The Ludwig von Mises Institute presents The Libertarian Tradition, an audio series with Jeff Rigenbach.
Friedrich August von Hayek was born in Vienna on the eighth day of May 1899.
When he graduated from the University of Vienna in 1921 at the age of 22,
II, he applied for a job with the Austrian Office of Claims Accounts, the government
agency charged with paying the nation's war debts, as those had recently been defined
in the Treaty of Saint-Germain, the treaty that, for those who lived in Austria, ended
World War I. Hayek had a letter of recommendation from a very high-ranking and influential professor
of economics at the university, Friedrich von Wieser, and it seems to have been largely
on the Strength of Wieser's Recommendation that Hayek was hired by his new boss, a 40-year-old
named Ludwig von Mises.
When Hayek came into Mises' employ, he had favored the democratic socialist politics
of Wieser, his mentor at the university, but it didn't take too many days of daily exposure
to Mises to set Hayek on the right track with regard to that.
Mises taught Hayek a great deal and gave him the two great subjects of his early years
as a Wunterkant economist, the socialist calculation problem, and what has come in years since
to be called Austrian Business Cycle Theory.
It has been said, and not without justice, that when Hayek won the Nobel Prize in Economics
in 1974, he was being honored for his elaboration of Mises' Theory of the Business Cycle.
Yet, questions of originality aside, it always seemed to be Hayek who attracted public attention,
attracted it first, and attracted more of it.
This began in the 1940s and continued right up to the time of Hayek's death, 19 years
ago last week, on March 23, 1992.
Mises published two short books in 1944, Bureaucracy and Omnipotent Government, while Hayek published
Only One.
But Hayek's book, The Road to Serfdom, was an international bestseller that set the stage
for a sensationally successful U.S. lecture tour.
Thirty years later, it was Hayek, not Mises, who won the Nobel Prize.
And in the last decade, it has been Hayek, not Mises, who has begun to worm his way into
American popular culture.
This, despite the fact that his prose style can be, shall we say, formidable?
I remember years ago, sometime back in the 80s, I think, reading a brief comment by the
American science fiction writer Samuel R. Delaney.
In this passage, Delaney said of some author or other that his prose was almost opaque
with precision.
Delaney wasn't writing about Hayek, but I recall looking up from the page and thinking,
Hayek, the most recent and therefore currently the most noticeable instance of this unlikely
The only penetration of American popular culture by Hayek is the Hayek vs. Keynes Wrap, which,
with amazing accuracy, depicts the famous ongoing public debate during the 1930s between
Hayek and John Maynard Keynes over the business cycle and government policy.
If somehow you have managed not to see this small masterpiece yet, run Don't Walk to
to YouTube, and search for the Hayek vs. Keynes rap.
Meanwhile, let me tell you about a less well-known appearance Friedrich Hayek made in American
popular culture in the last decade, one involving ideas of his that he definitely did not learn
from Ludwig von Mises.
It was in 2003 in a novel called Pattern Recognition by William Gibson.
Gibson is a South Carolina native, now in his early 60s, who fled to Canada to escape
the Vietnam-era draft and has lived in Vancouver ever since.
With the publication of his revolutionary novel Neuromancer in 1984, he became the
resident wunderkind of American science fiction, a status I think he could be said to have
gone on holding through the 1990s.
Then in 2003 he published Pattern Recognition, the first realistic novel of international
business that might be said to be informed by an Austrian perspective.
Hayekians will instantly notice Gibson's title, of course, and will suspect some connection
between his novel and one of their masters' most deservedly famous essays, The Theory
of Complex Phenomena.
They will be right to do so.
The main character of pattern recognition is Case Pollard, a 32-year-old independent
marketing consultant with a rare skill set to offer the advertising agencies and design
firms that make up her clientele.
She is, Gibson tells us, a sort of dowser in the world of global marketing, a person
whose job is finding whatever the next thing might be.
As she explains to a hopeful young designer of hats at one point in the novel, what I
What I do is pattern recognition.
I try to recognize a pattern before anyone else does.
In this, of course, she is no different from anyone else in the marketplace.
In this, she is only human.
As Hayek notes in The Theory of Complex Phenomena, no matter how urgently we may want to find
our way in what appears just chaotic, so long as we do not know what to look for, even the
The most attentive and persistent observation of the bare facts is not likely to make them
more intelligible.
Until we have definite questions to ask, we cannot employ our intellect.
And of course, questions will arise at first only after our senses have discerned some
recurring pattern or order in the events.
It is a recognition of some regularity or recurring pattern or order of some similar
Hayek reminds us, this trait of our minds is not without its drawbacks.
Marvelous as the intuitive capacity of our senses for pattern recognition is, he writes,
it is still limited.
For one thing, only certain kinds of regular arrangements, not necessarily the simplest,
obtrude themselves on our senses, many of the patterns of nature we can discover only
after they have been constructed by our mind.
Another built-in limitation is the uncomfortable fact that there are problems so complex that
no one mind can solve them, no matter how formidable its powers of pattern recognition.
As Hayek noted in 1945 in The Use of Knowledge in Society, another of his justly celebrated
essays, the peculiar character of the problem of a rational economic order is determined
precisely by the fact that the knowledge of the 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.
The economic problem of society is thus a problem of how to secure the best use of resources
known to any of the members of society for ends whose relative importance only these
individuals know.
Or to put it briefly, it is a problem of the utilization of knowledge which is not given
and to anyone in its totality.
No one mind can grasp the pattern of the entire economy all at once, if only because that
pattern is constantly changing, constantly evolving.
In another sense, then, as Hayek puts it, the economic problem of society is mainly
one of rapid adaptation to changes in the particular circumstances of time and place.
For the continuous flow of goods and services is maintained by constant deliberate adjustments,
by new dispositions made every day in the light of circumstances not known the day before,
by B stepping in at once when A fails to deliver.
And people who can recognize patterns before anyone else does can do very well for themselves
in the Marketplace, by knowing before anyone else exactly what adjustments need to be made.
One such person is the entrepreneur, whose recognition of a pattern no one else sees
enables him to launch successful new enterprises.
Another is the radio or television programmer, the theatrical or musical booking agent, the
buyer for a retail store, the person whose recognition of a pattern few others yet see
enables her to profitably anticipate changes in the public taste.
Yet another is the professional marketer, someone like Case Pollard.
As the action of pattern recognition begins, sometime in the early 21st century, Case has
been flown to London by an advertising firm called Blue Ant to pass judgment on a proposed
new corporate logo for one of the agency's largest clients.
It is to such logos that case has a special sensitivity, or perhaps it might better be
called a set of finely tuned receptors, or a set of special talents.
Her talents, Gibson tells us, which her boss at Blue Ant calls her tame pathologies, had
carried her along, and gradually she'd let them define the nature of what it was that
she did.
He'd thought of that as going with the flow, but maybe, she thinks now, it had really been
the path of least resistance.
But of course, going with the flow is following the path of least resistance.
It's going where the flow is unimpeded.
And this is precisely what is required of every participant in the world of business
who seeks monetary success, to find one's niche, to find the place where one's natural
One is reminded here of the character John Strapp in another science fiction story set
in the world of business, Time is the Traitor, by Alfred Bester.
Bester, an acknowledged influence on Gibson's writing, introduces Strapp in a manner that
would have made Hayek's heart fond.
There was a man named John Strapp, Bester wrote, the most valuable, the most powerful,
the most legendary man in a world containing 700 planets and 1700 billion people.
He was prized for one quality alone.
He could make decisions.
Note the capital D.
He was one of the few men who could make major decisions in a world of incredible complexity,
and his decisions were 87% correct.
He sold his decisions for high prices.
There would be an industry named, say, Bruxton Biotics, with plants on Deneb Alpha, Mizar
3, Terra, and main offices on Alcor 4.
Bruxton's gross income was 270 billion credits.
The involutions of Bruxton's trade relations with consumers and competitors required the
specialized services of 200 company economists, each an expert on one tiny facet of the vast
overall picture.
No one was big enough to coordinate the entire picture.
Still, the day would come when Bruxton would need a major decision on policy.
A research expert named E.T.A. Golland in the Deneb Laboratories had discovered a new
catalyst for biotic synthesis.
It was an embryological hormone that rendered nucleonic molecules as plastic as clay.
The clay could be modeled and developed in any direction.
Query, should Bruxton abandon the old culture methods and retool for this new technique?
The decision involved an intricate ramification of interreacting factors, cost, saving, time,
supply, demand, training, patents, patent legislation, court actions and so on.
There was only one answer, ask Strapp.
Bruxton does, Strapp decides, and in return, Bruxton had an 87% assurance that the decision
was correct.
Yet, as Aldous Fisher, Strapp's liaison man notes, he doesn't know how he does it.
If he did, he'd be 100% right, instead of 87%.
It's an unconscious process.
Case has no way of knowing how she knows.
Strapp doesn't know how he does it, nor is either of their situations unique.
Alfred Bester reports in his introduction to a 1976 reprinting of Time is the Traitor,
which was originally published in 1953, that he himself did his own work in the marketplace
without understanding fully how he did it.
I don't coolly block a story in progressive steps like an attorney preparing a brief for
the Supreme Court, he wrote.
I'm more like Zara Colburn, the American idiot savant who could perform mathematical
Hayek would say, I believe, that this is merely one of millions of possible examples of a
phenomenon he describes as the capacity to act according to rules which we may be able
to Discover, but which we need not be able to state in order to obey them.
This is taken from yet another justly celebrated Hayekian essay, Rules, Perception and Intelligibility.
In Hayek's view, the most striking instance of the phenomenon is the ability of small
children to use language in accordance with the rules of grammar and idiom of which they
are wholly unaware.
But the phenomenon is a very comprehensive one, and includes all that we call skills.
Skills like judging corporate logos, making decisions, writing fiction, or, as Hayek notes,
the skill of a craftsman or athlete, or a player at the billiards table.
Skills are also, of course, what each of us has to sell in the marketplace.
So far as I know, no one else has pointed out this Hayekian angle in Gibson's novel,
but it's there, and with any luck, it may intrigue a few more people into picking up
Hayek himself to see what all the fuss has been about.
For anyone hoping to see continued growth of the libertarian tradition in the years
to come, such an outcome is profoundly to be desired.
This is Jeff Rigenback.