Friedrich von Hayek

In August 1926, Hayek married Helen Berta Maria von Fritsch, at that time a secretary at the civil service office where Hayek was working. They had two children; Christina Maria Felicitas, Lorenz Josef Heinrich. Later, he claimed that he was never happy with her.

Hayek was actually in love with his cousin Helene Bitterlich. When she got married to somebody else Hayek married Berta Maria on the rebound. Sometime around 1945-1946, he began an affair with Bitterlich, keeping it a secret until 1948.

Initially Helen Berta Maria refused to grant him the divorce. Nonetheless, it took place in July 1950, after he had almost arm twisted her and their children into accepting it. He married Helene Bitterlich just a few weeks after this. After his divorce, he rarely visited his children.

Friedrich August von Hayek was born on 8 May 1899, in Vienna, into an academically distinguished family. His father, August von Hayek, was a physician with a passion for botany. Employed with the municipality, he also taught at Hochschule für Bodenkultur and is remembered for his role in phytogeographical investigations.

Friedrich’s mother, Felicitas Hayek née von Juraschek, was the daughter of a leading economist and a statistician. She came from a wealthy, land-owning family, inheriting substantial amount on the death of her mother.

Friedrich was the eldest of his parents’ three children; having two younger brothers named Heinrich and Erich. From his childhood, he displayed an intellectual bent of mind. Although his brothers were slightly younger than him, he never felt at ease with them, preferring to interact with elders.

He was also far advanced in academics, and learnt to read fluently before he reached school going age. During his teens, he enjoyed reading the works of Hugo de Vries and Ludwig Feuerbach. A lecture on Aristotelian ethics at school also impressed him a lot.

In 1917, during the later stages of World War I, Hayek’s education was interrupted for a brief period, when he joined the Austro-Hungarian army as an artillery officer on the Piave front in northern Italy. During the war, he was decorated for bravery, but suffered damage in left ear.

On his return to Vienna in the middle of 1924, Friedrich Von Hayek took up a job at a civil service office. Sometime now, he read ‘Socialism’ by Ludwig von Mises and became more sympathetic to Carl Menger’s classical liberalism than towards Wieser’s democratic socialism. Subsequently, he joined Ludwig’s academic circle.

He was also greatly stimulated by the advanced techniques, developed in the recent years, for forecasting industrial fluctuations and analyzing time series. He now started publishing number of articles in these fields and also arranging number of private seminars.

In 1927, he helped Mises to set up ‘Österreichisches Institut für Konjunkturforschung’ (Austrian Institute for Business Cycle Research), eventually becoming its first Director, a position he held until he left for London in 1931. Today, with a pool of forty economists, it is the largest research institute in Austria.

In 1929, on completion of his habilitation, Hayek joined University of Vienna as a lecturer. In the same year, he had his first book, ‘Monetary Theory and the Trade Cycle’ published.

In January 1931, he gave a series of lectures at the London School of Economics and Political Science. Later in the same year, these lectures were published as ‘Prices and Production’ and more importantly, led to his appointment as Tooke Professor of Economic Science and Statistics in the University of London.

In late 1931, Hayek took up his position at the London School of Economics (LSE). Very quickly, he gained recognition as an eminent economist, at the same time becoming embroiled in a debate with John Maynard Keynes of Cambridge University.

While Keynes preached increased government expenditures and lower taxes to stimulate demand and pull the global economy out of the Depression, Hayek suggested that private investment in the public markets was a better road to prosperity. He also wrote a long and critical review of Keynes’ book, ‘A Treatise on Money’ (1930). In response Keynes vehemently attacked Hayek’s ‘Prices and Production’ (1931).

Very soon, other economists got embroiled into the debate, many of them criticizing both of them, causing them to rethink their theory. In 1936, Keynes had his most famous book, ‘The General Theory of Employment, Interest and Money’ published while Hayek took five more years to publish his.

Hayek remained with the LSE till 1950. Some of the would-be famous economists who studied with him during this period were Arthur Lewis, Ronald Coase, John Kenneth Galbraith, Abba Lerner, Nicholas Kaldor, George Shackle, Thomas Balogh, Vera Smith, L. K. Jha, Arthur Seldon, Paul Rosenstein-Rodan, and Oskar Lange.

He also continued writing, producing number of papers and books. Among them, most famous were ‘Monetary Nationalism and International Stability' (1937), 'Profits, Interest & Investment' (1939), ‘The Pure Theory of Capital’ (1941), 'The Road to Serfdom' (1944) and 'Individualism and Economic Order' (1948).