Diagram of macroeconomic circulation. L_S ≤ L_D is the full employment situation, one in which the rate of unemployment is zero or negative (corresponding to a labor shortfall).

Full employment, in macroeconomics, is the level of employment rates when there is no cyclical unemployment.^[1] It is defined by the majority of mainstream economists as being an acceptable level of natural unemployment above 0%, the discrepancy from 0% being due to non-cyclical types of unemployment. Unemployment above 0% is advocated as necessary to control inflation, which has brought about the concept of the Non-Accelerating Inflation Rate of Unemployment (NAIRU); the majority of mainstream economists mean NAIRU when speaking of "full" employment.

Economic concept[link]

What most neoclassical economists mean by "full" employment is a rate somewhat less than 100% employment, considering slightly lower levels desirable. Others, such as James Tobin, vehemently disagree, considering full employment as 0% unemployment.^[2]

Rates of unemployment substantially above 0% have also been attacked by John Maynard Keynes:

"The Conservative belief that there is some law of nature which prevents men from being employed, that it is 'rash' to employ men, and that it is financially 'sound' to maintain a tenth of the population in idleness for an indefinite period, is crazily improbable - the sort of thing which no man could believe who had not had his head fuddled with nonsense for years and years. The objections which are raised are mostly not the objections of experience or of practical men. They are based on highly abstract theories – venerable, academic inventions, half misunderstood by those who are applying them today, and based on assumptions which are contrary to the facts…Our main task, therefore, will be to confirm the reader’s instinct that what seems sensible is sensible, and what seems nonsense is nonsense."

– J.M. Keynes in a pamphlet to support Lloyd George in the 1929 election.

The 20th century British economist William Beveridge stated that an unemployment rate of 3% was full employment. Other economists have provided estimates between 2% and 13%, depending on the country, time period, and the various economists' political biases.

Before Milton Friedman and Edmund Phelps, Abba Lerner (Lerner 1951, Chapter 15) developed a version of the NAIRU. Unlike the current view, he saw a range of "full employment" unemployment rates. He distinguished between "high" full employment (the lowest sustainable unemployment under incomes policies) and "low" full employment (the lowest sustainable unemployment rate without these policies).

Technical terms[link]

"Ideal" unemployment[link]

An alternative, more normative, definition (used by some labor economists) would see "full employment" as the attainment of the ideal unemployment rate, where the types of unemployment that reflect labor-market inefficiency (such as structural unemployment) do not exist. Only some frictional unemployment would exist, where workers are temporarily searching for new jobs. For example, Lord William Beveridge defined "full employment" as where the number of unemployed workers equaled the number of job vacancies available. He preferred that the economy be kept above that full employment level in order to allow maximum economic production.

Long run aggregate supply[link]

The concept of full employment has so far been used in conjunction with the long run aggregate supply (LRAS) curve, where long run potential output is also the full employment level of output. Full employment does not mean that there is 'zero unemployment', but rather that all of the people willing and able to work have jobs at the current wage rate. Full employment is the quantity of labour employed when the labour market is in equilibrium.

NAIRU[link]

Phillips Curve before and after Expansionary Policy, with Long-Run Phillips Curve (NAIRU)

The following should be understood in discussions of NAIRU: governments that follow it are attempting to keep unemployment at certain levels (usually over four percent, and as high as ten or more percent) by keeping interest rates high. As interest rates increase, more bankruptcies of individuals and businesses occur, meaning less money to hire staff or purchase goods (the making and distributing of which requires workers, which means jobs). It might also be noted that the main cause of inflation is not high employment, but rather the ability of banks to make money with little to no backing with things of value (commodities such as gold and silver are some examples), thus flooding the market with money and decreasing the value of each dollar already issued in the process, assuming the economy has not kept up to this increase in issued loans. Economists such as Milton Friedman^[3] and Dr. Ravi Batra have theorized ways that a modern economy could have low inflation and near full employment (as in close to 100% of those who are not students and are healthy enough to work, and who wish to work at any given point in time), as of yet these have yet to be widely disseminated through the press or introduced by most governments. Paul Martin - former finance minister and past Prime Minister of Canada - once held that full employment could be achieved, yet let go of this idea after gaining power.

Friedman's view has prevailed so that in much of modern macroeconomics, full employment means the lowest level of unemployment that can be sustained given the structure of the economy. Using the terminology first introduced by James Tobin (following the lead of Franco Modigliani), this equals the Non-Accelerating Inflation Rate of Unemployment (NAIRU) when the real gross domestic product equals potential output. This concept is identical to the "natural" rate but reflects the fact that there is nothing "natural" about an economy.

At this level of unemployment, there is no unemployment above the level of the NAIRU. That is, at full employment there is no cyclical or deficient-demand unemployment. If the unemployment rate stays below this "natural" or "inflation threshold" level for several years, it is posited that inflation will accelerate, i.e. get worse and worse (in the absence of wage and price controls). Similarly, inflation will get better (decelerate) if unemployment rates exceed the NAIRU for a long time. The theory says that inflation does not rise or fall when the unemployment equals the "natural" rate. This is where the term NAIRU is derived.

The level of the NAIRU thus depends on the degree of "supply side" unemployment, i.e., joblessness that can't be abolished by high demand. This includes frictional, structural, and classical unemployment.

Phillips curve[link]

Ideas associated with the Phillips curve questioned the possibility and value of full employment in a society: this theory suggests that full employment—especially as defined normatively—will be associated with positive inflation. The Phillips curve tells us also that there is no single unemployment number that one can single out as the "full employment" rate. Instead, there is a trade-off between unemployment and inflation: a government might choose to attain a lower unemployment rate but would pay for it with higher inflation rates. In 1968, Milton Friedman, leader of the monetarist school of economics, and Edmund Phelps posited a unique full employment rate of unemployment, what they called the "natural" rate of unemployment. But this is seen not as a normative choice as much as something we are stuck with, even if it is unknown. Rather than trying to attain full employment, Friedman argues that policy-makers should try to keep prices stable (a low or even a zero inflation rate). If this policy is sustained, he suggests that the economy will gravitate to the "natural" rate of unemployment automatically.

Structural unemployment[link]

Some Economists estimate a "range" of possible unemployment rates. For example, in 1999, in the United States, the Organisation for Economic Co-operation and Development (OECD) gives an estimate of the "full-employment unemployment rate" of 4 to 6.4%. This is the estimated "structural" unemployment rate, (the unemployment when there is full employment), plus & minus, the standard error of the estimate. (Estimates for other countries are also available from the OECD.) [1]

Full employability[link]

Full employability indicates an attempt by government to make people "employable" by both positive means (e.g. training courses) and negative means (e.g. cuts in benefits). It does not necessarily create full employment.

Technical issues[link]

Whatever the definition of full employment, it is difficult to discover exactly what unemployment rate it corresponds to. In the United States, for example, the economy saw stable inflation despite low unemployment during the late 1990s, contradicting most economists' estimates of the NAIRU.

The idea that the full-employment unemployment rate (NAIRU) is not a unique number has been seen in recent empirical research. Staiger, Stock, and Watson found that the range of possible values of the NAIRU (from 4.3 to 7.3% unemployment) was too large to be useful to macroeconomic policy-makers. Robert Eisner suggested that for 1956-95 there was a zone from about 5% to about 10% unemployment between the low-unemployment realm of accelerating inflation and the high-unemployment realm of disinflation. In between, he found that inflation falls with falling unemployment.

Worse, the NAIRU doesn't stay the same over time—and can change due to economic policy. For example, some economists argue that British Prime Minister Margaret Thatcher's anti-inflation policies using persistently high unemployment led to higher structural unemployment and a higher NAIRU.

Policy[link]

The active pursuit of national full employment through interventionist government policies is associated with Keynesian economics and marked the postwar agenda of many Western nations, until the stagflation of the 1970s.

Australia[link]

Australia was the first country in the world in which full employment in a free society was made official policy by its government. On May 30, 1945, The Australian Labor Party Prime Minister John Curtin and his Employment Minister John Dedman proposed a white paper in the Australian House of Representatives titled Full Employment In Australia, the first time any government apart from totalitarian regimes had unequivocally committed itself to providing work for any person who was willing and able to work. Conditions of full employment lasted in Australia from 1941 to 1975. This had been preceded by the Harvester Judgment (1907), establishing the basic wage (a living wage); while this earlier case was overturned, it remained influential.

United States[link]

The United States is, as a statutory matter, committed to full employment (defined as 3% unemployment for persons 20 and older, 4% for persons aged 16 and over), the government is empowered to effect this goal, and a job is a right.^[4] The relevant legislation is the Employment Act (1946), initially the "Full Employment Act," later amended in the Full Employment and Balanced Growth Act (1978). The 1946 act was passed in the aftermath of World War II, when it was feared that demobilization would result in a depression, as it had following World War I in the Depression of 1920–21, while the 1978 act was passed following the 1973–75 recession and in the midst of continuing high inflation.

The law states that full employment is one of four economic goals, in concert with growth in production, price stability, balance of trade, and budget, and that the US shall rely primarily on private enterprise to achieve these goals. Specifically, the Act is committed to an unemployment rate of no more than 3% for persons aged 20 or over and not more than 4% for persons aged 16 or over (from 1983 onwards), and the Act expressly allows (but does not require) the government to create a "reservoir of public employment" to effect this level of employment. These jobs are required to be in the lower ranges of skill and pay so as to not draw the workforce away from the private sector.

However, since the passage of this Act in 1978, the US has, as of 2012^[update] never achieved this level of employment, nor has such a reservoir of public employment been created.

Job guarantee[link]

Some, particularly Post-Keynesian economists^[5][6] have suggested ensuring full employment via a job guarantee program, where those who are unable to find work in the private sector are employed by the government, the stock of thus employed public sector workers fulfilling the same function as the unemployed do in controlling inflation, without the human costs of unemployment.

See also[link]

• Career
• Corporatism
• Deflation
• Employment
• False Consciousness
• Job guarantee
• Labour (economics)
• Marxism
• Profession
• Reserve army of labour
• Say's law
• Wage slavery

Notes[link]

External sources[link]

• The OECD on measuring the NAIRU
• Devine, James. 2004. The "Natural" Rate of Unemployment. In Edward Fullbrook, ed., A Guide to What's Wrong with Economics, London, UK: Anthem Press, 126-32.
• Eisner, Robert. 1997. A New View of the NAIRU. In Paul Davidson and Jan A. Kregel, eds. Improving the Global Economy. Cheltenham, UK: Edgar Elgar, 1997.
• Friedman, Milton. 1968. The Role of Monetary Policy. American Economic Review. 58(1) March: 1-21.
• Lerner, Abba. 1951. Economics of Employment, New York: McGraw-Hill.
• Staiger, Douglas, James H. Stock, and Mark W. Watson. 1997. The NAIRU, Unemployment and Monetary Policy. Journal of Economic Perspectives. 11(1) Winter: 33-49.

Robert N. Pollin (born September 29, 1950) is an American economist and activist. He is a professor of economics at the University of Massachusetts-Amherst and founding co-director of its Political Economy Research Institute (PERI).

He was the economic spokesperson in Jerry Brown's 1992 campaign for President of the United States.

He is the son of Abe Pollin, the owner of the NBA's Washington Wizards.

Books[link]

• The Macroeconomics of Saving, Finance, and Investment (1997)
• Globalization and Progressive Economic Policy (ed., with Dean Baker and Gerald Epstein; 1998)
• Contours of Descent: US Economic Fractures and the Landscape of Global Austerity (2003)
• The Living Wage: Building a Fair Economy (with Stephanie Luce)
• Transforming the US Financial System (ed., with Gary Dymski and Gerald Epstein)

External links[link]

	Biography portal
	Economics portal

• Lead article by Robert Pollin in a wonderful written forum at the Boston Review on full employment, with articles by many authors
• Tools for a New Economy: Proposals for a Financial Regulatory System by Robert Pollin in the Boston Review
• How Unleashed Capitalism Produces Economic Crises: What is to be done? Video of talk at University of Minnesota, February, 2009
• Curriculum Vitae (March 2009)

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This biographical article needs additional citations for verification. Please help by adding reliable sources. Contentious material about living persons that is unsourced or poorly sourced must be removed immediately, especially if potentially libelous or harmful. (June 2010)

John Conyers, Jr.
Member of the U.S. House of Representatives from Michigan's 14th district
Incumbent
Assumed office January 3, 1993
Preceded by	Dennis M. Hertel
Member of the U.S. House of Representatives from Michigan's 1st district
In office January 3, 1965 – January 3, 1993
Preceded by	Lucien N. Nedzi
Succeeded by	Bart Stupak
Chairman of the House Committee on the Judiciary
In office January 4, 2007 – January 3, 2011
Preceded by	Jim Sensenbrenner
Succeeded by	Lamar S. Smith
Chairman of the House Committee on Government Operations
In office January 3, 1989 – January 3, 1995
Preceded by	Jack Brooks
Succeeded by	Bill Clinger
Personal details
Born	(1929-05-16) May 16, 1929 (age 83) Highland Park, Michigan
Political party	Democratic
Spouse(s)	Monica Conyers
Children	John Conyers III Carl Edward Conyers
Residence	Detroit, Michigan
Alma mater	Wayne State University
Occupation	attorney
Religion	Baptist
Signature
Military service
Service/branch	United States Army National Guard United States Army
Years of service	1948–1950 1950–1957
Battles/wars	Korean War

John Conyers, Jr. (born May 16, 1929) is the U.S. Representative for Michigan's 14th congressional district, serving since 1965 (the district was numbered as the 1st District until 1993). He is a member of the Democratic Party. He is currently the second longest-serving incumbent member of the House (after fellow Michigan Democrat, John Dingell) and the third-longest incumbent member of the entire Congress by length of service (after Dingell and Daniel Inouye). The district includes most of northwestern Detroit, as well as Highland Park, Hamtramck and part of Dearborn.

Early life, education, and early career[link]

After graduating from Northwestern High School in Detroit, Conyers served in the Michigan National Guard 1948–50; US Army 1950–54; and the US Army Reserves 1954–57. Conyers served for a year in Korea as an officer in the U.S. Army Corps of Engineers and was awarded combat and merit citations.^[1] Conyers grew up in Detroit, and received both his B.A. and his LL.B. from Wayne State University.

Conyers was present in Selma, Alabama on October 7, 1963, for the civil rights movement voter registration drive known as Freedom Day.^[2] He served as an assistant to U.S. Congressman John Dingell, Jr. prior to his election to Congress.

Detroit Mayoral campaigns[link]

While serving in the U.S. House, Conyers made two unsuccessful runs for mayor of Detroit: one in 1989 against incumbent Coleman Young and again in 1993.^[3]

1989[link]

Incumbent Democratic Mayor Coleman Young decided to run for a fifth term, despite growing unpopularity and the declining economy of Detroit. In the September primary, Young won with 51% of the vote. Accountant Tom Barrow qualified for the November run off by getting second place with 24% and Conyers got third place with 18% of the vote.^[4] Young defeated Barrow in the run off with 56% of the vote.^[5]

1993[link]

In June 1993, incumbent Democratic Mayor Coleman Young decided to retire instead of seeking a sixth term, citing his age and health as the reasons. Although, many believed he decided not to run because of his growing unpopularity. In a Detroit News poll in February, 81% said Young should retire.^[6] Conyers was one of the 23 candidates who qualified for ballot access.^[7] Dennis Archer was a clear front runner from the beginning. He was a 51-year-old former State Supreme Court Justice who raised over $1.6 million. He won the September primary with 54% of the vote. Conyers placed in fourth place.^[8] Archer won the November election.

U.S. House of Representatives[link]

Elections[link]

In 1964, he defeated Republican Robert Blackwell with 84% of the vote. He won re-election to Michigan's 1st congressional district thirteen times, all with even larger margins. After the 1990 United States Census, Michigan lost a congressional district and Conyer's district was renumbered to the 14th district. In 1992, he won re-election to his 15th term in his new district with 82% of the vote against Republican nominee John Gordon. He won re-election another nine times after that. His worst re-election performance was in 2010, when he got 77% of the vote against Republican nominee Don Ukrainec.

In total, he has won re-election twenty-three times and has served twenty-four terms. He is the second longest-serving current member of the House, as well as the after World War II.^[9]

Tenure[link]

Conyers is one of the 13 founding members of the Congressional Black Caucus, and is considered the Dean of that group. Formed in 1969, the CBC was founded to strengthen African-American lawmakers' ability to address the legislative concerns of Black and minority citizens. He has served longer in Congress than any other African-American. In 1971, he was one of the original members of Nixon's Enemies List.

In 1965, John Conyers won a seat as a freshman on the influential Judiciary Committee, which was then under the leadership of liberal Democrat Emanuel Celler of New York. At the time, the assignment was an elite one, as Judiciary ranked behind only Ways and Means and Appropriations in terms of the number of Members who sought assignment there.^[10]

According to the National Journal, Conyers has been considered, with Pete Stark, John Lewis, Jim McDermott, and Barbara Lee, to be one of the most liberal members of Congress for many years. Civil rights icon Rosa Parks served on Conyers' staff between 1965 and 1988.

Conyers is known as one of the supporters of the drive to regulate online gambling. He has likened the Unlawful Internet Gambling Enforcement Act of 2006, hidden within the SAFE Port Act, to Prohibition.

After Martin Luther King Jr.'s assassination in 1968, Conyers introduced the first bill in Congress to make King's birthday a national holiday. It is now celebrated as Martin Luther King, Jr. Day.

Nixon and Watergate

Conyers was critical of Richard Nixon during his tenure, and as a result was number 13 on President Richard Nixon's enemies list during Nixon's 1969–74 presidential tenure. The president's Chief Counsel described him as "coming on fast", and that he was "emerging" as a "black anti-Nixon spokesman".^[11][12]

Conyers voted on the Articles of Impeachment against Nixon in July 1974. He is the last remaining member of the House Judiciary Committee who did so, though one other fellow Committee member is still in Congress (Charles B. Rangel, Democrat of New York).

National Health Care Act

The U.S. National Health Care Act (Expanded and Improved Medicare for All Act) (HR 676), is a bill submitted to the United States House of Representatives by Conyers which, as of September 29, 2008, has 93 cosponsors. It was first introduced, with 25 cosponsors, in 2003,^[13] and reintroduced each session since then. The act calls for the creation of a universal single-payer health care system in the United States, in which the government would provide every resident health care free of charge. In order to eliminate disparate treatment between richer and poorer Americans, the Act would also prohibit private insurers from covering any treatment or procedure already covered by the Act. The bill is currently in the House Energy and Commerce's Subcommittee on Health.

Downing Street memo

On May 5, 2005, Conyers and 88 other members of Congress wrote an open letter to the White House inquiring about the Downing Street memo, a leaked memorandum that revealed an apparent secret agreement between the U.S. and the United Kingdom to attack Iraq in 2002. The Times reported that newly discovered documents reveal British and U.S. intentions to invade Iraq and leaders of the two countries had "discussed creating pretextual justifications for doing so". The documents go on to say that Tony Blair decided the U.S. would need to "create" conditions to justify the war.^{[citation needed]}

The memo story broke in the United Kingdom, but did not receive much coverage in the United States, prompting Conyers to lament: "This should not be allowed to fall down the memory hole during wall-to-wall coverage of the Michael Jackson trial and a runaway bride."^[14] Conyers and others reportedly considered sending a congressional investigation delegation to London.^[15]

What Went Wrong In Ohio

In May, 2005, Conyers released What Went Wrong In Ohio: The Conyers Report On The 2004 Presidential Election, which discusses the voting irregularities in the state of Ohio during the 2004 U.S. Presidential Election. The evidence offered consists of statistical abnormalities in the differences between exit poll results and actual votes registered at those locations. The book also discusses reports of faulty electronic voting machines and the lack of credibility of those machines used to tally votes.

He was one of 31 members of the House who voted not to count the electoral votes from Ohio in the United States presidential election, 2004.^[16]

The Constitution in Crisis

On August 4, 2006, Conyers released his report, The Constitution in Crisis: The Downing Street Minutes and Deception, Manipulation, Torture, Retributions and Cover-ups in the Iraq War, an edited collection of information intended to serve as evidence that the Bush Administration altered intelligence to justify the 2003 invasion of Iraq.

The Constitution in Crisis examines much of the evidence presented by the Bush Administration prior to the invasion and questions the credibility of their sources of intelligence. In addition, the document investigates the conditions that led to the torture scandal at Abu Ghraib prison in Iraq, as well as further evidence of torture having been committed but not made known to the public. Finally, the document reports on a series of "smear tactics" purportedly used by the administration in dealing with its political adversaries.

The document calls for the censure of President George W. Bush and Vice President Dick Cheney. Notably, however, Conyers refuses to back impeachment proceedings.

On anti-Muslim intolerance

Conyers has proposed House Resolution 288, which condemns “religious intolerance” but emphasizes Islam as needing special protection from acts of violence and intolerance. It states that “it should never be official policy of the United States Government to disparage the Quran, Islam, or any religion in any way, shape, or form”, and “calls upon local, State, and Federal authorities to work to prevent bias-motivated crimes and acts against all individuals, including those of the Islamic faith”. The bill was referred to the House subcommittee on the Constitution in June 2005.

Conyers v. Bush

See also Conyers v. Bush

In April 2006 Conyers, together with ten other senior congressmen, filed an action in the U.S. District Court in the Eastern District of Michigan, Southern Division, challenging the constitutionality of the Deficit Reduction Act of 2005. The complaint alleged the bill was not afforded due consideration by the United States Congress before being signed by the President.^[17] The action was subsequently dismissed on grounds of lack of standing.^[18]

Ethics controversy

In letters sent separately to the House Ethics Committee, the FBI, and the US Attorney's office by two former aides of Conyers, they alleged that Conyers used his staff to work on several local and state campaigns, and forced them to baby-sit and chauffeur his children.^[19] In late December 2006, Conyers "accepted responsibility" for possibly violating House rules. A statement issued December 29, 2006, by the House Ethics Committee Chairman Doc Hastings (R-Wash.) and Ranking Minority Member Howard Berman (D-Calif.), said that Conyers acknowledged what he characterized as a "lack of clarity" in his communications with staff members regarding their official duties and responsibilities, and accepted responsibility for his actions. In deciding to drop the matter, Hastings and Berman stated:

After reviewing the information gathered during the inquiry, and in light of Representative Conyers’ cooperation with the inquiry, we have concluded that this matter should be resolved through the issuance of this public statement and the agreement by Representative Conyers to take a number of additional, significant steps to ensure that his office complies with all rules and standards regarding campaign and personal work by congressional staff.^[20]

Also, in 1992, he was implicated in the House banking scandal.

Copyright controversy

Conyers has come under fire from scientific and taxpayers' advocacy groups^[21] for repeatedly introducing a bill that would overturn NIH Public Access Policy, and forbid the government from mandating that federally funded research be made freely available to the public.^[22] Critics assert that Conyers has been influenced by publishing houses who have contributed significant money to Conyers.^[23]

House Report on George W. Bush presidency and proposed inquiry

On January 13, 2009, the House Committee on the Judiciary, led by Conyers, released "Reining in the Imperial Presidency: Lessons and Recommendations Relating to the Presidency of George W. Bush", a 486-page report detailing alleged abuses of power that occurred during the Bush administration, and a comprehensive set of recommendations to prevent recurrence. Conyers has introduced a bill to set up a "truth commission" panel to investigate alleged policy abuses of the Bush administration.^[24][25]

Bill reading controversy

In late July 2009, Conyers, commenting on the healthcare debate in the House, stated that “I love these members, they get up and say, ‘Read the bill'... What good is reading the bill if it’s a thousand pages and you don’t have two days and two lawyers to find out what it means after you read the bill?” His remark brought criticism from government transparency advocates such as the Sunlight Foundation, which referred to readthebill.org in response.^[26] In the House, 93 representatives signed a pledge, started by Mike Pence of Indiana, to read a health care bill before voting on it.^[27]

Bribery conviction of wife, Monica Conyers

Conyers' wife, Monica, a former President pro tempore of the Detroit City Council, pleaded guilty to conspiring to commit bribery in June 2009.^[28] This is punishable by up to five years in prison; in March 2010 she was sentenced to 37 months imprisonment, followed by two years supervised probation.^[29]

On June 16, 2009, the United States Attorney's Office said that two Synagro Technologies representatives had named Monica Conyers as the recipient of bribes from the company totaling more than $60,000, paid to influence passage of a contract with the City of Detroit.^[30][31] The information was gathered during an FBI investigation into political corruption in the city.^[32] She was given a pre-indictment letter, and offered a plea bargain deal in the case.^[30] On June 26, 2009, she was charged with conspiring to commit bribery. She pleaded guilty.^[33] On March 10, 2010 she was sentenced to 37 months in prison, and also received two years of supervised probation. She is appealing the sentence.^[29] She began serving her term on September 10, 2010 at a minimum-security camp in Alderson, West Virginia.^[34]

Response to accusations regarding American Muslim spies

In October, Conyers responded to allegations from four Republican Congress Members, in the wake of the launch of the book Muslim Mafia, that the Council on American-Islamic Relations (CAIR) sought to plant Muslim "spies" in Capitol Hill. He strongly opposed the accusations, saying:

Conyers was one of the first three U.S. Congress members to condemn the allegations, joining André Carson (D-IN) and Loretta Sanchez (D-CA).

WikiLeaks

At a December 16, 2010 hearing of the House Judiciary Committee on the subject of "the Espionage Act and the Legal and Constitutional Issues Raised by WikiLeaks,"^[36] Conyers "argue[d] strongly against prosecuting WikiLeaks in haste-or at all."^[37] He strongly defended the whistleblowing organization, saying:

"As an initial matter, there is no doubt that WikiLeaks is very unpopular right now. Many feel that the WikiLeaks publication was offensive. But being unpopular is not a crime, and publishing offensive information is not either. And the repeated calls from politicians, journalists, and other so-called experts crying out for criminal prosecutions or other extreme measures make me very uncomfortable. Indeed, when everyone in this town is joined together calling for someone’s head, that is it a pretty strong sign we need to slow down and take a closer look.... [L]et us not be hasty, and let us not legislate in a climate of fear or prejudice. For, in such an atmosphere, it is our constitutional freedoms and our cherished civil rights that are the first to be sacrificed in the false service of our national security."^[37]

Conyer's statement was "in marked contrast to the repeated calls from other members of Congress and Obama administration officials to prosecute (or kill) [WikiLeaks head Julian] Assange immediately."^[37]

Committee assignments[link]

• Committee on the Judiciary (Ranking Member)
  • As Ranking Member of the full committee, Rep. Conyers may serve as an ex officio member of all subcommittees.
  • Subcommittee on Courts and Competition Policy
  • Subcommittee on the Constitution, Civil Rights, and Civil Liberties
  • Subcommittee on Commercial and Administrative Law

Caucus membership[link]

• Founding Member and Dean of the Congressional Black Caucus
• Congressional Progressive Caucus
• International Conservation Caucus
• Out of Afghanistan Caucus (Co-Chair)

Electoral history[link]

Personal life[link]

Conyers is married to Monica Conyers.

He appeared in Michael Moore's documentary Fahrenheit 9/11 discussing the aftermath of the September 11, 2001, attacks, stating that members of Congress "don't read most of the bills". Conyers frequently posts at Daily Kos and Democratic Underground. Since May 2005, he's been a contributing blogger at The Huffington Post and his own blog.

See also[link]

• United States National Health Care Act - legislation introduced by John Conyers that would provide universal health care in the U.S.
• PRO-IP Act - legislation introduced by John Conyers that would increase both civil and criminal penalties for trademark and copyright infringement and create a new executive branch office dedicated to enforcing intellectual property laws.^[38]

United States Army portal

References[link]

External links[link]

Wikinews has related news: Representative Conyers raises impeachment issue

• Congressman John Conyers, Jr. official U.S. House site
• John Conyers Jr for U.S. Congress official campaign site
• Biography at WhoRunsGov.com at The Washington Post
• Biography at the Biographical Directory of the United States Congress
• Voting record maintained by The Washington Post
• Biography, voting record, and interest group ratings at Project Vote Smart
• Congressional profile at GovTrack
• Congressional profile at OpenCongress
• Issue positions and quotes at On the Issues
• Financial information at OpenSecrets.org
• Staff salaries, trips and personal finance at LegiStorm.com
• Campaign finance reports and data at the Federal Election Commission
• Appearances on C-SPAN programs
• Collected news and commentary at The New York Times
• Profile at SourceWatch
• CD14 at Michigan Liberal
• Global Family Day movement co-founded by John Conyers and Linda Grover
• John Conyers' oral history video excerpts at The National Visionary Leadership Project

Articles

• Congressman John Conyers Talks About Bush Lying America Into War and His Campaign to Hold Bush Accountable: The Downing Street Memo and More (John Conyers interview), BuzzFlash (June 9, 2005)
• Bush asked to explain UK war memo CNN (May 12, 2005)
• Open letter to George W. Bush, re: Downing Street Memo (originally signed by 89 US Congress members), John Conyers, et al. (May 5, 2005)
• Preserving Democracy: What Went Wrong in Ohio: Status Report of the House Judiciary Committee Democratic Staff (prepared at the request of Congressman John Conyers, January 5, 2005)
• The Constitution in Crisis; The Downing Street Minutes and Deception, Manipulation, Torture, Retribution, and Coverups in the Iraq War (Investigative Status Report of the House Judiciary Committee Democratic Staff, December 2005)
• The Downing Street Memo John Conyers (May 27, 2005)
• It's time for Karl Rove to go: The president needs to ask for a special prosecutor in the Valerie Plame case Congressman John Conyers, Jr., Salon.com (October 15, 2003)
• A Motion for Censure Congressman John Conyers, Jr., The Nation (December 22, 2005)
• Q & A with Conyers Guernica Magazine
• House chair warns White House to comply with subpoenas

Friedrich August von Hayek

Austrian School
Born	(1899-05-08)8 May 1899 Vienna, Austria-Hungary
Died	23 March 1992(1992-03-23) (aged 92) Freiburg, Germany
Nationality	Austrian, British
Institution	University of Freiburg (1962–1968) University of Chicago (1950–1962) London School of Economics (1931–1950)
Field	Economics, political science, law, philosophy, psychology
Alma mater	University of Vienna (Dr. jur. 1921, Dr. rer. pol 1923)
Opposed	Keynes · Sraffa · Kaldor
Influences	Wieser · Menger · Mach · Böhm-Bawerk · Mises · Mandeville · Wittgenstein · Burke · Mill · Tocqueville · Popper
Influenced	Friedman · Popper · Coase · Hicks · V. Smith · Thatcher · Paul · Reagan · Lerner · Rothbard
Contributions	Economic calculation problem, catallaxy, extended order, dispersed knowledge, price signal, spontaneous order, Hebbian theory
Awards	Nobel Memorial Prize in Economic Sciences (1974) Presidential Medal of Freedom (1991)
Signature

Friedrich August Hayek CH (German pronunciation: [ˈfʁiːdʁɪç ˈaʊ̯ɡʊst ˈhaɪ̯ɛk]; 8 May 1899 – 23 March 1992), born in Austria-Hungary as Friedrich August von Hayek, was an economist and philosopher best known for his defense of classical liberalism. In 1974, Hayek shared the Nobel Memorial Prize in Economic Sciences (with his political rival, Gunnar Myrdal) for his "pioneering work in the theory of money and economic fluctuations and... penetrating analysis of the interdependence of economic, social and institutional phenomena." He considered the efficient allocation of capital to be the most important factor leading to sustainable and optimal GDP growth, and warned of harms from monetary authority manipulation of interest rates. Interest rates should be set naturally by equilibrium between consumption of goods or capital stock.^[1]

Hayek is considered to be a major economist and political philosopher of the twentieth century.^[2][3] Along with his mentor Ludwig von Mises, he was an important contributor to the Austrian school of economic thought. Hayek's account of how changing prices communicate information which enable individuals to coordinate their plans is widely regarded as an important achievement in economics.^[4] He also contributed to the fields of systems thinking, jurisprudence, neuroscience and the history of ideas.

Hayek served in World War I and said that his experience in the war and his desire to help avoid the mistakes that had led to the war (see below) led him to his career. Hayek lived in Austria, Great Britain, the United States and Germany, and became a British subject in 1938. He spent most of his academic life at the London School of Economics (LSE), the University of Chicago, and the University of Freiburg.

In 1984, he was appointed as a member of the Order of the Companions of Honour by Queen Elizabeth II on the advice of Prime Minister Margaret Thatcher for his "services to the study of economics."^[5] He also received the US Presidential Medal of Freedom in 1991 from president George H. W. Bush.^[6] In 2011, his article The Use of Knowledge in Society was selected as one of the top 20 articles published in the American Economic Review during its first 100 years.^[7]

Early life[link]

Hayek was born in Vienna (then the capital of Austria-Hungary), and was the son of August von Hayek, a doctor in the municipal health service. Hayek's grandfathers were prominent academics working in the fields of statistics and biology. His paternal line had been raised to the ranks of the Bohemian nobility for its services to the state.^[8] Similarly, a generation before his maternal forebears had also been raised to the lower noble rank. However, after 1919 titles of nobility were banned by law in Austria, and the "von Hayek" family became simply the Hayek family. Hence, after 1919, Hayek's legal name became "Friedrich Hayek", not "Friedrich von Hayek". Hayek's father turned his work on regional botany into a highly esteemed botanical treatise, continuing the family's scholarly traditions.^{[citation needed]}

On his mother's side, Hayek was second-cousin to the philosopher Ludwig Wittgenstein. His mother often played with Wittgenstein's sisters, and had known Ludwig well. As a result of their family relationship, Hayek became one of the first to read Wittgenstein's Tractatus Logico-Philosophicus when the book was published in its original German edition in 1921. Although Hayek only met Wittgenstein on a few occasions, Hayek said that Wittgenstein's philosophy and methods of analysis had a profound influence on his own life and thought.^[9] In his later years, Hayek recalled a discussion of philosophy with Wittgenstein, when both were officers during World War I.^[10] After Wittgenstein's death, Hayek had intended to write a biography of Wittgenstein and worked on collecting family materials, and he later assisted biographers of Wittgenstein.^[11]

At his father's suggestion as a teenager, Hayek read the genetic and evolutionary works of Hugo de Vries and the philosophical works of Ludwig Feuerbach.^[12] In school Hayek was much taken by one instructor's lectures on Aristotle's ethics.

In 1917, he joined an artillery regiment in the Austro-Hungarian Army and fought on the Italian front. Much of Hayek's combat experience was spent as a spotter in an aeroplane. He survived the war without serious injury and was decorated for bravery.

Hayek then decided to pursue an academic career, determined to help avoid the mistakes that had led to the war. Hayek said about his experience: "The decisive influence was really World War I. It's bound to draw your attention to the problems of political organization." He vowed to work for a better world.^[13]

Education and career[link]

At the University of Vienna, he earned doctorates in law and political science in 1921 and 1923 respectively, and he also studied philosophy, psychology, and economics. For a short time, when the University of Vienna closed, Hayek studied in Constantin von Monakow's Institute of Brain Anatomy, where Hayek spent much of his time staining brain cells. Hayek's time in Monakow's lab, and his deep interest in the work of Ernst Mach, inspired Hayek's first intellectual project, eventually published as The Sensory Order (1952). It located connective learning at the physical and neurological levels, rejecting the "sense data" associationism^{[clarification needed]} of the empiricists and logical positivists. Hayek presented his work to the private seminar he had created with Herbert Furth called the Geistkreis.^[14]

During his years at the University of Vienna, Carl Menger's work on the explanatory strategy of social science and Friedrich von Wieser's commanding presence in the classroom left a lasting influence on Hayek.^[15] Upon the completion of his examinations, Hayek was hired by Ludwig von Mises on the recommendation of Wieser as a specialist for the Austrian government working on the legal and economic details of the Treaty of Saint Germain. Between 1923 and 1924 Hayek worked as a research assistant to Prof. Jeremiah Jenks of New York University, compiling macroeconomic data on the American economy and the operations of the U.S. Federal Reserve.^[16]

Initially sympathetic to Wieser's democratic socialism, Hayek's economic thinking shifted away from socialism and toward the classical liberalism of Carl Menger after reading Ludwig von Mises' book Socialism. It was sometime after reading Socialism that Hayek began attending Ludwig von Mises' private seminars, joining several of his university friends, including Fritz Machlup, Alfred Schutz, Felix Kaufmann,and Gottfried Haberler, who were also participating in Hayek's own, more general, private seminar. It was during this time that he also encountered and befriended noted political philosopher Eric Voegelin, with whom he retained a long-standing relationship.^[17]

With the help of Mises, in the late 1920s Hayek founded and served as director of the Austrian Institute for Business Cycle Research, before joining the faculty of the London School of Economics (LSE) in 1931 at the behest of Lionel Robbins. Upon his arrival in London, Hayek was quickly recognized as one of the leading economic theorists in the world, and his development of the economics of processes in time and the coordination function of prices inspired the ground-breaking work of John Hicks, Abba Lerner, and many others in the development of modern microeconomics.^[18]

In 1932, Hayek suggested that private investment in the public markets was a better road to wealth and economic coordination in Britain than government spending programs, as argued in a letter he co-signed with Lionel Robbins and others in an exchange of letters with John Maynard Keynes in The Times.^[19][20] The global Great Depression formed a crucial backdrop against which Hayek formulated his positions, especially in opposition to the views of Keynes.^[21]

Economists who studied with Hayek at the LSE in the 1930s and the 1940s include Arthur Lewis, Ronald Coase, John Kenneth Galbraith, Abba Lerner, Nicholas Kaldor, George Shackle, Thomas Balogh, Vera Smith, L. K. Jha, Arthur Seldon, Paul Rosenstein-Rodan, and Oskar Lange.^[22][23][24] Hayek also taught or tutored all sorts of other L.S.E. students, including David Rockefeller.^[25]

Unwilling to return to Austria after the Anschluss brought it under the control of Nazi Germany in 1938, Hayek remained in Britain and became a British subject in 1938. He held this status for the remainder of his life, but he did not live in Great Britain after 1950. He lived in the United States from 1950 to 1962 and then mostly in Germany but also briefly in Austria.^[26]

[edit] The Road to Serfdom

Hayek was concerned about the general view in Britain's academia that fascism was a capitalist reaction to socialism and The Road to Serfdom arose from those concerns. It was written between 1940 and 1943. The title was inspired by the French classical liberal thinker Alexis de Tocqueville's writings on the "road to servitude".^[27] It was first published in Britain by Routledge in March 1944 and was quite popular, leading Hayek to call it "that unobtainable book," also due in part to wartime paper rationing.^[28] When it was published in the United States by the University of Chicago in September of that year, it achieved greater popularity than in Britain.^[29] At the arrangement of editor Max Eastman, the American magazine Reader's Digest also published an abridged version in April 1945, enabling The Road to Serfdom to reach a far wider audience than academics.

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The libertarian economist Walter Block observed critically that while The Road to Serfdom is "a war cry against central planning," it offers lukewarm support for a free market system and laissez-faire capitalism,^[30] with Hayek even going so far as to say that "probably nothing has done so much harm to the liberal cause as the wooden insistence of some liberals on certain rules of thumb, above all the principle of laissez-faire."^[31] In the book, Hayek writes that the government has a role to play in the economy through the monetary system, work-hours regulation, and institutions for the flow of proper information. These are contentions associated with the point of view of ordoliberalism.

Through analysis of this and many other of Hayek's works, Block asserts, "in making the case against socialism, Hayek was led into making all sort of compromises with what otherwise appeared to be his own philosophical perspective – so much so, that if a system was erected on the basis of them, it would not differ too sharply from what this author explicitly opposed."^[30]

Chicago[link]

In 1950, Hayek left the London School of Economics for the University of Chicago, becoming a professor in the Committee on Social Thought. Hayek's first class at Chicago was a faculty seminar on the philosophy of science attended by many of the University's most notable scientists of the time, including Enrico Fermi, Sewall Wright and Leó Szilárd. During his time at Chicago, Hayek worked on the philosophy of science, economics, political philosophy, and the history of ideas. Hayek's economic notes from this period have yet to be published. He did not become part of the Chicago School of Economics, but his recognition of the impact that demand and velocity had on money were a fundamental influence on it.^[32] It can be noted that he never taught at the Economics Department which unwaveringly refused him access.^[33]

After editing a book on John Stuart Mill's letters he planned to publish two books on the liberal order, The Constitution of Liberty and "The Creative Powers of a Free Civilization" (eventually the title for the second chapter of The Constitution of Liberty).^[34] He completed The Constitution of Liberty in May 1959, with publication in February 1960. Hayek was concerned "with that condition of men in which coercion of some by others is reduced as much as is possible in society".^[35] Hayek was disappointed that the book did not receive the same enthusiastic general reception as The Road to Serfdom had sixteen years before.^[36]

Freiburg, California, and Salzburg[link]

From 1962 until his retirement in 1968, he was a professor at the University of Freiburg, West Germany, where he began work on his next book, Law, Legislation and Liberty. Hayek regarded his years at Freiburg as "very fruitful".^[37] Following his retirement, Hayek spent a year as a visiting professor of philosophy at the University of California, Los Angeles, where he continued work on Law, Legislation and Liberty, teaching a graduate seminar by the same name and another on the philosophy of social science. Primary drafts of the book were completed by 1970, but Hayek chose to rework his drafts and finally brought the book to publication in three volumes in 1973, 1976 and 1979. Charles Koch invited Hayek to serve as the Institute for Humane Studies – then based in Menlo Park, California – “distinguished senior scholar” in preparation for its first conference on Austrian economics, to be held in June 1974. Hayek initially declined the offer, but accepted the position after Koch convinced him that he would receive Social Security and Medicare benefits.^[38]

He became professor at the University of Salzburg from 1969 to 1977; he then returned to Freiburg, where he spent the rest of his days. When Hayek left Salzburg in 1977, he wrote, "I made a mistake in moving to Salzburg". The economics department was small, and the library facilities were inadequate.^[39]

Nobel laureate[link]

On 9 October 1974, it was announced that Hayek would be awarded the Nobel Memorial Prize in Economics, along with Swedish socialist economist Gunnar Myrdal. The reasons for the two of them winning the prize are described in the Nobel committee's press release.^[40] He was surprised at being given the award and believed that he was given it with Myrdal in order to balance the award with someone from the opposite side of the political spectrum.^[41]

During the Nobel ceremony in December 1974, Hayek met the Russian dissident Aleksandr Solzhenitsyn. Hayek later sent him a Russian translation of The Road to Serfdom.^[41] Although he spoke at his award speech of apprehension about the danger the authority of the prize would lend to an economist,^[42] the prize brought much greater public awareness of Hayek and has been described by his biographer as "the great rejuvenating event in his life".^[43]

[edit] The Denationalization of Money

In 1976, in a paper on The Denationalization of Money,^[44] Hayek advocated that rather than re-instituting a government-mandated gold standard, a free market in money be allowed to develop, with issuers of money competing with each other to produce the best, most stable and healthy currency.

This sparked an entire school of thought within economics, Free Banking, with banks not being banned from having fractional reserves as Rothbard advocated, but instead being free to experiment and discover the best method of conducting business. Economists including Richard Timberlake, George Selgin, Lawrence White, and Steven Horwitz are part of this school of thought.^{[citation needed]}

Later years[link]

United Kingdom politics[link]

In February 1975, Margaret Thatcher was elected leader of the British Conservative Party. The Institute of Economic Affairs arranged a meeting between Hayek and Thatcher in London soon after.^[45] During Thatcher's only visit to the Conservative Research Department in the summer of 1975, a speaker had prepared a paper on why the "middle way" was the pragmatic path the Conservative Party should take, avoiding the extremes of left and right. Before he had finished, Thatcher "reached into her briefcase and took out a book. It was Hayek's The Constitution of Liberty. Interrupting our pragmatist, she held the book up for all of us to see. 'This', she said sternly, 'is what we believe', and banged Hayek down on the table".^[46]

In 1977, Hayek was critical of the Lib-Lab pact, in which the British Liberal Party agreed to keep the British Labour government in office. Writing to The Times, Hayek said, "May one who has devoted a large part of his life to the study of the history and the principles of liberalism point out that a party that keeps a socialist government in power has lost all title to the name 'Liberal'. Certainly no liberal can in future vote 'Liberal'".^[47] Hayek was criticised by Liberal politicians Lord Gladwyn and Andrew Phillips, who both claimed that the purpose of the pact was to discourage socialist legislation.

Lord Gladwyn pointed out that the German Free Democrats were in coalition with the German Social Democrats.^[48] Hayek was defended by Professor Antony Flew who stated that the German Social Democrats, unlike the British Labour Party, had, since the late 1950s, abandoned public ownership of the means of production, distribution and exchange and had instead embraced the social market economy.^[49]

In 1978, Hayek came into conflict with the Liberal Party leader, David Steel, who claimed that liberty was possible only with "social justice and an equitable distribution of wealth and power, which in turn require a degree of active government intervention" and that the Conservative Party were more concerned with the connection between liberty and private enterprise than between liberty and democracy. Hayek claimed that a limited democracy might be better than other forms of limited government at protecting liberty but that an unlimited democracy was worse than other forms of unlimited government because "its government loses the power even to do what it thinks right if any group on which its majority depends thinks otherwise".

Hayek stated that if the Conservative leader had said "that free choice is to be exercised more in the market place than in the ballot box, she has merely uttered the truism that the first is indispensable for individual freedom while the second is not: free choice can at least exist under a dictatorship that can limit itself but not under the government of an unlimited democracy which cannot".^[50]

Influence on central European politics[link]

US President Ronald Reagan at his time listed Hayek as among the two or three people who most influenced his philosophy, and welcomed Hayek to the White House as a special guest.^[51] In the 1970s and 1980s, the writings of Hayek were also a major influence on many of the leaders of the "velvet" revolution in Central Europe during the collapse of the old Soviet Empire. Here are some supporting examples:

There is no figure who had more of an influence, no person had more of an influence on the intellectuals behind the Iron Curtain than Friedrich Hayek. His books were translated and published by the underground and black market editions, read widely, and undoubtedly influenced the climate of opinion that ultimately brought about the collapse of the Soviet Union.

—Milton Friedman* (Hoover Institution)

The most interesting among the courageous dissenters of the 1980s were the classical liberals, disciples of F. A. Hayek, from whom they had learned about the crucial importance of economic freedom and about the often-ignored conceptual difference between liberalism and democracy.^[52]

—Andrzej Walicki* (History, Notre Dame)

Estonian Prime Minister Mart Laar came to my office the other day to recount his country’s remarkable transformation. He described a nation of people who are harder-working, more virtuous – yes, more virtuous, because the market punishes immorality – and more hopeful about the future than they’ve ever been in their history. I asked Mr. Laar where his government got the idea for these reforms. Do you know what he replied? He said, "We read Milton Friedman and F. A. Hayek."^[53]

—U.S. Representative Dick Armey

I was 25 years old and pursuing my doctorate in economics when I was allowed to spend six months of post-graduate studies in Naples, Italy. I read the Western economic textbooks and also the more general work of people like Hayek. By the time I returned to Czechoslovakia, I had an understanding of the principles of the market. In 1968, I was glad at the political liberalism of the Dubcek Prague Spring, but was very critical of the Third Way they pursued in economics.^[54]

—Vaclav Klaus (President of the Czech Republic)

Recognition[link]

In 1980, Hayek, a non-practicing Roman Catholic,^[55][56] was one of twelve Nobel laureates to meet with Pope John Paul II, "to dialogue, discuss views in their fields, communicate regarding the relationship between Catholicism and science, and 'bring to the Pontiff's attention the problems which the Nobel Prize Winners, in their respective fields of study, consider to be the most urgent for contemporary man.'"^[57]

In 1984, he was appointed as a member of the Order of the Companions of Honour (CH) by Queen Elizabeth II of the United Kingdom on the advice of the British Prime Minister Margaret Thatcher for his "services to the study of economics."^[5] Hayek had hoped to receive a baronetcy, and after he was awarded the CH he sent a letter to his friends requesting that he be called the English version of Friedrich (Frederick) from now on. After his 20 min audience with the Queen, he was "absolutely besotted" with her according to his daughter-in-law, Esca Hayek. Hayek said a year later that he was "amazed by her. That ease and skill, as if she'd known me all my life." The audience with the Queen was followed by a dinner with family and friends at the Institute of Economic Affairs. When, later that evening, Hayek was dropped off at the Reform Club, he commented: "I've just had the happiest day of my life."^[58]

In 1991, US President George H. W. Bush awarded Hayek the Presidential Medal of Freedom, one of the two highest civilian awards in the United States, for a "lifetime of looking beyond the horizon." Hayek died in 1992 in Freiburg, Germany, and was buried in the Neustift am Wald cemetery in the northern outskirts of Vienna.^[59] In 2011, his article The Use of Knowledge in Society was selected as one of the top 20 articles published in the American Economic Review during its first 100 years.^[7]

Work[link]

The business cycle[link]

Hayek's principal investigations in economics concerned capital, money, and the business cycle. Mises had earlier applied the concept of marginal utility to the value of money in his Theory of Money and Credit (1912), in which he also proposed an explanation for "industrial fluctuations" based on the ideas of the old British Currency School and of Swedish economist Knut Wicksell. Hayek used this body of work as a starting point for his own interpretation of the business cycle, elaborating what later became known as the "Austrian Theory of the Business Cycle". In his Prices and Production (1931), Hayek argued that the business cycle resulted from the central bank's inflationary credit expansion and its transmission over time, leading to a capital misallocation caused by the artificially low interest rates. Hayek claimed that "the past instability of the market economy is the consequence of the exclusion of the most important regulator of the market mechanism, money, from itself being regulated by the market process."

In accordance with arguments outlined in his essay The Use of Knowledge in Society, he argued that a monopolistic governmental agency like a central bank can neither possess the relevant information which should govern supply of money, nor have the ability to use it correctly.^[60]

In 1929, Lionel Robbins assumed the helm of the London School of Economics (LSE). Eager to promote alternatives to what he regarded as the narrow approach of the school of economic thought that then dominated the English-speaking academic world (centered at the University of Cambridge and deriving largely from the work of Alfred Marshall), Robbins invited Hayek to join the faculty at LSE, which he did in 1931. According to Nicholas Kaldor, Hayek's theory of the time-structure of capital and of the business cycle initially "fascinated the academic world" and appeared to offer a less "facile and superficial" understanding of macroeconomics than the Cambridge school's.^[61]

Also in 1931, Hayek critiqued Keynes's Treatise on Money (1930) in his "Reflections on the pure theory of Mr. J. M. Keynes"^[62] and published his lectures at the LSE in book form as Prices and Production.^[63] Unemployment and idle resources are, for Keynes, caused by a lack of effective demand; for Hayek, they stem from a previous, unsustainable episode of easy money and artificially low interest rates.

Hayek's argument is based on Böhm-Bawerk's concept of the "average period of production."^[64]

Criticisms[link]

Keynes asked his friend Piero Sraffa to respond publicly to Hayek's challenge; instead of formulating an alternative theory, Sraffa elaborated on the logical inconsistencies of Hayek's argument, especially concerning the effect of inflation-induced "forced savings" on the capital sector and about the definition of a "natural" interest rate in a growing economy.^[65] Others who responded negatively to Hayek's work on the business cycle included John Hicks, Frank Knight, and Gunnar Myrdal.^[66]

Hayek continued his research on monetary and capital theory, revising his theories of the relations between credit cycles and capital structure in Profits, Interest and Investment (1939) and The Pure Theory of Capital (1941), but his reputation as an economic theorist had by then fallen so much that those works were largely ignored, except for scathing critiques by Nicholas Kaldor.^[61][67] Lionel Robbins himself, who had embraced the Austrian theory of the business cycle in The Great Depression (1934), later regretted having written that book and accepted many of the Keynesian counter-arguments.^[68]

Hayek never produced the book-length treatment of "the dynamics of capital" that he had promised in the Pure Theory of Capital. After 1941, he continued to publish works on the economics of information, political philosophy, the theory of law, and psychology, but seldom on macroeconomics. At the University of Chicago, Hayek was not part of the economics department and did not influence the rebirth of neoclassical theory which took place there (see Chicago school of economics). When, in 1974, he shared the Nobel Memorial Prize in Economics with Gunnar Myrdal, the latter complained about being paired with an "ideologue". Milton Friedman declared himself "an enormous admirer of Hayek, but not for his economics. I think Prices and Production is a very flawed book. I think his [Pure Theory of Capital] is unreadable. On the other hand, The Road to Serfdom is one of the great books of our time."^[68]

"Your greatest danger is the probable practical failure of the application of your philosophy in the United States." - John Maynard Keynes in a letter to Hayek.^[69]

The economic calculation problem[link]

Hayek was one of the leading academic critics of collectivism in the 20th century. Hayek argued that all forms of collectivism (even those theoretically based on voluntary cooperation) could only be maintained by a central authority of some kind. In Hayek's view, the central role of the state should be to maintain the rule of law, with as little arbitrary intervention as possible. In his popular book, The Road to Serfdom (1944) and in subsequent academic works, Hayek argued that socialism required central economic planning and that such planning in turn leads towards totalitarianism. Hayek posited that a central planning authority would have to be endowed with powers that would impact and ultimately control social life, because the knowledge required for central planning an economy is inherently decentralized, and would need to be brought under control.

Building on the earlier work of Ludwig von Mises and others, Hayek also argued that while in centrally planned economies an individual or a select group of individuals must determine the distribution of resources, these planners will never have enough information to carry out this allocation reliably. This argument, first proposed by Max Weber, says that the efficient exchange and use of resources can be maintained only through the price mechanism in free markets (see economic calculation problem).

In The Use of Knowledge in Society (1945), Hayek argued that the price mechanism serves to share and synchronize local and personal knowledge, allowing society's members to achieve diverse, complicated ends through a principle of spontaneous self-organization. He used the term catallaxy to describe a "self-organizing system of voluntary co-operation." Hayek's research into this argument was specifically cited by the Nobel Committee in its press release awarding Hayek the Nobel prize.^[40]

Hayek also wrote that the state has a role to play in the economy, and specifically, in creating a "safety net". He wrote, "There is no reason why, in a society which has reached the general level of wealth ours has, the first kind of security should not be guaranteed to all without endangering general freedom; that is: some minimum of food, shelter and clothing, sufficient to preserve health. Nor is there any reason why the state should not help to organize a comprehensive system of social insurance in providing for those common hazards of life against which few can make adequate provision."^[70]

Spontaneous order[link]

Hayek viewed the free price system not as a conscious invention (that which is intentionally designed by man),but as spontaneous order or what he referred to as "that which is the result of human action but not of human design". Thus, Hayek put the price mechanism on the same level as, for example, language.

Hayek attributed the birth of civilization to private property in his book The Fatal Conceit (1988). He explained that price signals are the only means of enabling each economic decision maker to communicate tacit knowledge or dispersed knowledge to each other, in order to solve the economic calculation problem.

Investment and choice[link]

Perhaps more fully than any other economist, Hayek investigated the choice theory of investment. He examined the inter-relations between non-permanent production goods and "latent" or potentially economic permanent resources – building on the choice theoretical insight that, "processes that take more time will evidently not be adopted unless they yield a greater return than those that take less time."^[71]

Hayek's work on the microeconomics of the choice theoretics of investment, non-permanent goods, potential permanent resources, and economically-adapted permanent resources mark a central dividing point between his work in areas of macroeconomics and that of most all other economists. Hayek's work on the macroeconomic subjects of central planning, trade cycle theory, the division of knowledge, and entrepreneurial adaptation especially, differ greatly from the opinions of macroeconomic "Marshallian" economists in the tradition of John Maynard Keynes and the microeconomic "Walrasian" economists in the tradition of Abba Lerner.

Social and political philosophy[link]

In the latter half of his career Hayek made a number of contributions to social and political philosophy, which he based on his views on the limits of human knowledge,^[72] and the idea of spontaneous order in social institutions. He argues in favor of a society organized around a market order, in which the apparatus of state is employed almost (though not entirely) exclusively to enforce the legal order (consisting of abstract rules, and not particular commands) necessary for a market of free individuals to function. These ideas were informed by a moral philosophy derived from epistemological concerns regarding the inherent limits of human knowledge. Hayek argued that his ideal individualistic, free-market polity would be self-regulating to such a degree that it would be 'a society which does not depend for its functioning on our finding good men for running it'.^[73]

Hayek disapproved strongly of the notion of 'social justice'. He compared the market to a game in which 'there is no point in calling the outcome just or unjust'^[74] and argued that 'social justice is an empty phrase with no determinable content';^[75] likewise 'the results of the individual's efforts are necessarily unpredictable, and the question as to whether the resulting distribution of incomes is just has no meaning.'^[76] He regarded any attempt by government to redistribute income or capital as an unacceptable intrusion upon individual freedom: 'the principle of distributive justice, once introduced, would not be fulfilled until the whole of society was organised in accordance with it. This would produce a kind of society which in all essential respects would be the opposite of a free society.^[75]

With regard to a safety net, Hayek's statements are mixed. On the one hand, he was prepared to tolerate "some provision for those threatened by the extremes of indigence or starvation, be it only in the interest of those who require protection against acts of desperation on the part of the needy."^[77] On the other hand, as referenced above in the section on "The economic calculation problem", Hayek wrote that "there is no reason why... the state should not help to organize a comprehensive system of social insurance."

Philosophy of science[link]

In his philosophy of science, which has much in common with that of his good friend Karl Popper, Hayek was highly critical of what he termed scientism: a false understanding of the methods of science that has been mistakenly forced upon the social sciences, but that is contrary to the practices of genuine science. Usually, scientism involves combining the philosophers' ancient demand for demonstrative justification with the associationists' false view that all scientific explanations are simple two-variable linear relationships. Hayek points out that much of science involves the explanation of complex multivariable and nonlinear phenomena, and the social science of economics and undesigned order compares favourably with such complex sciences as Darwinian biology. These ideas were developed in The Counter-Revolution of Science: Studies in the Abuse of Reason, 1952 and in some of Hayek's later essays in the philosophy of science such as "Degrees of Explanation" and "The Theory of Complex Phenomena".

Psychology[link]

In The Sensory Order: An Inquiry into the Foundations of Theoretical Psychology (1952), Hayek independently developed a "Hebbian learning" model of learning and memory – an idea which he first conceived in 1920, prior to his study of economics. Hayek's expansion of the "Hebbian synapse" construction into a global brain theory has received continued attention ^{[78][79][80][81]} in neuroscience, cognitive science, computer science, behavioural science, and evolutionary psychology, by scientists such as Edelman, and Fuster.

Influence and recognition[link]

Hayek's influence on the development of economics is widely acknowledged. Hayek is the second-most frequently cited economist (after Kenneth Arrow) in the Nobel lectures of the prize winners in economics, particularly since his lecture was critical of the field of orthodox economics and neo-classical modelization. A number of Nobel Laureates in economics, such as Vernon Smith and Herbert A. Simon, recognize Hayek as the greatest modern economist.^{[citation needed]} Another Nobel winner, Paul Samuelson believes that Hayek was worthy of his award but nevertheless claims that "there were good historical reasons for fading memories of Hayek within the mainstream last half of the twentieth century economist fraternity. In 1931, Hayek's Prices and Production had enjoyed an ultra-short Byronic success. In retrospect hindsight tells us that its mumbo-jumbo about the period of production grossly misdiagnosed the macroeconomics of the 1927–1931 (and the 1931–2007) historical scene".^[82] Despite this comment, Samuelson spent the last 50 years of his life obsessed with the problems of capital theory identified by Hayek and Böhm-Bawerk, and Samuelson flatly judged Hayek to have been right and his own teacher, Joseph Schumpeter, to have been wrong on the central economic question of the 20th century, the feasibility of socialist economic planning in a production goods dominated economy.^[83]