1974 - A Case for Capitalism

Friedrich von Hayek

Austrian economist Friedrich von Hayek (1899 to 1992) was awarded the Nobel Memorial Prize in Economics in 1974. In his seminal book, The Road to Serfdom,1 Hayek articulated the reasons why free market capitalism is a superior economic model to communism or socialism. He and his mentor, Ludwig von Mises, were influential figures in the Austrian school of political economy. He postulated that centralized planning by a government is not democratic and that market economies are the result of spontaneous order, resulting in a more efficient allocation of resources than any other system could achieve. Building on the work of Adam Smith, Mises, and others, Hayek argued that in socialist or communist societies, an individual or a small group of people inefficiently determines the distribution of resources. His findings support the concept that prices in a free market, such as the global stock exchanges, reflect all available information as well as the forecasts of all market participants. In other words, prices are an effective and efficient means of communication between buyers and sellers.

    -1 Friedrich von Hayek, The Road to Serfdom (Chicago: University of Chicago Press, 1994).
Step 2Friedrich von HayekThe Road to SerfdomCapitalismAdam Smith