 1994: 248).

Hayek's first job as an economist was to work under Mises at the Abrechnungsamt für Kriegsschulden (Clearing Office for War Debts), for five years from the day after his JD examinations in October 1921 until December 1928 except for a visit to the United States from March 1923 to May 1924: “Money aside, the main benefit of Fritz's job was that it brought him into daily contact with Mises. . . . Mises's impact on the evolution of his thought . . . fundamentally shaped his views throughout the 1920s and beyond. . . . [It] was most strongly felt in two fields: the study of money and inflation, and the question of socialist economic calculation” (141–43). It was also here that he met Helena (Hella) Fritsch, his first wife. He attended some of Mises's university seminars in 1921–22 and participated in his friend Herbert Fürth's discussion group (the “Geistkreis,” as Steffy Browne nicknamed it) but not Mises's “private seminar” until after his American sojourn.

The American economist Jeremiah Jenks lectured at the Vienna Chamber of Commerce in October 1922. Jenks told Hayek that if Hayek went to the United States he could employ him as a research assistant. With Mises's support, and with letters of introduction from Schumpeter to Wesley Mitchell among other US economists, Hayek sailed from Bremerhaven to Hoboken, New Jersey, in March 1923. As well as employing him through the spring and summer, Jenks helped Hayek obtain a PhD fellowship at NYU for 1923–24, where Hayek attended Mitchell's course titled “Types of Economic Theory” and usefully worked on statistical material for Willard Thorp but did little toward a thesis. The authors well describe Hayek's aversion to the American lifestyle, but their account of the effect of Mitchell on Hayek is rather speculative. Hayek also read English history in the evenings at the New York Public Library: “It was then that I discovered my sympathy with the British approach, a country which I did not yet know but whose literature increasingly captivated me. It was this experience which, before I had ever set foot on English soil, converted me to a thoroughly English view on moral and political matters, which at once made me feel at home when I later first visited England three and a half years later” (185). He sailed back to Europe in May 1924. While he was away, Lenerl married Hans Warhanek.

Back in Vienna, Hayek began to publish articles and reviews in academic journals (including the Zeitschrift für Nationalökonomie after its launch in 1929) on economic stabilization and on the US monetary system—one of which contains “in a famous footnote . . . the first appearance in print of Hayek's own version of Austrian business cycle theory” (212)—as well as the theory of interest and imputation. On August 4, 1926, he married Hella. In December of that year Mises founded the Österreichisches Institut für Konjunkturforschung (Austrian Institute for Business Cycle Research), with Hayek as its first director; two years later Morgenstern joined as Hayek's deputy. The authors provide an excellent account of the institute's work (which did not, contra Robbins's preface to Prices and Production [Robbins 1931: xi–xii], predict the Great Depression [284–85]). In these years Hayek met many important economists, including Wilhelm Röpke and Walter Eucken, Dennis Robertson, Frank Knight, and, at a conference at LSE in 1928, Maynard Keynes. In July 1929 he succeeded in obtaining his habilitation with a thesis that became his first book, Geldtheorie und Konjunkturtheorie (1929), and a lectureship in economics and statistics at the University of Vienna. He lectured on money and banking, cycles and crises, and international monetary policy in 1919–31. The authors round off this section with a neat “preliminary summary” of Hayek's theory of money and business cycles (258–67).

In spite of all that has been written (by Caldwell [2004] as well as many others), the chapters devoted to Hayek in London are fresh and exciting, including the correct version of how he came to be invited to lecture at LSE, his interactions with Keynes (and Piero Sraffa), the English 1930s debate on economic planning and Hayek's contribution to it (Collectivist Economic Planning [1935]), “Economics and Knowledge” (1937), his LSE teaching, students, colleagues, and visitors. As well as attending Robbins's graduate seminar, Hayek held one of his own, about which little is known (344–48). A noteworthy visitor in June 1936 was the Viennese philosopher Karl Popper, who recalled that

in September or October of 1935 . . . I knocked at the door of his study here in the LSE. . . . I had heard of him in Vienna, but we had never met. . . . I had a letter of introduction from Professor Hans Kelsen . . . [who] had told me to visit Hayek, but had warned that he and Hayek were not seeing eye to eye. . . . I felt anything but confident. Yet Hayek received me with more than friendliness. He assured me that he had been told by his friend Gottfried Haberler that he must read a book I had published [Logik der Forschung (1935)]. . . . So I gave him a copy, and he assured me that he would read it at once and that, if I came back next week, he would have read it. And when I came again in a week, he really had read it . . . [and] he asked me to read a paper in his seminar. You can imagine that this was great encouragement. (Popper [1992] 1997: 311)

One of the most compelling chapters is on ‘“the battle for young LSE minds,” which Keynes won despite Hayek's best efforts: there never was a “London school” like the Cambridge school of economics. Hayek's efforts included his “long struggle” to produce his last book in economic theory (Hayek 1941), clearly described here (371–81), although the authors do not mention that he had a mathematician research assistant in 1934–35 (Howson 2001: 371). There are a few mistakes. Hayek cannot have “expressed his views rather provocatively in Cambridge's Political Economy Club” in 1931 if those present included “Gregory . . . Hawtrey, Stamp and Blackett from the Bank [of England] and also Beveridge” (302), since the Political Economy Club founded by Keynes was for selected undergraduates and a few Cambridge academics; the occasion must have been a meeting of the long-established Political Economy Club that met at the Reform Club in London (Hayek was soon to join the Reform Club himself). At the same time, however, the authors have consistently tried to check fallible recollections against other more reliable sources. For instance, Hayek claimed that he had told his younger colleague John Hicks to read Pareto's Manuale, but it was in fact Hugh Dalton, who could read Italian thanks to his war experience, who made the suggestion (362–63).

Hayek was naturalized as a British subject on July 18, 1938, thus losing his Austrian nationality, but this did not prevent him from continuing to visit Lenerl in Austria as he had done in the preceding four years, until World War II began. The war meant LSE's move to Cambridge, hosted by Peterhouse College, for the duration. At first the Hayeks stayed in London, with Hayek spending three nights a week at a house rented by LSE in Cambridge, but with the end of the “phoney war” in May 1940 Hella and the children joined Robbins's wife and children in the cottage in Buckinghamshire they had begun to rent after the Munich crisis. In June 1940 Robbins joined what became the Economic Section of the War Cabinet Offices; Hayek took over some of his teaching and administrative duties and began his own war effort: “a history of the influence of scientific and technological development on social thought and policy (to be called The Abuse and Decline of Reason)” (479). The authors provide a very helpful account of the attitudes, particularly those of the self-styled “men of science” in Britain, that Hayek was challenging. Hayek had written six chapters of his new book by the time (October 1940) he left his house in London, Keynes having arranged for him to have rooms and dining privileges in King's College. (Caldwell and Klausinger rightly debunk the oft-repeated story that Hayek and Keynes did fire-watching duty together on the roof of the college chapel [although they do not mention that Keynes was living in London and only in Cambridge on weekends during the university terms].) In September 1941, thanks this time to Joan Robinson, the Hayek family moved into a house in Cambridge near Newnham College. The few Cambridge and LSE economists not in wartime government service shared the teaching for both the Cambridge Tripos and the B.Sc.Econ., and in the Michaelmas Term 1942 Hayek took over Robbins's famous “General Principles of Economic Analysis” lectures. His lecture notes survive and can be compared with Robbins's (2018). Hayek recalled his war years: “Life at Cambridge . . . was to me particularly congenial, and it completed the process of thorough absorption in English life. . . . And of all the forms of life, that at one of the colleges of the older universities . . . still seems to me the most attractive. The evenings at the High Table and the Combination Room at King's are among the pleasantest recollections of my life” (514; also Hayek 1994: 98).

The high point of this book is reached in the superb chapters on The Road to Serfdom (1944): its writing and its reception. The authors are judicious in making clear the reasons for the doubts of those unconvinced by Hayek's conclusions, at the same time arguing cogently that Hayek was not committed to “the view that once a society engages in a little bit of planning, it will eventually end up in a totalitarian state” (539). As Robbins expressed it later (in his 1960 review of The Constitution of Liberty), “What worries me is not the contention that this sort of thing may happen but rather any assumption that it must” (quoted in Howson 2011: 846). There is also an excellent account of the use of Hayek's book by the Conservatives in the British General Election of 1945 (578–84). But elsewhere the authors' relative lack of knowledge about British economic policy shows up, most startlingly in the following statement: “Despite near universal approbation from economists [including Hayek], Keynes's proposal did not get very far. Though a modest deferred pay scheme was added to the 1941 British government budget, in the end the war was financed by a hodgepodge of measures: increases in various taxes, government borrowing, and capital, interest rate, and exchange controls” (472). But Keynes's suggestions for “paying for the war” were not solely, or even mainly, for deferred pay. As the official historian of British wartime financial policy wrote,

The approach adopted by Sir Kingsley Wood in 1941 was a logical development. . . . There was clarification of the theory of inflationary finance, and there was acceptance of a new statistical foundation for the gap that had to be closed by new taxation. The clarification of theory dates from Keynes's Times articles . . . in the autumn of 1939: what was now achieved was its acceptance at the top level of the Treasury. (Sayers 1956: 68)

The statistical foundation was the first official estimates of national income and expenditure constructed explicitly for that purpose with support from the senior permanent Treasury officials. Austrian economics may have had no place for macroeconomic aggregates, but it was the practical success of national income accounting that finally persuaded Robbins to abandon Austrian economics (Howson 2011: 368–70, 417–18). (There are similar problems regarding the authors' account of the economic policy of the postwar Labour government, for instance the timing of the nationalizations [643].) The wartime chapters also include Hayek's and Popper's correspondence about the latter's “war effort,” The Open Society and Its Enemies (1945), written while Popper was at Canterbury University College. As he had tried to help his friends in Austria before the war, Hayek now helped to get Popper's book published in London and to enable Popper to leave New Zealand in December 1945 for a newly created readership in logic and scientific method at LSE (552–61; see also Hacohen 2000: 496–500).

Hayek managed to visit Vienna (then under Soviet occupation) again in September 1946 and January 1947. He also attended the 1947 and 1948 Internationale HochschulWochen (International University Weeks) in Alpbach, Switzerland. The phenomenal success of The Road to Serfdom in the United States led to two visits to that country in 1945 and 1946, on the second of which he secured financial support for an informal meeting in Switzerland as a preliminary to creating an “Acton-Tocqueville Society” of scholars who shared his concerns about the drift to socialism. He personally invited thirty-nine people, mostly economists, to this meeting at the Hotel du Parc, Mont Pèlerin sur Vevey, on April 1–10, 1947—a meeting that deserves the chapter devoted to it—which ended with agreement to create the Mont Pèlerin Society.

Shortly before the Mont Pèlerin meeting, Morgenstern had written in his diary that “Hayek is looking for a divorce in order to marry his early love whom he has seen again in Vienna. What kind of affair! He has two daughters [sic] & his wife is quite acceptable” (epigraph, p. 675; the sic is Caldwell and Klausinger's). Since Morgenstern was wrong about Hella, the consequences were a sorry tale, told here in the final three chapters of the volume. Hayek's first attempts to obtain an academic position in the States were not fruitful. At the end of 1949, his “annus horribilis,” on December 28 he calmly walked out on his family and flew to New York, where he asked the chairman of the Department of Economics and Business at the University of Arkansas for a position in his department (709–10). In Arkansas he immediately obtained an uncontested divorce before taking up a position at the University of Chicago, not in the Department of Economics but in the privately funded Committee on Social Thought. He admitted his intentions to his friend Robbins and to the director of LSE only in letters resigning his chair on February 16, 1950. Between departing from Arkansas and arriving in Chicago, he married Lenerl (whose husband had conveniently died in June) in Vienna on August 3, 1950. On leaving Hella he had not made suitable financial provision for her and their children, which cost him his friendship with Robbins (although, as it turned out, not permanently). This long, detailed, and fascinating volume ends on this rather desperate note.

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