Axel Leijonhufvud Interviews Hayek on the History of the Austrian School

This is an interview of Hayek by Axel Leijonhufvud, conducted in November 1978.

In Part 1 (which ends around 56.50), some points of interest are the Vienna university system that produced Hayek, methodology, the Geistkreis (an informal seminar founded by Hayek and Herbert Furth, which existed from 1921 to 1938), the Mises seminar at Vienna (in the 1920s and early 1930s), and Hayek’s personal assessment of Mises (from about 28.00).

Part 2 of the interview begins at 56.50, and deals with issues of methodology, the social sciences, and Hayek’s theory of mind.




What is most interesting are Hayek’s comments (from 40.43) on the history of the Austrian school in the 1920s and 1930s.

Here is a transcript:

“LEIJONHUFVUD: In economics, let me come back to a question we have touched upon before. In the twenties in Vienna, was there such a thing as an Austrian school in economics? Did you and your contemporaries perceive identification with a school?

HAYEK: Yes, yes. Although at the same time [we were] very much aware of the division between not only Meyer and Mises but already [Friedrich von] Wieser and Mises. You see, we were very much aware that there were two traditions—the [Eugen von] Böhm-Bawerk tradition and the Wieser tradition—and Mises was representing the Böhm-Bawerk tradition, and Meyer was representing the Wieser tradition.

LEIJONHUFVUD: And where did the line between the two go? Was there a political or politically ideological line involved?

HAYEK: Very little. Böhm-Bawerk had already been an outright liberal, and Mises even more, while Wieser was slightly tainted with Fabian socialist sympathies. In fact, it was his great pride to have given the scientific foundation for progressive taxation. But otherwise there wasn’t really—I mean, Wieser, of course, would have claimed to be liberal, but he was using it much more in a later sense, not a classical liberal” (Nobel Prize-Winning Economist: Friedrich A. von Hayek [1983], pp. 49–50).

In other words, there was a split in the Austrian school in the 1920s between

(1) the classical liberal wing of Eugen von Böhm-Bawerk and Mises (which evolved into modern American libertarianism), and

(2) the wing of von Wieser, whose members (or at least some of them) were leaning towards Fabian socialism, and was clearly becoming more like modern progressive liberalism or social democracy.

Another interesting exchange occurs from 50.10. According to Hayek, classical liberalism (or libertarianism) was not the major or defining ideology of early Austrian economists:

LEIJONHUFVUD: Now, in the twenties, were most of the economists in Vienna at that time liberals in the traditional sense?

HAYEK: No, no. Very few. Strigl was not; he was, if anything, a socialist. Shams was not. Morgenstern—was not. I think it reduces to Haberler, Machlup, and myself.

LEIJONHUFVUD: So my previous question was: Was there an Austrian school? and you said yes, definitely.

HAYEK: Theoretically, yes.

LEIJONHUFVUD: In theory.

HAYEK: In that sense, the term, the meaning of the term, has changed. At that time, we would use the term Austrian school quite irrespective of the political consequences which grew from it. It was the marginal utility analysis which to us was the Austrian school.

LEIJONHUFVUD: Deriving from Menger, via either Wieser or Bohm-Bawerk?

HAYEK: Yes, yes.

LEIJONHUFVUD: The association with liberal ideological beliefs was not yet there?

HAYEK: Well, the Menger/Bohm-Bawerk/Mises tradition had always been liberal, but that was not regarded as the essential attribute of the Austrian school. It was that wing which was the liberal wing of the school.

LEIJONHUFVUD: And the Geistkreis was not predominately liberal?

HAYEK: No, far from it.

LEIJONHUFVUD: And what about Mises’s seminar?

HAYEK: Again, not. I mean you had [Ewald] Schams and Strigl there; and Engel-Janoschi, the historian; and Kaufmann, who certainly was not in any sense a liberal; Schutz, who hardly was—he was perhaps closer to us; Voegelin, who was not ….

LEIJONHUFVUD: So in the revival of interest in the Austrian school that has taken place in recent years in the United States …

HAYEK: It means the Mises school (Nobel Prize-Winning Economist: Friedrich A. von Hayek [1983], pp. 54–56).

According to Hayek, it was “marginal utility analysis” that was the defining attribute of the Austrian school, not Classical liberalism.

Hayek had studied under Friedrich von Wieser, and, as we have seen above, von Wieser was a type of progressive liberal who had been sympathetic to Fabian socialism.

In fact, in Hayek’s own words, he had studied under Wieser for this reason:

“I was personally a pupil of [sc. Eugen von Böhm-Bawerk’s] … contemporary, friend and brother-in-law, Friedrich von Wieser. I was attracted by him, I admit, because unlike most of the other members of the Austrian school, he had a good deal of sympathy with a mild Fabian socialism to which I was inclined as a young man. He in fact prided himself that his theory of marginal utility had provided the basis of progressive taxation, which then seemed to me one of the ideals of social justice”
F. A. Hayek, “Coping With Ignorance,” July 1978.
http://www.hillsdale.edu/news/imprimis/archive/issue.asp?year=1978&month=07.

There is an untold story here of the interventionist and progressive liberal side of some of the early Austrians (see my posts below).

From 53.30, Hayek argues that methodological individualism leads to political liberalism (in its laissez faire form). Hayek also repudiates Mises’s apriorism as a methodology for economics.

For more on the early history of the Austrian school and on its interesting early “socialists” (or in modern political terminology “progressive liberals”), see my posts here:

“Why are there no Austrian Socialists?,” June 3, 2011.

“Friedrich von Wieser and Eugen von Philippovich von Philippsberg: Austrian Economists and Fabian Socialists,” October 21, 2010.

BIBLIOGRAPHY
Nobel Prize-Winning Economist: Friedrich A. von Hayek. Interviewed by Earlene Graver, Axel Leijonhufvud, Leo Rosten, Jack High, James Buchanan, Robert Bork, Thomas Hazlett, Armen A. Alchian, Robert Chitester, Regents of the University of California, 1983.