1. Friedrich August von Hayek
Lorenzo McClellan

2. Life
 Born in 1899 Vienna
 Studied with Ludwig von Mises
 Moved to London, then to Chicago and
finally to Germany.
 Won the Nobel prize in 1974

3. Business Cycle Theory
 Hayek said “busts” were caused by bad
central bank policy.
 If the bank lowered interest rates too much,
credit would be too easy to get.
 People would make bad business
assumptions, and the hollowness of these
would eventually be discovered, resulting in
a bust.

4. Hayek’s view of free markets and
government planning
 Hayek said that the problem of communism
was that knowledge is diffuse. Central
planning assumes the planners know
everything necessary to run society. They
do not.
 Free markets allow people to each make
decisions based on their area of expertise,
resulting in a “spontaneous” order.

5.  “The peculiar character of the problem of a
rational economic order is determined precisely by
the fact that the knowledge of circumstances of
which we must make use never exists in
concentrated or integrated form but solely as the
dispersed bits of incomplete and frequently
contradictory knowledge which all the separate
individuals possess.”
 ---Hayek, The Use of Knowledge in Society

6. Influence
 Hayek had many followers among the new
conservatives of the 1980s.
 Margaret Thatcher said his The Road to Serfdom
was “what we believe.”
 Ronald Reagan appointed many Hayekians to high
office.
 George H.W. Bush gave him the presidential
medal of freedom.

7. More influence
 Jimmy Wales, the founder of Wikipedia,
has said that Hayek’s ideas of diffuse
knowledge inspired him to create an
encyclopedia anyone can edit.

8. Works Cited
 http://freedomandwhisky.blogspot.com/1980c5.jpg (Illustration)
 http://www.montpelerin.org/images/photos/friedrichVonHayek2.jpg
 http://www.brisbanetimes.com.au/ffximage/2007/04/26/jimmywales55_wideweb__470x364,0.jpg
 studio52contact.blogspot.com
 frmarkdwhite.wordpress.com
 Hayek NY Times Obit by Sylvia Nasar
 Thatcher’s People by John Ranelagh
 Jimmy Wales interview on Youtube
 ‘The Use of Knowledge in Society,” by F.A. Hayek
 Hayek biography from Mises.org, by Peter G. Klein
 Hayek article on econlib.org