Friedrich Hayek was born in Austria on May 8, 1899. His father was a doctor and his mother cared for the Hayek family. Hayek was intellectual and excelled throughout his education. In 1917, Hayek signed up to the Army and served in World War I. His experiences in war led to his desire to study economics as he wanted to help governments prevent the financial mistakes that led to the war. After the war Hayek studied law and political science at the University of Vienna.
In 1927, Hayek became director of the Austrian Institute for Business Cycle Research. Hayek focussed much of his work on Austrian theory of business cycles, capital theory and monetary theory and exploring the links between all three. He became well known for his work and theoretic models about why markets fail to coordinate people’s plans and result in large scale unemployment.
Hayek was developing his theories at the same time as British economist John Keynes. Both were prominent economists during the Great Depression era but battled over their different beliefs. Hayek believed that recovery from a post- boom crash called for a return to sustainable production as well as adequate spending. However, people thought this ‘liquidate labour, liquidate stocks, liquidate the farmers’ methodology would not work. As a result, many economists thought that Keynes ‘General Theory of Employment, Interest and Money’ won over Hayek’s ideas; however Hayek and most members of the Austrian school of thought disagreed.
In 1930 Hayek moved to the London School of Economics and soon after became a British citizen. Whilst at the institution, Hayek made fundamental contributions to political theory, psychology and economics. In 1950 Hayek became professor of social and moral sciences at the University of Chicago. Hayek stayed until 1962 and worked on political theory, psychology and methodology. His work from that period included arguments against ‘scientism’ methodology in social sciences, and the proper role of government.
Hayek returned to Europe in 1962 as professor of economic policy at the University of Freiberg, West Germany. In 1968 he went on to the University of Salzburg where he taught and continued to research. In 1974, Hayek was awarded the Nobel Prize jointly with Gunnar Myrdal for their ‘pioneering work in the theory of money and economic fluctuations and for their penetrating analysis of the interdependence of economic, social and institutional phenomena.’ Hayek continued to work, and publish papers and books. Hayek will be best remembered for his defence of classical liberalism and his work that led to his Nobel Prize. Hayek died March 23, 1992.