Does someone mind explaining it to me in small words? 
All I can get out of it so far is that it is a laisee faire approach to economics… centralized government keeps it’s hands off, good times and bad, and lets the market correct itself. I am not sure how that differs from the basic austrian school though?
Any help would be much appreciated!
Hayek was an Austrian. He built upon the works of Mises and Wicksell when it came to monetary/business cycle theory, developed international economics from an Austrian approach, and is widely known for the “coordination problem.” The “Hayekian Triangle” comes straight from Bohm-Bawerk, who was a second generation Austrian. His positions are 100% consistent with the Austrian framework (laid down by Menger).
This would help me as well, recently everyone’s been arguing about Misesian Vs. Hayekian Vs. Rothbardian economics but I thought that there was no real difference between them besides the fact that Hayek was something of a dissenter in terms of minimizing the state and Mises was a skeptic and felt that the minuscule night watchman state was necessary. Where exactly is it that the big 3 differ besides the fact that Rothbard was willing to apply free market economics everywhere that was humanly possible while Hayek and Mises called it quits in more orthodox areas?
Their differences are very nuanced when it comes to economic theory. For example, Hayek held onto the traditional distinction between the demand for money as money and the demand for money as capital, while Mises believed that there’s no actual difference. But there are indeed substantive differences between them when it comes ethics and political philosophy–which is what this forum tends to focus on. Some like to say that Hayek was more Wiserian, while Mises was more Bohm-Bawerkian, but I see no support for this assertion when it comes to actual theory (Wieser believed that value could be cardinally measured, and supported statistics and indecies).
Hayek accepted more neo-classical approaches than Mises.
So the big argument on the “why are there so few Misesians” thread was on ethics and not economics? Because I understand the basic differences in thier ethics, but as you have stated there appear to be practically no differences in their economics besides how far they are ready apply free market principals.
Yeah. Now, there are some who don’t particularly like Hayek’s political philosophy/ethics, so they try label him as somehow “un-Austrian.” But his work in economic theory is outstanding and absolutely Austrian, in every sense of the term. Bohm-Bawerk’s capital theory, price theory, even his arguments against socialist calculation, have been expanded upon by Both Mises and Hayek.
Unfortunately, Austrian economics is now conflated with the moral/political philosophies of Rothbard, Mises, Hayek, et al. Not that there’s anything wrong with their political philosophies (to be honest, I’m not into philosophy), but it’s just not economics. The arguments against AE are never economic in nature, and this is because their economic doctrines are logically flawless.
Ok, thank you for clearing this up.
Where is Ensuric? This is what I mean by somehow interpreting Hayek differently.
Well, first let me thank everyone for thier answers.
Second, however, I am still somewhat confused. The basic idea being simple that Hayek, like all austrian economists, believes in free market and Hayek just wanted ZERO government involvement?
Sorry, this is really outside my area of study so it is probably a stupid question.
No, not zero. Austrian economists don’t all believe in zero involvement either.
Hi Esuric,
What do you think of this from Hulsmann’s Mises bio?:
Today Hayek is often considered Mises’s most famous student.
In fact, however, his Wieserian intellectual heritage is
striking. In 1922–1923, under the direction of Hans Kelsen and
Othmar Spann, Hayek had written his doctoral dissertation (in
economics) on the theory of imputation. The work was based
on the Wieserian approach to problems of value and price theory,
which was incompatible with Mises’s socialist-calculation
argument.42 When he updated his thesis three years later for an
article in Conrad’s Jahrbücher, he knew the calculation thesis, but
had not changed his mind on the question of imputation. This
is what Hayek wrote on the topic, without mentioning Mises by
name:
Of course, in so far as one believes that a completely
satisfactory solution to the problem [of imputation]
has not yet been found, we cannot exclude the possibility
from the very outset that the determinants of
the prices of the factors of production are to be found
in the exchange economy alone, and therefore that an
imputation of value is not applicable, a view held by
several younger authors. Nevertheless, if this view
were regarded as valid, the result would be that we
would have no satisfactory explanation of economic
processes based on the subjective theory of value, and
it would also follow that these authors too would lack
any basis for many of their investigations.
Hayek went on to explain and develop Wieserian imputation
theory, which in his view was “still today the fundamental and
most detailed treatment of the problem.” He explicitly
rejected Mises’s argument because it contradicted the Wieserian
assumption that all social phenomena are explicable on the
basis of value theory alone.
Grayson, we should expect a young graduate student to be heavily influenced by his world-renown professor, but we can’t forget that Hayek later conceded the point to Mises. Either way, this disagreement doesn’t show itself in the bulk of Hayek’s work dealing with money, international economics, business cycles, and capital theory (from what I’ve read). But to be honest, I don’t know what Hayek means when he says " Nevertheless, if this view were regarded as valid, the result would be that we would have no satisfactory explanation of economic processes based on the subjective theory of value, and it would also follow that these authors too would lack any basis for many of their investigations." The prices of the factors of production are indeed solely determined by the exchange economy, as Mises states, but how he reaches this conclusion doesn’t make sense to me. This kind of stuff is extremely nuanced, and it shouldn’t lead people to the conclusion that Hayek was somehow “unAustrian.”
Hoppe wrote an article rejecting the time preference theory of interest, but he’s definitely an Austrian economist.
Wasn’t that Hülsmann?
Yes: A Theory of Interest. It should not be considered an outright rejection of time preference theory, just a refinement (if you agree with Hülsmann, that is).
There is a good introduction to Hayek’s ideas by Dan D’Amico at FEE (http://fee.org/audio-library/?speaker=Daniel+D%E2%80%99Amico&seminar=)
It’s a good place to start.
Yeah, my mistake.
Just out of curiosity, how Austrian would you say John Hicks’ Value and Capital is? As far as I know, Hayek was quite enthusiastic about this work.
Have you a reference for that?
http://blog.mises.org/archives/009657.asp:
HAYEK: There is no doubt about both [Carl] Menger’s Grundsetze and [Ludwig von] Mises’s On Socialism . Menger I at once absorbed; Mises’s was a book with which I struggled for years and years, because I came to the conclusion that his conclusions were almost invariably right, but I wasn’t always satisfied by his arguments. But he had probably as great an influence on me as any person I know.