Hayek and historical political economy

Hayek’s opposition to the historical approach to political economy was unwavering over the course of his career. In spite of Hayek’s antagonistic attitude, this article argues that certain elements of his stance after “Economics and Knowledge” (1936) were raised by historical political economists in the final decades of the nineteenth century. The point is not to suggest a direct influence of historical economists on Hayek, but one mediated by the geographical, linguistic, and cultural proximity of Austria and Germany. As documented in section one, plenty of evidence indicates that the Methodenstreit between Menger and Schmoller did not entail a sharp separation between the two camps. Section two shows that Hayek’s interpretation of the “younger historical school” was severely biased. In section three, the following facets of Hayek’s thought are considered: his concern with realism; the acknowledgement of complexity; the willingness to address policy issues; his peculiar history of modern thought; his ambivalence about value judgements; his focus on institutions and social rules; and a view of evolution as regulated by group superiority. A contrast is sketched between Hayek as an advocate of the “primacy of the abstract” and Schmoller as an upholder of the primacy of the concrete. In section four, an interpretation of Hayek’s thinking centred on value judgements is put forward.[...