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. 336 Murray N.Rothbard: Making Economic SenseEngland was then the prestigious center of world economic thought,and Keynes had behind him the eminence of Cambridge University, aswell as his own stature in the intellectual community.Add to thisKeynes s personal charm, and the fact that his allegedlyrevolutionary theory put the imprimatur of economic science behindstatism and massive increases of government spending, and Keynesianismproved irresistible.Of all the Misesians who had been nurtured in Viennaand London, by the end of the 1930s only Mises and Hayek were left,as indomitable champions of the free market, and opponents of statism anddeficit spending.In later years Hayek conceded that the worst mistake of his life was tofail to write the sort of devastating refutation of the General Theory thathe had done for the Treatise, but he had concluded that there was no pointin doing so, since Keynes changed his mind so often.Unfortunately, thistime there was no demolition by Hayek to force him to do so.If the business cycle theory was swamped by the Keynesian model, sotoo was the Mises-Hayek critiques of socialism, which Hayek had alsobrought to London, and to which he had contributed in the 1930s.But thisline of argument had been brought to an end, in the late 1930s, when mosteconomists came to believe that socialist governments could easily engagein economic calculation by simply ordering their managers to act as if theywere participating in a real market for resources and capital goods.During World War II, at a low point in the fortunes of human freedomand Austrian economics, in the midst of an era when it seemed thatsocialism and communism would inevitably triumph, Hayek publishedThe Road to Serfdom (1944).It linked the statism of communism, socialdemocracy, and fascism, and demonstrated that, just as people who arebest suited for any given occupations will rise to the top in those pursuits,so under statism, the worst would inevitably rise to the top.Thanks topromotion efforts funded by J.Howard Pew of the then Pew-owned SunOil Company, the Road to Serfdom became extraordinarily influential inAmerican intellectual and academic life.In 1974, perhaps not coincidentally the year after his mentor Ludwigvon Mises died, F.A.Hayek received the Nobel Prize.The first free-market economist to receive that honor, Hayek was accorded the prizeexplicitly for his elaboration of Misesian business cycle theory inthe 1920s and 30s.Since both Mises and Hayek had by that time dropped Our Intellectual Debts 337down the Orwellian memory hole of the economics profession, manyeconomists were sent scurrying to find out who this person Hayek mightbe, thus helping give rise to a renaissance of the Austrian School.Hayek s receipt of the Nobel at this time was deeply ironic, since afterWorld War II his ideas began to diverge increasingly from those of Misesand thus acquire acclaim from latter-day Hayekians who are scarcelyfamiliar with the work which had made Hayek eminent to begin with.Tothe extent that Hayek remained interested in cycle theory, he began toengage in shifting and contradictory deviations from the Misesianparadigm ranging from calling for price-level stabilization, in directcontrast to his warning about the inflationary consequences ofsuch measures during the 1920s; to blaming unions instead of bank creditfor price inflation; to concocting bizarre schemes for individuals andbanks to issue their own newly named currency.Increasingly, Hayek s interests shifted from economics to social andpolitical philosophy.But here his approach differed strikingly fromMises s ventures into broader realms.Mises entire lifework is virtually aseamless web, a mighty architectonic, a system in which he added toand enriched monetary and cycle theory by wider economic political andsocial theories.But Hayek, instead of providing a more elaborate anddeveloped system, kept changing his focus and viewpoint in acontradictory and muddled fashion.His major problem, and his majordivergence from Mises, is that Hayek, instead of analyzing man as arational, conscious, and purposive being, considered man to be irrational,acting virtually unconsciously and unknowingly.Since Hayek was radically scornful of human reason, he could not, likeJohn Locke or the Scholastics, elaborate a libertarian system of personaland property rights based on the insights of human reason into natural law.Nor could he, like Mises, emphasize man s rational insight into the vitalimportance of laissez-faire for the flourishing and even survival of thehuman race, or of foregoing any coercive intervention into the vast andinterdependent network of the free market economy.Instead, Hayek had to fall back on the importance of blindly obeyingwhatever social rules happened to have evolved, and his only feebleargument against intervention was that the government was even moreirrational, and was even more ignorant, than individuals in the marketeconomy. 338 Murray N.Rothbard: Making Economic SenseIt is sad commentary on academia and on intellectual life these daysthat Hayek s thought, possibly because of its very muddle, inconsistency,and contradictions, should have attracted far more scholarly dissertationsthan Mises s consistency and clarity.In the long run, however, it will beall too obvious that Mises has left us a grand intellectual and scientificsystem for the ages whereas Hayek s lasting contribution will boil down towhat was acknowledged by the Nobel committee his elaboration ofMisesian cycle theory.In addition, Hayek must always be honored forhaving the courage to stand shoulder to shoulder with his mentor, in thedark days of the interwar and postwar years, against the twin evils ofsocialism and Keynesianism.109V.Orval Watts:1898-1993V.Orval Watts, one of the leading free-market economists of the WorldWar II and post-war eras, died on March 30 this year.When I first methim, in the winter of 1947, he was a leading economist at the Foundationfor Economic Education (FEE), the only free-market organization andthink-tank of that era.He was a pleasantly sardonic man in his late forties.Born in 1898 in Manitoba, Vernon Orval Willard Watts was graduatedfrom the University of Manitoba in 1918, and went on to earn a master sand a doctor s degree in economics from Harvard University in its nobler,pre-Keynesian era.After teaching economics at various colleges, Orval was hired byLeonard Read in 1939 to be the economist for the Los Angeles Chamberof Commerce, of which Leonard was executive director.Watts therebybecame the first full- time economist to be employed by a chamberof commerce in the United States.Leonard Read had built up the Los Angeles Chamber into the largestmunicipal business organization in the world, and Read himself had beenconverted to the libertarian, free-market creed by a remarkable constituentof the Chamber: William C.Mullendore, head of the Southern CaliforniaEdison Corporation.During World War II, Read, assisted by Watts, lent his remarkableorganizing talents to making the Los Angeles Chamber a beacon of Our Intellectual Debts 339freedom in an increasingly collectivist world
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