F. A. Hayek won the Nobel Prize in economics in 1974. He was a free market economist. Today, he is a legend.
In 1946, he was blackballed by the supposedly free market-oriented department of economics at the University of Chicago.
That was an outrage, of course. It was hypocrisy of a high order. But it is a mark of how far things have come that Hayek is at least grudgingly recognized by academia today.
A C-Span in was aired 1994on the 50th anniversary of the publication of Hayek’s Road to Serfdom. The interview was with Milton Friedman.
The interview had lots of good information. The interviewer asked him why the publisher asked him to write an introduction. Hayek had died two years earlier. Friedman gave a long answer about how he had been a member of the Mont Pelerin Society, which Hayek had founded in 1947. It was an association of free market economists.
What Friedman never mentioned was that the department of economics at the University of Chicago refused to hire Hayek in 1946. Hayek returned to the London School of Economics. Then, in 1950, Hayek came to the University of Chicago to teach in the tiny and obscure Committee on Social Thought. His salary was paid by the William Volker Fund. He cost the University nothing. He received no pension.
Why did the economics department do such a thing? Officially, because Hayek did not meet its rigorous standards of academic excellence. That was nonsense, and was understood as such at the time by the few people who knew of the blackball. He was an Austrian School economist who reminded people that Chicago School economists had sold out to the Keynesian mainstream in methodology, as well as on the idea of anti-monopoly regulation.
Methodology was a major issue. The Chicago School used lots of formulas to provide the appearance of scientific rigor. Friedman became famous in the December 31, 1965 issue of Time Magazine, with its soon-to-be-famous cover story on John Maynard Keynes. “We are all Keynesians now,” he announced. He later explained that he meant “methodologically.”
Hayek wasn’t a Keynesian. The Austrian School wasn’t.
It is also worth noting that The Road to Serfdom was the first best-selling book published by the University of Chicago Press. Its initial run of 2,000 sold out immediately. It sold 30,000 copies over the next six months. Then a Reader’s Digest condensation was run in April 1945. Book sales shot up. By 2007, it had sold 350,000 copies.
At no time did the department of economics allow him to teach a course.
To see the interview with Friedman on Hayek, click the link.