The archive.

Notorious in his own century as a satirist who declared private vices public benefits, Bernard Mandeville is recovered here, in the German translation of Hayek's 1966 British Academy lecture, not as an economist but as a profound psychologist of human nature. The scandalous paradox of The Fable of the Bees, Hayek argues, is the lesser insight; the greater is that complex social order arises from actions that pursue private aims while intending none of the larger outcomes they produce. Mandeville thus becomes an early theorist of spontaneously grown institutions, law, morality, language, money, markets, against the seventeenth-century rationalism of Descartes and Hobbes. The essay traces a line of descent from Mandeville through Hume and Adam Smith to Ferguson's formula about results of human action but not human design, and onward to Darwin.

Ich befürchte, die meisten Zeitgenossen von Bernard Mandeville würden sich im Grabe umdrehen, wüßten sie, daß er der Britischen Akademie inzwischen als »master mind« gilt.

English translation: “I fear that most of Bernard Mandeville's contemporaries would turn in their graves if they knew that he is now regarded by the British Academy as a "master mind".”

Mach’s influence on Hayek took an unexpected form: his attack on metaphysics helped Hayek question the foundations of Mach’s own psychology. In this brief symposium contribution, presented in English translation, Hayek recalls his student years in Vienna before the formation of the Vienna Circle. Mach offered a resource for clarifying what counted as scientific explanation, without requiring allegiance to positivism or to its socialist advocates. The sharpest example is Hayek’s rejection of “simple and pure sensations” as the elements of perception—a criticism that helped set him on the path toward The Sensory Order. This personal testimony lets readers distinguish intellectual influence from doctrinal agreement, while tracing a concrete connection between Hayek’s early psychological interests and his later methodological concerns.

Supermarket boycotts misidentify their villain: the housewives picketing chain stores before the 1966 elections blame merchants for prices that government, not retailers, produced. Only Washington can legally run the printing presses that depreciate the currency, Sennholz argues, yet the Johnson administration exploits a semantic shift—redefining inflation as mere price increase—so that businessmen absorb the blame officials have earned. He turns the charge back on the picketers, many of whom champion the very spending programs that breed the deficits behind rising prices, and traces the cost of a can of tomatoes through farm supports, crop restriction, subsidized exports, embedded taxation, and union work rules. Chain supermarkets, he counters, are low-margin, fiercely competitive institutions; the boycott is coercion by a minority against the majority's own preference.

They themselves are infected with the very bacillus that is breeding the inflation.

Because needs, supplies, and costs never stop shifting, any price a government fixes by law is soon an obsolete one — which is why Hazlitt's blunt answer to his title question, that the market should set prices, forecloses most schemes to raise, lower, or freeze them. No price stands alone; each is knotted to every other through joint production, substitution, and the competition of all goods for the consumer's dollar. Export supports for rubber or wheat must choke supply into quotas that breed bureaucracy and invite substitutes; wartime ceilings on necessities drain margins until controls metastasize across wages, imports, and inputs. Flexibility is the corrective, since a soaring price both rations scarce goods and summons new supply. He carries the case into monopoly and antitrust, doubting any court can price a competition that never existed.

Price control always reduces, unbalances, distorts, and discoordinates production.

An overstaffed civil service cannot be adequately paid, yet dismissing its educated employees may threaten political stability. This dilemma anchors Hayek’s brief 1967 letter to the Sunday Times, republished here in 2022. Returning from Djakarta, he supplements Henry Brandon’s reporting with a sympathetic account of Indonesia’s governing generals: he stresses their varied professional origins and presents corruption as a problem constrained by the bureaucracy inherited from Sukarno. The letter offers a sharply bounded encounter with Hayek’s political judgement—how he frames the relationship between administrative reform and preserving order. The later editorial note supplies context about Suharto’s regime that is distinct from Hayek’s own defence of the rulers’ position.

Multiplier theory, as Keynes bequeathed it, sums an endless sequence of income effects without ever fixing the accounting period national income actually requires—and for Mahr the neglect of the time factor is its cardinal defect. Since income is reckoned by the year, the multiplier too must be annual: he redefines it as the coefficient linking a rise in circulating money to the rise in monetary national income, and identifies it with the marginal velocity of circulation, the number of income-forming turnovers a newly issued unit performs within the year. Hoarding, on this account, is not an external leakage but a lowering of that average velocity. The Keynesian investment multiplier and the export multiplier become mere special cases of a broader principle: supplying a growing economy with means of payment. Marked here as previously unpublished.

Der entscheidende Mangel der herrschenden Multiplikatortheorie liegt in der Vernachlässigung des Zeitfaktors.

English translation: “The decisive defect of the prevailing multiplier theory lies in the neglect of the time factor.”

Hayek draws a distinction that, once stated, seems obvious yet is constantly confused: the rules an individual follows are not the same thing as the order of actions that emerges when many follow them. A rule may be innate or learned, genetic or cultural, and need never be consciously known; what natural selection tests is not the isolated rule but the viability of the whole group order it helps sustain. Moving from the flight patterns of geese and insect division of labour to kinship, property, and succession, he shows coordination arising without any actor grasping the design. He calls the theoretical reconstruction of such processes conjectural history, aligns social science with biology and geology rather than mechanics, and, invoking Mandeville, Hume, and Smith, defends explanation by function without any designing purpose.

Norms are thus an adaptation to a factual regularity on which we depend but which we know only partially and on which we can count only if we observe those norms.

Exchange crises, draining reserves, balance-of-payments alarms: the international monetary problem, Mises contends, is a domestic policy problem wearing a foreign mask. Governments inflate and cheapen credit at home while pledging fixed exchange parities abroad, then blame tourists, importers, and speculators for the contradiction they created. Reasserting the purchasing-power-parity theory against the balance-of-payments doctrine, he argues that currencies exchange according to what they buy, so a state that expands its money supply must watch its currency's external value fall; what the press calls an attack is only the market correcting an official falsification. He distinguishes inflation, the increase of money beyond demand, from inflationism, its deliberate fiscal use, and dismisses reserve pooling and new international facilities as schemes to spread one country's inflation to others. An appendix shows how anticipated depreciation corrupts interest rates and business accounting alike.

Inflationism is not a variety of economic policies. It is an instrument of destruction; if not stopped very soon, it destroys the market entirely.

Behind the single German word Rechtsordnung, Hayek finds two things habitually run together: the order of legal rules and the Handelnsordnung, the order of actions that arises when people follow them. Written in German across twelve sections, the essay defines order as a factual relation among recurring elements that lets us form reliable expectations from partial knowledge, with no ordering will required. The market is his central case: it solves the problem of using more knowledge than any single mind possesses, adjusting through prices by what he calls, borrowing from cybernetics, negative feedback. From this he mounts a sustained assault on 'social' justice, on Carl Schmitt's concrete-order thinking, and on the welfare state's drift from private-law rules toward public-law command, arguing that only human conduct, never an unintended outcome, can be called just or unjust.

Gerecht oder ungerecht kann nur menschliches Verhalten oder dessen beabsichtigte Ergebnisse sein, aber nicht eine bloße Tatsache, die niemand absichtlich herbeigeführt hat oder herbeiführen könnte.

English translation: “Only human conduct, or its intended results, can be just or unjust, but not a mere fact that no one has intentionally brought about or could have brought about.”

The separation of powers, the founders' chosen guard for liberty, has failed, hollowed out, Hayek argues, once law came to mean whatever a legislature enacts rather than a particular kind of rule. First published in Il Politico, this essay locates the deeper error in the doctrine of sovereignty: the assumption that ultimate power must be unlimited because power can be checked only by another power. Against Rousseau, legal positivism, and unlimited majority rule, he revives the distinction between law as an abstract rule of just conduct and command aimed at chosen outcomes. His remedy splits the assembly in two, a partisan governmental chamber for services and budgets, a nonparty lawmaking chamber for universal rules, and, illustrating the design through taxation, names the result demarchy.

In the last resort it rests on the misconception that the ultimate ‘sovereign’ power must be unlimited, because, it is thought, power can be checked only by another power.

Between the natural and the artificial, Hayek argues, lies a third and decisive category that Western thought has persistently missed: the institutions and rules that are the result of human action but not of human design. Markets, customs, language and law belong there, neither given by nature nor invented by any mind. Tracing the insight through Mandeville, Montesquieu, Hume, Ferguson and Smith to its revival in Carl Menger, he turns it against legal positivism, which mistakes law for the mere command of a legislator and so severs it from justice. Law, he counters, is older than legislation; justice is discovered by testing rules for compatibility within an inherited order, never deduced from pure reason nor invented by sovereign will.

There never has been and there never can be a ‘gap-less’ (lückenlos) system of formulated rules.

Machlup’s presidential address returns to the 1946 American Economic Review battlefield twenty years on, asking not which theory of the firm is realistic but what each is built to explain. The governing distinction is between the firm as an analytical construct and the firm as an actual organization: competitive price theory uses a deliberately simplified agent to infer how prices and outputs move when wages or taxes change, and treating that fiction as a miniature General Motors commits the “fallacy of misplaced concreteness.” Behavioral and managerial models — Baumol’s sales maximization, Williamson’s expense preference — are not refutations but tools for different problems, above all monopoly and oligopoly, where discretion widens. His verdict is a disciplined pluralism that matches each model to the question it was designed to answer.

Thus, instead of a heated contest between marginalism and managerialism in the theory of the firm, a marriage between the two has come about.