Annotated Bibliography of Fredrich Hayek
Shacorra Hall
ECO 561
May 22, 2015
Dr. Robert Dratwa

Friedrich August Hayek: The Concise Encyclopedia of Economics. (2008). Retrieved from http://www.econlib.org/library/Enc/bios/Hayek.html
In this online article exerted from the Library of Economics and Liberty, the economic theories of Friedrich Hayek are glorified and explained. Hayek is the best-known advocate of Austrian Economics. This writing focuses on the idea that the market is a spontaneous order. The belief that the free market was not designed by anyone, but evolves slowly as a result of human actions. It is stressed that the market is imperfect, and reasons for this imperfection are given. The question Hayek asked was “What causes the market to fail to fail to coordinate people’s plans, so that at times large numbers of people are unemployed?” One explanation given was the increase in money supply by the central bank. Increases by the central bank have the capability to drive down interest rates, inevitably making credit artificially cheap. Contributing to this issue, is business men making capital investments, unknowingly receiving distorted price signals from the credit market. Capital investments are inconsistent. Long-term investments are more sensitive to interest rates. Hayek came to the conclusion that artificially low interest rates causes investments to be high, which in turn causes too much investment in long-term projects. Instances like this turn the boom into a bust. Hayek viewed busts as a positive, because it is a natural readjustment. Hayek explained the way to avoid busts, is to avoid the booms that cause them.
Keynes vs. Hayek: The Rise of the Chicago School of Economics. (2015). Retrieved from http://www.econedlink.org/lessons/index.php?lid=593&type=student
In this article the economic views of John Maynard Keynes and Friedrich Hayek are discussed. Their views on the role of government in the economy are vastly different. This article also depicts how their views influenced the “Chicago School of Thought” and our current economic system. Both prominent economists had distinct ideas on economic freedom. Keynes theories called for a large role of government in the economy. Hayek’s theories focused on less government intervention meaning more economic freedom. “Keynes's analysis laid the basis for the field of macroeconomics, which treats the economy as a whole and focuses on government's use of fiscal policy spending, deficits, and tax” (Keynes vs. Hayek : The Rise of the Chicago School of Economics, 2015). Hayek challenged Keynes theories arguing that under central planning there was no economic calculation.
Friedrich Hayek. (2015). Retrieved from http://www.investopedia.com/terms/f/friedrich-hayek.asp
This article provides a definition of Friedrich Hayek. The article also goes on to mention accomplishments of the renowned economist. Hayek’s approach derives from the Austrian school of economics. This approach emphasizes the limited nature of knowledge. Hayek is infamous for his defense of free-market capitalism. Hayek greatly criticized the socialist consensus. Friedrich Hayek and Gunnar Myrdal were co-winners of the Nobel Prize in Economics in 1974 “for their pioneering work in the theory of money and economic fluctuations and for their penetrating analysis of interdependence of economic, social and institutional phenomena” (Friedrich Hayek, 2015).
Caldwell, B. (2015). Ten Hayekian Insights for Trying Economic Times. Retrieved from http://www.heritage.org/research/reports/2011/02/ten-mostly-hayekian-insights-for-trying-economic-times
The author researches the life and views of Friedrich Hayek. The article highlights Hayek’s efforts to return the economy to a rejuvenated form of classical liberalism. The article distills ten fundamental insights on the current economic state and inspires ways to think more clearly about the nature and limits of economics. The first theme is that the business cycle is a necessary and unavoidable concomitant of a free-market money-using economy, the basis of this theme is that money performs various functions, including to provide a unit of account and a store of value. The second theme focuses on the 1970’s and why Keynesian Economics was rejected, the center of this theme is that the success of Keynesian theory leading to the 1970’s was brief. The 1970’s are labeled as the worst recession since the Great Depression, because “1) consciously policy-induced and (2) made necessary by the failed attempts at activist, discretionary policy aimed at combating the business cycle during the previous decade and a half” (Ten Hayekian Insights for Trying Economic Times, 2015). The third theme recognizes that some regulation is necessary, the source of this theme is that planning is required. Hayek agreed planning was necessary, but central planning would be disastrous. The fourth theme is that excessive regulation will make matters worse. The origin of this theme is that Hayek believed that a planned system with prices set by the government would always be playing catch-up with the rapid price adjustments that occur in a free-market system. The fifth theme is the economy is a complex phenomenon. The theme zones in on the financial fiscal stimulus program. The sixth theme is good and bad unintended consequences. The heart of this theme is unintentional consequences due to intentional human action. The seventh theme is basic economic reasoning dictates what we know and say about the economy. The foundation of this theme is “Hayek argued that, when dealing with spontaneous orders or other complex adaptive systems, often the best that we can do is to make pattern predictions or to offer explanations of the principle by which a phenomenon may work” (Ten Hayekian Insights for Trying Economic Times, 2015). The eighth theme is the cry for social justice being dangerous and misguided. The root of this theme is Hayek acknowledged that a market system unavoidably results in an imbalanced circulation of income. The ninth theme is freely adjusting market prices help solve the knowledge problem and allow social coordination. This theme answers the question how has capitalism been able to accomplish so much in such a short period. The answer for Hayek was that markets allow the coordination of individual plans on a vast scale. The final theme is government cures to the issue is worst and leads to more problems. The insight of this theme is that public choice is separate and complementary.