Elgar Companion to Hayekian Economics

Elgar Companion to Hayekian Economics

Elgar original reference

Edited by Roger W. Garrison and Norman Barry

The Elgar Companion to Hayekian Economics provides an in-depth treatment of Friedrich August von Hayek’s economic thought from his technical economics of the 1920s and 1930s to his broader views on the spontaneous order of a free society. Taken together, the chapters show evidence both of continuity of thought and of significant changes in focus.

Chapter 6: Hayek and Friedman

Roger W. Garrison

Subjects: economics and finance, public choice theory, politics and public policy, public choice


In the grand battle of ideas, Friedrich A. Hayek and Milton Friedman were, at the same time, soul mates and adversaries. Hayek’s Constitution of Liberty (1960) and Friedman’s Capitalism and Freedom (1962) are rightly seen as companion volumes. By contrast, Hayek’s Monetary Theory and the Trade Cycle ([1928] 1975) and Friedman’s Optimum Quantity of Money and Other Essays (1969) are worlds apart. The tenets of classical liberalism unite these two thinkers; the methods and substance of their economics, particularly the economics of money and business cycles, divide them. A thorough understanding of both the common ground and the battleground requires attention to several different fields of study, including philosophy of science, methodology, political economy and economics. The comparison is facilitated by a wealth of literature produced by Hayek and Friedman as well as a voluminous and still-growing secondary literature aimed at reconciling the differences or at sharpening them. But sorting it all out requires careful attention to the changing views of these two leaders of their respective schools of thought and to the various contexts in which particular arguments were made. Hayek’s own characterizations of the relationship between his views and those of Friedman are sometimes less than helpful. In a mid-1980s interview conducted by W.W. Bartley III, for instance, Hayek (1994, p. 144) claimed that ‘Milton and I agree on almost everything except monetary policy’.

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