Friedrich Hayek
A Biography

By Alan Ebenstein

for St. Martin's Press

Copyright © 2001 Alan Ebenstein. All rights reserved.
ISBN: 0-312-23344-2

Chapter One


The Vienna into which Friedrich August von Hayek was born on May 8,1899 was cacophonous. The Viennese held divergent views about the future ofalmost everything. Theodor Herzl, founder of the political Zionist movement,was from Vienna, as was Hitler.

    Vienna had long been capital of the Holy Roman Empire and then theAustrian Empire. In 1867, it became capital of the Austro-Hungarian Empire. Viennawas the cultural center of the Germanic world. It was the musical center of the entireworld—Beethoven, Mozart, Haydn, and Schubert all lived and worked there.

    Hayek's father, August (from whom he received his middle name), wasborn in Vienna in 1871. August became a medical doctor employed by themunicipal ministry of health, but his true passion was botany, in which he wrotea number of monographs. August von Hayek was also a part-time botany lecturerat the University of Vienna.

    Hayek's mother, Felicitas (nee) von Juraschek, was born in 1875. Hermother was from a wealthy, conservative, land-owning family. When Felicitas'mother died some years before Friedrich was born, Felicitas received aconsiderable inheritance that provided as much as half of her and August'sincome during the early years of their marriage. Hayek was the oldest of threeboys. Heinrich and Erich came one-and-a-half and five years after him.

    Once, discussing his father and his influence on his career, Hayek said,"I suppose the one thing which might have changed my own development wouldhave been if there didn't exist that esteem for intellectual work. My determinationto become a scholar was certainly affected by the unsatisfied ambition ofmy father to become a university professor. Behind the scenes it wasn't muchtalked about, but I was very much aware that in my father the great ambition ofhis life was to be a university professor. So I grew up with the idea that therewas nothing higher in life than becoming a university professor, without anyclear conception of which subject I wanted to do."

    In addition to his father's scholarly pursuits, both of his grandfathers—wholived long enough for Hayek to know them—were scholars. Franz vonJuraschek was a leading economist in Austria and close friend of Eugen vonBöhm-Bawerk, one of the three key originators of the historical Austrian schoolof economics (the others were Carl Menger and Friedrich von Wieser, the latterof whom von Juraschek also knew). Von Juraschek was a statistician and laterbecame employed by the Austrian national government. As a result of his owninheritance from his first wife (Felicitas' mother), he became wealthy.

    Hayek's paternal grandfather, Gustav Edler von Hayek, taught naturalscience at the Imperial Realobergymnasium (secondary school) in Vienna forthirty years. He wrote systematic works in biology, some of which becamerelatively well known. One monograph of his at the University of Vienna libraryis titled (in German), A Deep Sea Investigation on Board the British Warship"Porcupine" 1869; other titles include Compendium of the Geography of Viennaand Atlas of Medical and Pharmaceutical Plant Powers.

    The Germanic world at the turn of the twentieth century was differentfrom the present in myriad ways. As an example of the changes in technologythat occurred during his lifetime, Hayek described a scene from his youth,before the time of the automobile, when he observed a fireman's horse"standing in its stable ready to be put on the carriage with everything hangingover it; so it required only two or three pressings of buttons and the horse wasfinished to go out."

    Differences between the Germanic world at the turn of the twentiethcentury and the world just after the turn of the twenty-first go beyond technology.The Germanic world in 1899 was thoroughly prejudiced and anti-Semitism wasrampant, particularly in Vienna. Hayek did not share the anti-Semitic views ofmany, perhaps most, of his Christian contemporaries.

    Vienna before World War I has been celebrated and condemned. Forsome, it was a glittering intellectual paradise in which some of the greatest mindslived. For others, it was a phony city in which superficiality prevailed oversubstance. Historians of Vienna Allan Janik and Stephen Toulmin, followingViennese author Robert Musil, call Austrian society "Kakania," a namecombining two "senses on different levels. On the surface, it is a coinage fromthe initials K. K. or K. u. K., standing for `Imperial-Royal' or `Imperial andRoyal.' But to anyone familiar with German nursery language, it carries also thesecondary sense of `Excrementia.'"

    Musil himself wrote, "All in all, how many remarkable things might besaid about that vanished Kakania! On paper it called itself the Austro-HungarianMonarchy; in speaking, however, one referred to it as `Austria'—that is to say,it was known by a name that it had, as a State, solemnly renounced by oath. Byits constitution it was liberal, but its system of government was clerical. Beforethe law all citizens were equal, but not everyone, of course, was a citizen. Therewas a parliament, which made such vigorous use of its liberty that it was usuallykept shut; but there was also an emergency powers act by means of which it waspossible to manage without Parliament, and every time when everyone was justbeginning to rejoice in absolutism, the Crown decreed that there must now againbe a return to parliamentary government."

    Viennese author Hilde Spiel called the time between 1898 and WorldWar I the "magical" years in Vienna, when a "seemingly sudden flowering oftalent came about—especially in the fields of literature and philosophy." Thedecades following Austria's defeat by Prussia in the Austro-Prussian War of1866 were relatively free from war and bloodshed. During these years, Viennaprospered and the middle class expanded.

    Vienna was one of the largest cities in the world in 1900. There were twoseparate eras in its history that are sometimes called golden. The first was themusical golden age of the late eighteenth and early nineteenth centuries. Thesecond was the decades on either side of World War I.

    Friedrich—or "Fritz," as his mother and most friends called himthroughout life (to his dislike)—displayed an incredibly intellectual andacademic bent from a very young age. In unpublished autobiographical notes,he recounts that he read fluently and frequently before going to school.

    As a result of his father's serving different neighborhoods as a healthofficer in the municipal ministry of health, Hayek lived in four apartments whilegrowing up. He recalled in his unpublished autobiographical notes a divisionwithin the family between himself and his younger brothers. Although they wereonly a few years younger than him, he believed that they were somehow of adifferent generation. Hayek preferred to associate with adults.

    After receiving the Nobel Prize in Economics in 1974, he wrote a semi-autobiographicalessay, "Two Types of Mind," where he commented that in his"private language" he described "the recognised standard type of scientists asthe memory type. It is the kind of mind who can retain the particular things hehas read or heard, often the particular words in which an idea has beenexpressed." This type of mind is the "master of his subject." Hayek was, by wayof contrast, a "rather extreme instance of the more unconventional type," the"puzzler," whose "constant difficulties, which in rare instances may be rewardedby a new insight, are due to the fact that they cannot avail themselves of theestablished verbal formulae or arguments which lead others smoothly andquickly to the result. People whose minds work that way seem to rely in somemeasure on a process of wordless thought. To `see' certain connections distinctlydoes not yet mean for them that they know how to describe them in words."

    The issue of "explicit" versus "tacit" knowledge—or the differencebetween "knowing that" and "knowing how," or between verbal and intuitiveknowledge—is one that he explored later in his career, and was vital in hisconception of spontaneous order. The "master of his subject" has verbalknowledge; the "puzzler" has intuitive knowledge. Knowledge is not, or maynot initially be, verbal. To assume that all knowledge can be verbally expressedat a point in time is false. Knowledge can exist although the words to express ithave not been discovered yet. One of the errors of classical socialism was thatit relied too much on verbal knowledge.

    Hayek characterized his teacher von Wieser at the University of Vienna asin "many respects rather a puzzler," and recalled an intellectual description of Wieserby Joseph Schumpeter, presumably therefore also giving some idea of Hayek'sconception of himself. The "fellow economist who enters Wieser's intellectualworld at once finds himself in a new atmosphere. It is as if one entered a house whichnowhere resembles the houses of our time and the plan and furniture of which isstrange and not at once intelligible. There is hardly another author who owes as littleto other authors as Wieser, fundamentally to none except Menger and to him onlya suggestion—with the result that for a long time many fellow economists did notknow what to do with Wieser's work. Of his edifice everything is his intellectualproperty, even where what he says has already been said before him."

    Hayek described characteristics of the Germanic culture in which he wasraised. He wrote in The Road to Serfdom (though he made a distinction betweenGermans and Austrians) that "few people will deny that the Germans on thewhole are industrious and disciplined, thorough and energetic to the degree ofruthlessness, conscientious and single-minded in any tasks they undertake, thatthey possess a strong sense of order, duty, and strict obedience to authority, andthat they often show great readiness to make personal sacrifices and greatcourage in physical danger. Deficient they seem in most of those little yet soimportant qualities which facilitate the intercourse between men in a freesociety: kindliness and a sense of humour, personal modesty, and respect for theprivacy and belief in the good intentions of one's neighbour."

    He made these comments about his distant cousin, the philosopherLudwig Wittgenstein, that shed further light on the society in which he grew tomaturity. "What struck me most," Hayek remembered, "was a radical passionfor truthfulness in everything (which I came to know as a characteristic vogueamong the young Viennese intellectuals of the generation immediately precedingmine). This truthfulness became almost a fashion in that border groupbetween the parts of the intelligentsia in which I came so much to move. It meantmuch more than truth in speech, One had to `live' truth and not tolerate anypretence in oneself or others. It sometimes produced outright rudeness and,certainly, unpleasantness. Every convention was dissected and every conventionalform exposed as fraud."

    Hayek was personally as well as politically a thorough-going individualist.He said in a 1945 lecture that in the "rationalist sense of the term, in theirinsistence on the development of `original' personalities which in every respectare the product of the conscious choice of the individual, the German intellectualtradition indeed favors a kind of `individualism' little known elsewhere. Iremember well how surprised and even shocked I was myself when as a youngstudent, on my first contact with English and American contemporaries, Idiscovered how much they were disposed to conform in all externals to commonusage rather than, as seemed natural to me, to be proud to be different andoriginal in most respects."

    The focus of the von Hayek household as Hayek grew up was his father'sbotanical collections. Wherever his family lived, their premises were filled tooverflowing with dried plants, prints, and photos of plants. In addition to theirown residence, the family, particularly Felicitas and the children, visited thevilla of Felicitas' father and his second wife and their children. Hayek's familytoday remember their father's first family as extended and close-knit. He himselfrecalled that get-togethers at his maternal grandfather's home were large andextended across ages.

    By comparison to his maternal grandparents, his paternal grandparents'circumstances were modest. The von Hayeks had been ennobled over a generationbefore the von Jurascheks, however, and were "proud of their gentility and ancestry."By way of comparison, the von Jurascheks were "definitely upper-class bourgeoisieand wealthier by far." Hayek remembered that his maternal grandparents' home was"magnificent, even grandiose ... undoubtedly one of the most beautiful flats inVienna." They had several servants.

    "Von" was the fourth and lowest, as well as most common, of the secondof two ranks of nobility in imperial Austria. The higher rank was composed ofthe royal families who ruled the Germanic world's principalities for centuries,and the lesser rank were those—such as the von Hayeks and von Jurascheks—whoseforebears were ennobled during the previous century or so. The Englishapproximation of "von" is "sir."

    An "ek" ending on a surname is typically Czech. Hayek traced hisancestry to a "Hagek" from Prague, who was an associate of the famousastronomer Tycho Brahe. Hayek liked to note that on some old maps of the moonthere is a crater named "Hagetsius," after his probable ancestor. He observedthat families with the name "Hayek" or "Hagek" can be traced in Bohemia (nowprincipally the Czech Republic) from the 1500s, and that—although his familyspoke German for as long as he could ascertain—"Hayek" is probably derivedfrom the Czech word "Hajek," meaning "small wood."

    He also had ancestors, as did his second wife, from the Salzburg region.In his inaugural lecture at the University of Salzburg, he commenced that in the"course of my life I always introduced myself as a foreigner at the beginning ofmy lectures. But this time I may permit myself to start with the statement that Iam a native. It is now 370 years since a common ancestor of my wife and myselfas Duke Archbishop court registry writer received a heraldic letter" to performa building project. A number of Hayek's ancestors from the Salzburg regionwere government officials or salt producers. The family later moved to Vienna.

    Josef Hayek, the administrator of an aristocrat, was ennobled in 1789 fordeveloping the first Austrian textile factories, through which he became wealthy.His son Heinrich, Friedrich's great-grandfather, became a civil servant in Viennaand, in his great-grandson's words, "spent a long, dignified, and comfortablelife as a gentleman." Gustav, Heinrich's son, was originally educated by privatetutors and attended an upper-class school reserved for the nobility. Hayekrecalled that Gustav became a "naval officer, and indeed seems to have been abit of a naval dandy." Late in life, by the 1860s, Heinrich lost the family fortune,and Gustav was required to become a schoolmaster. Gustav was August's father.

    Hayek told an anecdote about how he recognized Wittgenstein at a railwaystation in 1918 when both were officers in the Austrian Army that sheds a little lighton his childhood. "Very likely Wittgenstein had been one of the handsome andelegant young men whom I remembered around 19 10," Hayek recalled, "when my[maternal] grandparents rented for the spring and summer a Swiss cottage on aproperty adjoining the park of the Wittgensteins in the suburb of Neuwaldegg,having frequently called from their much more grandiose villa for the much youngersisters of my mother to take them to tennis." His relationship with Wittgensteinwas not close.

    Hayek spent many happy hours on botany with his father, his mostsustained childhood hobby. August accumulated a herbarium of between 75,000and 100,000 sheets and traveled extensively in central Europe, Scandinavia,France, Tunisia, Greece, and Egypt on botanical expeditions. Friedrich hadcollections of natural specimens of various kinds, including insects andminerals, as well as plants. August edited a "Flora Exotica" supplying andexchanging rare specimens of pressed plants, and Friedrich helped him inpractical aspects of this endeavor.

    Other hobbies in which Hayek participated as a child and youthincluded photography, cycling, skiing, sailing, climbing, mountaineering, andtheater. He described his attraction to mountain climbing. It was not "so muchthe technique of rock climbing which fascinated" him, "partly because for thatpurpose you had to get a guide." He climbed without a guide, and enjoyed"difficult, but not exceedingly difficult, terrain—combinations of ice androck." He was intrigued by finding his way where there was only one way toget through the face of a mountain. This "needn't be technically difficult. Butyou knew you would get stuck unless you found the one possible waythrough." Mountaineering was a family tradition—his maternal grandfathervon Juraschek mountain climbed with Eugene von Böhm-Bawerk during the1880s when they were colleagues in Innsbruck. Friedrich mostly climbed withhis brothers and occasionally with his father.

    He remarked of his youth that up to his college years his tendencies were"very definitely practical." He wanted to be "efficient." An interviewer wroteand quoted him as saying that the first interest he "pursued systematically wasthe theatre, and [he] even tried to write tragedies `on rather violent and more orless erotic themes—Andromache, Rosamunde, and so on.'" Hayek attendedplays frequently and read many translations of Spanish and French dramas fromthe seventeenth and eighteenth centuries and the Greek classics. He read fineGerman literature, especially the works of Goethe, whom he considered thegreatest literary influence on his early thinking. He was a tall, gangly, untidyboy, and a voracious reader.

    He was brought up without religious instruction, though both his parentswere formally Roman Catholic. His parents never took him to church. Therewas some religious education in school, but this was minimal. He and hisbrothers often did not attend the semi-compulsory mass at school whenever a"quite regular" Sunday family excursion occurred during spring and summer,which led to frequent conflicts with scholastic authorities. He and his fathersometimes took walks in the woods on Sundays.

    However, as a young boy, Hayek remembered the "anguish of feelingthat he had sinned between confession and communion." Hayek recalled thatwhen he was thirteen or fourteen, he asked all the priests he knew to explainwhat they "meant by the word God. None of them could. [laughter] That wasthe end of it for me." "By the age of fifteen, I had convinced myself that nobodycould give a reasonable explanation of the word `God' and that it was thereforeas meaningless to assert a belief as to assert a disbelief in God." Few of hisfamily's friends were religious.

    His family today remember stories about him as a somewhat rebelliousstudent. This was in contrast to his brothers, who, though excellent students,were not precocious. He showed little interest in any subject except biology.Once, at age fourteen, having failed Latin, Greek, and mathematics, he wasrequired to repeat a grade. He changed Gymnasium not just once, but twice,because he had problems with teachers. He would generally "swot up in a fewweeks before the end-of-the-year examinations the whole substance of a year'steaching in several subjects" in which he had done "no work whatever."

    As a schoolboy, he irritated most of his teachers by his combination ofintelligence and disinterest. While he did not do well in school, he wasnonetheless considered a very bright boy by his fellows. When he left his firstGymnasium—because, he claimed, of deficiency in drawing—he went toanother school with poorer boys (schools were separated by gender). Most ofthe time, he was near the bottom of his class in most required subjects. He wasnot interested in most of what his fellow students were learning and teacherswere teaching, nor did he feel any compunction to be interested.

    At home, it was a different matter. Here, he was the little scholar helpinghis father with botanical work and attending meetings of the Vienna Zoologicand Botanical Society with him. At fourteen or fifteen, growing intellectuallydissatisfied with the classificatory aspects of biology, he desired more theoreticalknowledge. "When my father discovered this, he put in my hand what wasthen a major treatise on the theory of evolution. It was just a bit too early. I wasnot yet ready to follow a sustained theoretical argument. If he had given me thisa year later, I probably would have stuck with biology. The things did interestme intensely." He retained interest in evolution throughout his life and career.

    The idea of evolution perhaps loomed larger in the first decades afterDarwin's work than it has since the end of World War II. The idea of survivalof the fit and of unanticipated, undirected evolutionary development werecentral in Hayek's thought.

    His parents were "exceedingly well suited to each other, and their marriedlife seemed (not only to me) one of unclouded happiness." His family life was"probably ideal—three meals together every day, talking about every subjectunder the sun, always left free by our parents to roam, to think, even to commitminor peccadilloes."

    August was, Friedrich recalled, an "extraordinarily educated man" in thefield of German literature. Hayek's family today remember him making verypositive comments about his father. Hayek recalled the ice-cold bath his fathertook every morning for discipline of body and mind. As a youth and after WorldWar I, Hayek and the rest of the family spent many evenings listening to Augustread the great German dramas and German versions of Shakespeare's plays.August had a great memory and could quote things like "Die Glocke," FriedrichSchiller's poem, from beginning to end. Friedrich would have the academiccareer his father did not have. August had more influence on his oldest son thananyone else.