Books & Manuscripts

The Man Whose Powerful Critique of Socialism Influenced Margaret Thatcher

By Sotheby's
Sotheby's upcoming online auction, Friedrich von Hayek: His Nobel Prize and Family Collection from 8–19 March, features selected awards, photographs and personal effects of one of the 20th century's most influential economists.

I n 1931 Friedrich von Hayek was asked to join the faculty of the London School of Economics. At this point Hayek had a reputation as an economic theorist of formidable insight and rigour. His penetrating work on the business cycle brought him into conflict with John Maynard Keynes – the leading economist in Britain and perhaps the world – over the appropriate fiscal and monetary responses to the depression.

The move to the LSE proved to be of great personal importance. “I fell in love with England when I first went to Cambridge in January, 1931. Emotionally and intellectually it was my climate and it still is.” (interview with The Times, 1985). In 1938 – following the absorption of Austria into the Nazi Reich – Hayek and his family became naturalised citizens of Britain, and Hayek retained his British citizenship for the rest of his life.

It was a very particular vision of Britain that attracted Hayek: “of all the forms of life, that at one of the colleges of the old universities […] still seems to be the most attractive” (Hayek on Hayek, p.98). It was a world in which, at its best, intellectual disagreements went hand in hand with collegiality. When the LSE moved to Cambridge at the outbreak of World War II it was, of all people, Keynes who found rooms for Hayek at King’s College. The two men shared fire-watching duties on the roof of King’s Chapel, and Hayek later said that “the evenings at High Table and the Combination Room at King’s are among the pleasantest recollections of my life.”

Hayek’s tenure at the LSE saw the publication of his seminal work, The Road to Serfdom. The book, published by Routledge in 1944, was a warning that central planning posed a threat to freedom, and was specifically written to address a British readership at a time when there was growing pressure for a welfare state to be developed in the UK after the war.

Although the work was widely read, Hayek remained a relatively marginal figure in the UK until 1975 when Margaret Thatcher was elected leader of the Conservative Party. Soon after her election Thatcher met Hayek at The Institute of Economic affairs. Ralph Harris explained "although she is known as being a rather overpowering lady she sat down like a meek schoolgirl and listened."

Throughout her political career Thatcher was a fierce advocate of free-market libertarianism. There is a famous anecdote that during a Conservative Party policy meeting, Thatcher removed her copy of Hayek’s Constitution of Liberty from her handbag, slammed it down on the table and declared, “This is what we believe.”

The impact that Hayek’s writing had on Thatcher, her advisors, and her policies is undeniable. Thatcher herself wrote: “the most powerful critique of socialist planning and the socialist state which I read at this time and to which I have returned so often since [is] F.A. Hayek's The Road to Serfdom."

Hayek himself returned kind words back to the PM, not only in their private correspondence, but publicly in many letters to newspapers. In a letter to The Times in 1982 he wrote: “It is Mrs Thatcher’s great merit that she has broken the Keynesian immorality of ‘in the long run we are all dead’ and to have concentrated on the long run future of the country irrespective of possible effects on the electors…Mrs Thatcher’s courage makes her put the long run future of the country first.”

In the early 1983, Thatcher wrote to Hayek to let him know that he she would like to put his name forward for the Order of the Companion of Honours. The Order of the Companions of Honour was founded in 1917 by King George V which is “awarded for having a major contribution to the arts, science, medicine or government lasting over a long period of time”. The number of Companions of Honour is limited to 65 members.

Hayek was appointed a Companion of Honour in the 1984 Birthday honours for “services to the study of Economics”. The appointment was a 20-minute audience with the Queen followed by dinner at the Institute of Economic Affairs. That evening, after the festivities, Hayek is reported to have said “I’ve just had the happiest day of my life”

Throughout her career Thatcher constantly returned to her favourite economist. A decade after Hayek’s death, she was awarded the Internationaler Preis der Friedrich-August-von-Hayek-Stiftung prize. Her acceptance speech concluded “Hayek is, therefore, the prophet not of doom and disaster, but of peace and plenty. His is a voice of wisdom for our time, and for all time. We should listen to him.”

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