Edited by Peter G. Klein and Michael E. Sykuta
Chapter 8: F.A. Hayek
Peter G. Klein Oliver Williamson dedicates his 1985 book, The Economic Institutions of Capitalism, to four ‘teachers’: Kenneth Arrow, Alfred D. Chandler, Jr, Ronald Coase, and Herbert Simon. Another influential teacher, or predecessor, is F.A. Hayek, the 1974 Nobel laureate and best-known representative of the modern ‘Austrian’ school. Hayek began his career as a specialist in monetary and business-cycle theory but also made important contributions to the economics of knowledge and competition, legal and constitutional theory, evolutionary economics, and the theory of economic change. Hayek’s emphasis on the ubiquity of dispersed, tacit knowledge, the importance of adaptation, and the function of abstract rules have significantly influenced Williamson’s understanding of markets and hierarchies. More generally, Hayekian ideas about knowledge, competition, discovery, and complexity figure prominently in the transaction cost approach to economic organization. Hayek’s life and work Hayek’s life spanned the twentieth century, and he made his home in some of the great intellectual communities of the period.1 Born Friedrich August von Hayek in 1899 to a distinguished family of Viennese intellectuals, Hayek attended the University of Vienna, earning doctorates in 1921 and 1923. Hayek came to the University of Vienna just after World War I, when it was one of the three best places in the world to study economics (the others being Stockholm and Cambridge, England). Though Hayek was enrolled as a law student, his primary interests were economics and psychology. He studied with Friedrich von Wieser and was also influenced by Ludwig von Mises, particularly Mises’s 1922 book...
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