Austrian Economist

Friedrich Hayek, who, with Ludwig von Mises, were the giants of Austrian economics in the 20th Century, became a Nobel laureate in 1974. Hayek argued that government control is, inevitably, the enemy of freedom and denounced the growth of government as The Road to Serfdom (the title of his best-selling book). Hayek decried constructivism above all else, calling it "the pretense of knowledge" and "the illusion of human omnipotence."

Constructivism is the idea that enlightened leaders can steer a society in desirable directions. Theocratic theories and the concept of a revolutionary elite (developed by Vladimir I. Lenin, an early Russian revolutionary who led the Soviet Communist Party to power), epitomize the constructivist vision. Hayek, however, believed that culture and civilization are not consequences of deliberate human design but are instead the products of the survival of society's successful groups. Hence, civilization depends on rules of behavior, not on goals.

Here are some examples of constructivism in action: in the 1980s and 1990s, Iraq's dictator, Saddam Hussein, wanted to unify Arabs to zealously follow the precepts of Islam as he interpreted them. His regime killed tens of thousands of Iranians, Kurds, and Iraqis in attempts to reconstruct society to his design. Hitler, too, was a constructivist, as were the Soviet Union's Joseph Stalin and China's Mao Zedong.

Hayek viewed Keynesianism as a less virulent strain of the constructivism disease. Keynes's message is seductive: government can manipulate total spending to control the twin problems of unemployment and unstable prices. Keynes's comforting message has not been lost on many politicians, who no longer consider themselves to be helpless before the convulsions of a business cycle or limited in what they can deliver voters. Keynesian analysis looks like an instruction manual for running the economy as a well-oiled machine.

The trouble, said Hayek, is that societies are more like organisms than machines. Our interactions are so complex that they cannot be manipulated as many Keynesians suppose. In vain attempts to maintain very low unemployment, government may feel compelled to spend faster and faster, so that prices rise faster and faster as well. This kind of artificial stimulant, said Hayek, distorts the price signals that indicate individuals' desires and genuine scarcities.