F.A. Hayek

Quotes From

Monetary Theory and the Trade Cycle (1933)

• The rate of interest at which, in an expanding economy, the amount of new money entering circulation is just sufficient to keep the price-level stable, is always lower than the rate which would keep the amount of available loan-capital equal to the amount simultaneously saved by the public: and thus, despite the stability of the price-level, it makes possible a development leading away from the equilibrium position.#Quoted in Lawrence White, The Clash of Economic Ideas (2012)

“The Trend of Economic Thinking” (1933)

• It is probably no exaggeration to say that economics developed mainly as the outcome of the investigation and refutation of successive Utopian proposals.#Quoted in Erwin Dekker, The Viennese Students of Civilization (2016)

Prices and Production (1935)

• Anyone who has studied the monetary literature of the first half of the nineteenth century will agree that there is hardly any idea in contemporary monetary theory which was not known to one or more of the writers of that period.#

Monetary Nationalism and International Stability (1937)

• The effects of keeping the quantity of money in a region or country constant when under an international monetary system it would decrease are essentially inflationary, while to keep it constant if under an international system it would increase at the expense of other countries would have effects similar to an absolute deflation.#
• Without stability of exchange rates it is vain to hope for any reduction of trade barriers.#

The Pure Theory of Capital (1941)

• In the sphere of capital theory, as we have seen, the construction of a stationary state is particularly useless because the main problem, that of investment, arises just because people intend to do in the future something different from what they are doing in the present.#
• A given stock of capital goods does not represent one single stream of potential output of definite size and time shape; it represents a great number of alternatively possible streams of different shapes and magnitudes.#Quoted in Roger Garrison, “Reflections on Reswitching and Roundaboutness” (2003)

The Road to Serfdom (1945)

• As is true with respect to other great evils, the measures by which war might be made altogether impossible for the future may well be worse than even war itself.#
• A movement whose main promise is the relief from responsibility cannot but be antimoral in its effect, however lofty the ideals to which it owes its birth.#
• The political ideals of a people and its attitude toward authority are as much the effect as the cause of the political institutions under which it lives.#
• [Individualism] does not assume, as is often asserted, that man is egoistic or selfish or ought to be. It merely starts from the indisputable fact that the limits of our powers of imagination make it impossible to include in our scale of values more than a sector of the needs of the whole society, and that, since, strictly speaking, scales of value can only exist in individual minds, nothing but partial scales of value exist – scales which are inevitably different and often inconsistent with each other. From this the individualist concludes that the individuals should be allowed, within defined limits, to follow their own values and preferences rather than somebody else’s.#
• A complex whole in which all the parts must be most carefully adjusted to each other cannot be achieved through a compromise between conflicting views. To draw up an economic plan in this fashion is even less possible than, for example, successfully to plan a military campaign by democratic procedure. As in strategy it would become inevitable to delegate the task to the experts.#
• That socialism so long as it remains theoretical is internationalist, while as soon as it is put into practice, whether in Russia or in Germany, it becomes violently nationalist, is one of the reasons why “liberal socialism” as most people in the Western world imagine it is purely theoretical, while the practice of socialism is everywhere totalitarian.#
• Democratic government has worked successfully where, and so long as, the functions of government were, by a widely accepted creed, restricted to fields where agreement among a majority could be achieved by free discussion; and it is the great merit of the liberal creed that it reduced the range of subjects on which agreement was necessary to one on which it was likely to exist in a society of free men. It is now often said that democracy will not tolerate “capitalism”. If “capitalism” means here a competitive system based on free disposal over private property, it is far more important to realize that only within this system is democracy possible. When it becomes dominated by a collectivist creed, democracy will inevitably destroy itself.#
• There is no justification for the belief that, so long as power is conferred by democratic procedure, it cannot be arbitrary . . . it is not the source but the limitation of power which prevents it from being arbitrary.#
• Strictly speaking, there is no “economic motive” but only economic factors conditioning our striving for other ends. . . . If we strive for money, it is because it offers us the widest choice in enjoying the fruits of our efforts. Because in modern society it is through the limitation of our money incomes that we are made to feel the restrictions which our relative poverty still imposes upon us, many have come to hate money as the symbol of these restrictions. But this is to mistake for the cause the medium through which a force makes itself felt. It would be much truer to say that money is one of the greatest instruments of freedom ever invented by man.#
• So long as we can freely dispose over our income and all our possessions, economic loss will always deprive us only of what we regard as the least important of the desires we were able to satisfy. A “merely” economic loss is thus one whose effect we can still make fall on our less important needs, while when we say that the value of something we have lost is much greater than its economic value, or that it cannot even be estimated in economic terms, this means we must bear the loss where it falls.#
• Economic planning would not affect merely those of our marginal needs that we have in mind when we speak contemptuously about the merely economic. It would, in effect, mean that we as individuals should no longer be allowed to decide what we regard as marginal.#
• Who will deny that a world in which the wealthy are powerful is still a better world than one in which only the already powerful can acquire wealth?#
• It is not any contempt for material welfare, or even any diminished desire for it, but, on the contrary, a refusal to recognize any obstacles, any conflict with other aims which might impede the fulfillment of their own desires, which distinguishes our generation.#
• It is infinitely more difficult rationally to comprehend the necessity of submitting to forces whose operation we cannot follow in detail than to do so out of the humble awe which religion, or even the respect for the doctrines of economics, did inspire. . . . The only alternative to submission to the impersonal and seemingly irrational forces of the market is submission to an equally uncontrollable and therefore arbitrary power of other men.#

Individualism and Economic Order (1949)

• In a system in which the knowledge of the relevant facts is dispersed among many people, prices can act to coördinate the separate actions of different people in the same way as subjective values help the individual to coördinate the parts of his plan.#
• Economic problems arise always and only in consequence of change. So long as things continue as before, or at least as they were expected to, there arise no new problems requiring a decision, no need to form a new plan.#
• The real content of the assertion that a tendency toward equilibrium exists… can hardly mean anything but that, under certain conditions,… the expectations of the people and particularly of the entrepreneurs will become more and more correct.#Quoted in Israel Kirzner, How Markets Work (1997)
• Though the declining influence of religion is undoubtedly one major cause of our present lack of intellectual and moral orientation, its revival would not much lessen the need for a generally accepted principle of social order. We still should require a political philosophy which goes beyond the fundamental but general precepts which religion or morals provide.#
• Smith’s chief concern was not so much with what man might occasionally achieve when he was at his best but that he should have as little opportunity as possible to do harm when he was at his worst.#
• All the possible differences in men’s moral attitudes amount to little, so far as their significance for social organization is concerned, compared with the fact that all man’s mind can effectively comprehend are the facts of the narrow circle of which he is the center.#
• To the accepted Christian tradition that man must be free to follow his conscience in moral matters if his actions are to be of any merit, the economists added the further argument that he should be free to make full use of his knowledge and skill, that he must be allowed to be guided by his concern for the particular things of which he knows and for which he cares, if he is to make as great a contribution to the common purposes of society as he is capable of making.#
• Another misleading phrase, used to stress an important point, is the famous presumption that each man knows his interests best. In this form the contention is neither plausible nor necessary for the individualist’s conclusions. The true basis of his argument is that nobody can know who knows best and that the only way by which we can find out is through a social process in which everybody is allowed to try and see what he can do.#
• Far from being opposed to voluntary association, the case of the individualist rests, on the contrary, on the contention that much of what in the opinion of many can be brought about only by conscious direction, can be better achieved by the voluntary and spontaneous collaboration of individuals.#
• What the individual mayor may not do, or what he can expect his fellows to do or not to do, must depend not on some remote and indirect consequences which his actions may have but on the immediate and readily recognizable circumstances which he can be supposed to know.#
• Society is greater than the individual only in so far as it is free. In so far as it is controlled or directed, it is limited to the powers of the individual minds which control or direct it.#
• The concept of equilibrium itself and the methods which we employ in pure analysis have a clear meaning only when confined to the analysis of the action of a single person and we are really passing into a different sphere and silently introducing a new element of altogether different character when we apply it to the explanation of the interactions of a number of different individuals.#
• Correct foresight is then not, as it has sometimes been understood, a precondition which must exist in order that equilibrium may be arrived at. It is rather the defining characteristic of a state of equilibrium.#
• [T]he assertion that a tendency toward equilibrium exists . . . can hardly mean anything but that, under certain conditions, the knowledge and intentions of the different members of society are supposed to come more and more into agreement.#
• We never observe states or governments, battles or commercial activities, or a people as a whole. When we use any of these terms, we always refer to a scheme which connects individual activities by intelligible relations; that is, we use a theory which tells us what is and what is not part of our subject. #
• All that the theory of the social sciences attempts is to provide a technique of reasoning which assists us in connecting individual facts, but which, like logic or mathematics, is not about the facts. . . . The theory itself, the mental scheme for the interpretation, can never be “verified” but only tested for its consistency. It may be irrelevant because the conditions to which it refers never occur; or it may prove inadequate because it does not take account of a sufficient number of conditions. But it can no more be disproved by facts than can logic or mathematics.#
• if, of the infinite variety of phenomena which we can find in any concrete situation, only those can be regarded as part of one object which we can connect by means of our mental models, the object can possess no attributes beyond those which can be derived from our model. Of course, we can go on constructing models which fit concrete situations more and more closely – concepts of states or languages which possess an ever richer connotation. But as members of a class, as similar units about which we can make generalizations, these models can never possess any properties which we have not given to them or which do not derive deductively from the assumptions on which we have built them. Experience can never teach us that any particular kind of structure has properties which do not follow from the definition (or the way we construct it).#
• Just as the existence of a common structure of thought is the condition of the possibility of our communicating with one another, of your understanding what I say, so it is also the basis on which we all interpret such complicated social structures as those which we find in economic life or law, in language, and in customs.#
• The real problem in [the question of competition] not whether we will get given commodities or services at given marginal costs but mainly by what commodities and services the needs of the people can be most cheaply satisfied. The solution of the economic problem of society is in this respect always a voyage of exploration into the unknown, an attempt to discover new ways of doing things better than they have been done before.#
• Enthusiasm for perfect competition in theory and the support of monopoly in practice are indeed surprisingly often found to live together.#
• Where we have a highly organized market of a fully standardized commodity produced by many producers, there is little need or scope for competitive activities because the situation is such that the conditions which these activities might bring about are already satisfied to begin with.#
• It is only in a market where adaptation is slow compared with the rate of change that the process of competition is in continuous operation. #
• There is no sense in talking of a use of resources “as if” a perfect market existed, if this means that the resources would have to be different from what they are, or in discussing what somebody with perfect knowledge would do if our task must be to make the best use of the knowledge the existing people have.#
• Much more serious than the fact that prices may not correspond to marginal cost is the fact that, with an intrenched monopoly, costs are likely to be much higher than is necessary. A monopoly based on superior efficiency, on the other hand, does comparatively little harm so long as it is assured that it will disappear as soon as anyone else becomes more efficient in providing satisfaction to the consumers.#
• In a democratic society, at any rate, once the principle is admitted that the government undertakes responsibility for the status and position of particular groups, it is inevitable that this control will be extended to satisfy the aspirations and prejudices of the great masses.#
• The increasing preoccupation of the modern.world with problems of an engineering character tends to blind people to the totally different character of the economic problem and is probably the main cause why the nature of the latter was less and less understood. #
• To admit the possibility of changes in the legal framework is not to admit the possibility of a further type of planning in the sense in which we have used the word so far. There is an essential distinction here which must not be overlooked: the distinction between a permanent legal framework so devised as to provide all the necessary incentives to private initiative to bring about the adaptations required by any change and a system where such adaptations are bro’ught about by central direction.#
• To assume that it is possible to create conditions of full competition without making those who are responsible for the decisions pay for their mistakes seems to be pure illusion.#
• In no sense can costs during any period be said to depend solely on prices during that period. They depend as much.on whether these prices have been correctly foreseen as on the views that are held about future prices.#
• Economic frontiers create communities of interest on a regional basis and of a most intimate character: they bring it about that all conflicts of interests tend to become conflicts between the same groups of people, instead of conflicts between groups of constantly varying composition, and that there will in consequence be perpetual conflicts between the inhabitants of a state as such instead of between the various individuals finding themselves arrayed, sometimes with one group of people against another, and at other times on another issue with the second group against the first.#
• It is only because, in consequence of [economic frontiers], the standard of life of all the people in a country will tend to move in the same direction that concepts such as the standard of living or the price level of a country cease to be mere statistical abstractions and become very concrete realities.#
• That there will always be communities of interest which will be similarly affected by a particular event or a particular measure is unavoidable. But it is clearly in the interest of unity of the larger whole that these groupings should not be permanent and, more particularly, that the various communities of interest should overlap territorially and never become lastingly identified with the inhabitants of a particular region.#
• If goods, men, and money can move freely over the interstate frontiers, it becomes clearly impossible to affect the prices of the different products through action by the individual state.#
• in order that a particular industry should benefit from a tariff, it is necessary that the tariff on its products should be higher than the tariffs on the commodities which the producers in that industry consume.#
• Government by agreement is only possible provided that we do not require the government to act in fields other than those in which we can obtain true agreement.#
• Which of these systems [central or decentral planning] is likely to be more efficient . . . depends on whether we are more likely to succeed in putting at the disposal of a single central authority all the knowledge which ought to be used but which is initially dispersed among many different individuals, or in conveying to the individuals such additional knowledge as they need in order to enable them to fit their plans with those of others.#
• Even when quoted prices have become quite rigid, however, the forces which would operate through changes in price still operate to a considerable extent through changes in the other terms of the contract.#
• To make a monopolist charge the price that would rule under competition, or a price that is equal to the necessary cost, is impossible, because the competitive or necessary cost cannot be known unless there is competition.#
• Coercion can probably only be kept to a minimum in a society where conventions and tradition have made the behaviour of man to a large extent predictable.#
• Only because men are in fact unequal can we treat them equally. If all men were completely equal in their gifts and inclinations, we should have to treat them differently in order to achieve any sort of social organisation. Fortunately, they are not equal; and it is only owing to this that the differentiation of functions need not be determined by the arbitrary decision of some organizing will but that, after creating formal equality of the rules applying in the same manner to all, we can leave each individual to find his own level.#

The Sensory Order (1952)

• In order to be able to give a satisfactory account of the regularities existing in the physical world the physical sciences have been forced to define the objects of which this world exists increasingly in terms of the observed relations between these objects, and at the same time more and more to disregard the way in which these objects appear to us.#
• The problems of the physical sciences arise thus from the fact that objects which appear alike to us do not always prove to behave in the same way towards other objects; or that objects which phenomenally resemble each other need not be physically similar to each other, and that sometimes objects which appear to us to be altogether different may prove to be physically very similar.#
• Much that we believe to know about the external world is, in fact, knowledge about ourselves.#
• The fact that the problem of psychology is the converse of the problem of the physical sciences means that while for the latter the facts of the phenomenal world are the data and the order of the physical world the quaesitum, psychology must take the physical world as represented by modern physics as given and try to reconstruct the process by which the organism classifies the physical events in the manner which is familiar to us as the order of sensory qualities.#
• The specific character of the effect of a particular impulse need be neither due to the attributes of the stimulus which caused it, nor to the attributes of the impulse, but may be determined by the position in the structure of the nervous system of the fibre which carries the impulse.#
• The question of whether the sensory qualities which one person experiences are exactly the same as those which another person experiences is, in the absolute sense in which it is sometimes asked, an unanswerable and strictly meaningless question. All we can ever discuss is whether for different persons different sensory qualities differ in the same way.#
• The question of what determines (or what is meant by) purposiveness is in the last instance really the same question as that of what ensures the continued existence of the organism.#
• The representation of the existing situation [in the mind of the subject] in fact cannot be separated from, and has no significance apart from, the representation of the consequences to which it is likely to lead.#
• Perception is always an interpretation, the placing of something into one or several classes of objects. An event of an entirely new kind which has never occurred before, and which set up impulses which arrive in the brain for the first time, could not be perceived at all.#
• If frequently only certain abstract features of a perceived situation can be remembered, this is maybe a consequence of the fact that only those abstract features were perceived in the first place.#
• It is often difficult to decide which of our visual experiences are determined immediately by sensation and which, on the contrary, are determined by experience and practice.#
• No mere repetition but only knowledge of results of the attempts to discriminate will lead to an improvement of discrimination.#
• If qualities are, as we have maintained, subjective, then, if new discriminations appear for the first time, this means the appearance of a new quality. There is no sense in saying that, if a chemist learns to distinguish between two smells which nobody has ever distinguished before, he has learnt to distinguish between given qualities: these qualities just did not exist before he learnt to distinguish between them.#
• Learning to discriminate does not necessarily produce a better reproduction of the physical order of the stimuli; it merely means the creation of a new distinction in the phenomenal order which, if it were the result of a non-recurring, accidental or artificial combination of stimuli during a particular period, might indeed prove later not a help but an obstacle to orientation and appropriate behavior.#
• The process of experience thus does not begin with sensations of perceptions, but necessarily precedes then: it operates on physiological events and arranges them into a structure or order which becomes the basis of their ‘mental’ significance; and the distinction between the sensory qualities, in terms of which alone the conscious mind can learn about anything in the external world, is the result of such pre-sensory experience.#
• A certain part at least of what we know at any moment about the external world is therefore not learnt by sensory experience, but is rather implicit in the means through which we can obtain such experience; it is determined by the order of the apparatus of classification which has been built up by the pre-sensory linkages.#
• There is, therefore, on every level, or in every universe of discourse, a part of our knowledge which, although it is the result of experience, cannot be controlled by experience, because it constitutes the ordering principle of that universe by which we distinguish the different kinds of objects of which it consists and to which our statements refer.#
• Precisely because all our knowledge, including the initial order of our different sensory experiences of the world, is due to experience, it must contain elements which cannot be contradicted by experience.#
• The ideal of science as merely a complete description of phenomena, which is the positivist conclusion derived from the phenomenalistic approach, proves to be impossible. Science consists rather in a constant search for new classes, for ‘constructs’ which are so defined that general propositions about the behaviour of their elements are universally and necessarily true.#
• A stimulus whose occurrence in conjunction with other stimuli showed no regularities whatever could never be perceived by our senses. This would seem to mean that we can know only such kinds of events as show a certain degree of regularity in their occurrence in relations with others, and that we could not know anything about events which occurred in a completely irregular manner. The fact that the world which we know seems wholly an orderly world may thus be merely a result of the method by which we perceive it.#
• Any explanation of mental phenomena which we can hope ever to attain cannot be sufficient to ‘unify’ all our knowledge, in the sense that we should become able to substitute statements about particular physical events (or classes of physical events) for statements about mental events without thereby changing the meaning of the statement.#
• In discussing mental processes we will never be able to dispense with the use of mental terms, and . . . we shall have permanently to be content with a practical dualism, a dualism based not on any assertion of an objective difference between the two classes of events, but on the demonstrable limitations of the powers of our own mind fully to comprehend the unitary order to which they belong.#
• Even though we may know the general principle by which all human action is causally determined by physical processes, this would not mean that to us a particular human action can ever be recognizable as the necessary result of a particular set of physical circumstances.#
• Since the word ‘free’ has been formed to describe a certain subjective experience and can scarcely be defined except by reference to that experience, it could at most be asserted that the term [free will] is meaningless. But this would make any denial of the existence of free will as meaningless as its assertion.#
• Science thus tends necessarily towards an ultimate state in which all knowledge is embodied in the definitions of the objects with which it is concerned: and in which all true statements about these objects are analytical or tautological and could not be disproved by any experience. The observation that any object did not behave as it should, could then only mean that it was not an object of the kind it was thought to be.#

The Counterrevolution of Science (1955)

• The objects of economic activity cannot be defined in objective terms but only with reference to a human purpose.#Quoted in Roderick Long, “Wittgenstein, Austrian Economics, and the Logic of Action” (2001)
• So long as it was naïvely assumed that all the sense qualities (or their relations) which different men had in common were properties of the external world, it could be argued that our knowledge of other minds is no more than our common knowledge of the external world. But once we have learned that our senses make things appear to us alike or different which prove to be alike or different in none of their relations between themselves, but only in the way in which they affect our senses, this fact that men classify external stimuli in a particular way becomes a significant fact of experience.#
• If social phenomena showed no order except insofar as they were consciously designed, there would indeed be no room for theoretical sciences of society and there would be, as is often argued, only problems of psychology. It is only insofar as some sort of order arises as a result of individual action but without being designed by any individual that a problem is raised which demands a theoretical explanation.#

The Constitution of Liberty (1960)

• We have thus no choice but to submit to rules whose rationale we often do not know, and to do so whether or not we can see that anything important depends on their being observed in the particular instance. The rules of morals are instrumental in the sense that they assist mainly in the achievement of other human values; however, since we only rarely can know what depends on their being followed in the particular instance, to observe them must be regarded as a value in itself, a sort of intermediate end which we must pursue without questioning its justification in the particular case.#
• Though the concept of national freedom is analogous to that of individual freedom, it is not the same; and the striving for the first has not always enhanced the second.#
• Once this identification of freedom with power is admitted, there is no limit to the sophisms by which the attractions of the word “liberty” can be used to support measures which destroy individual liberty.#
• Coercion, however, cannot be altogether avoided because the only way to prevent it is by the threat of coercion.#
• Compared with the totality of knowledge which is continually utilized in the evolution of a dynamic civilization, the difference between the knowledge that the wisest and that which the most ignorant individual can deliberately employ is comparatively insignificant.#
• The benefits I derive from freedom are thus largely the result of the uses of freedom by others.#
• To turn the whole of society into a single organization built and directed according to a single plan would be to extinguish the very forces that shaped the individual human minds that planned it.#
• It is misleading to think of those new possibilities as if they were, from the beginning, a common possession of society which its members could deliberately share; they become a common possession only through that slow process by which the achievements of the few are made available to the many.#
• A large part of the expenditure of the rich, though not intended for that end, thus serves to defray the cost of the experimentation with the new things that, as a result, can later be made available to the poor.#
• As long as the graduation is more or less continuous and all the steps in the income pyramid are reasonably occupied, it can scarcely be denied that those lower down profit materially from the fact that others are ahead.#
• The experience of the United States at least seems to indicate that, once the rise in the position of the lower classes gathers speed, catering to the rich ceases to be the main source of great gain and gives place to efforts directed toward the needs of the masses.#
• The changes to which such people must submit are … an illustration of the fact that not only the mass of men but, strictly speaking, every human being is led by the growth of civilization into a path that is not of his own choosing.#
• To prevent progress at the top would soon prevent it all the way down.#
• That we ought not believe anything which has been shown to be false does not mean that we ought to believe only what has been demonstrated to be true.#
• In order to make ourselves act rationally we often find it necessary to be guided by habit rather than reflection.#
• Where all are made to serve the same ideals and where dissenters are not allowed to follow different ones, the rules can be proved inexpedient only by the decline of the whole nation guided by them.#
• It is nonsense to say, as is so often said, that “it is not a man’s fault that he is as he is,” for the aim of assigning responsibility is to make him different from what he is or might be. . . . We assign responsibility to a man, not in order to say that as he was he might have acted differently, but in order to make him different.#
• The assigning of responsibility does not involve the assertion of a fact. It is rather of the nature of a convention intended to make people observe certain rules.#
• Since we assign responsibility to the individual in order to influence his action, it should refer only to such effects of his conduct as it is humanly possible for him to foresee and to such as we can reasonably wish him to take into account in ordinary circumstances. To be effective, responsibility must be both definite and limited, adapted both emotionally and intellectually to human capacities.#
• If the result of individual liberty did not demonstrate that some manners of living are more successful than others, much of the case for it would vanish.#
• If in the Western world universal adult suffrage seems the best arrangement, this does not prove that it is required by some basic principle.#
• We certainly do not regard it as right that the citizens of a large country should dominate those of a small adjoining country merely because they are more numerous. There is as little reason why the majority of the people who have joined for some purposes, be it as a nation or some supranational organization, should be regarded as entitled to extend the scope of their power as far as they please. The current theory of democracy suffers from the fact that it is usually developed with some ideal homogenous community in view and then applied to the very imperfect and often arbitrary units which the existing states constitute.#
• Once it is generally accepted that majority decisions can merely indicate ends and that the pursuit of them is to be left to the discretion of the administrators, it will soon be believed also that almost any means to achieve those ends are legitimate. The individual has little reason to fear any general laws which the majority may pass, but he has much reason to fear the rulers it may put over him to implement its directions.#
• What later enabled those who did not inherit land and tools from their parents to survive and multiply was the fact that it became practicable and profitable for the wealthy to use their capital in such a way as to give employment to large numbers.#
• One may share to the full the distaste for the ostentation, the bad taste, and the wastefulness of many of the new rich and yet recognize that, if we were to prevent all that we disliked, the unforeseen things that might be thus prevented would probably outweigh the bad.#
• A constitutional system does not involve an absolute limitation of the will of the people but merely a subordination of immediate objectives to long-term ones. . . . It means that the agreement to submit to the will of the temporary majority on particular issues is based on the general understanding that this majority will abide by more general principles laid down beforehand by a more comprehensive body.#
• We must not believe that, because we have learned to make laws deliberately, all laws must be deliberately made by some human agency.#
• The main lesson of the period of Confederation was that the mere writing-down on paper of a constitution changed little unless explicit machinery was provided to enforce it.#
• The reason why a division of powers between different authorities always reduces the power that anybody can exercise . . . is not merely that the separate authorities will, through mutual jealousy, prevent one another from exceeding their authority. More important is the fact that certain kinds of coercion require the joint and coordinated use of different powers or the employment of several means, and, if these means are in separate hands, nobody can exercise those kinds of coercion.#
• The decisive factor which made the efforts of the [French] Revolution toward the enhancement of individual liberty so abortive was that it created the belief that, since at last all power had been placed in the hands of the people, all safeguards against the abuse of this power had become unnecessary.#
• A free society demands not only that the government have the monopoly of coercion but that it have the monopoly only of coercion.#
• A free system can adapt itself to almost any set of data, almost any general prohibition or regulation, so long as the adjusting mechanism itself is kept functioning.#
• There are strong reasons why action by local authorities generally offers the next-best solution where private initiative cannot be relied upon to provide certain services and where some sort of collective action is therefore needed; for it has many of the advantages of private enterprise and fewer of the dangers of the coercive action of government. Competition between local authorities or between larger units within an area where there is freedom of movement provides in a large measure that opportunity for experimentation with alternative methods which will secure most of the advantages of free growth.#
• Monopoly is certainly undesirable, but only in the same sense in which scarcity is undesirable; in neither case does this mean that we can avoid it. It is one of the unpleasant facts of life that certain capacities (and also certain advantages and traditions of particular organizations) cannot be duplicated, as it is a fact that certain goods are scarce.#
• The law cannot effectively prohibit states of affairs but only kinds of action.#
• Because unions are most powerful where capital investments are heaviest, they tend to become a deterrent to investment – at present probably second only to taxation.#
• The dominant “full-employment” doctrines explicitly relieve the unions of the responsibility for any unemployment and place the duty of preserving full employment on the monetary and fiscal authorities.#
• To the impatient reformer, who will be satisfied with nothing short of the immediate abolition of all avoidable evils, the creation of a single apparatus with full powers to do what can be done now appears therefore as the only appropriate method. In the long run, however . . . we may well prevent the evolution of other organizations whose eventual contribution to welfare might have been greater.#
• Though all insurance involves a pooling of risks, private competitive insurance can never effect a deliberate transfer of income from one previously designated group of people to another.#
• The fundamental absurdity of a majority taxing itself in order to maintain a propaganda organization aimed at persuading the same majority to go further than it is yet willing should be obvious.#
• While the task of combating the serious diseases which befall and disable some in manhood is a relatively limited one, the task of slowing down the chronic processes which must bring about the ultimate decay of all of us is unlimited. The latter presents a problem which can, under no conceivable condition, be solved by an unlimited provision of medical facilities and which, therefore, must continue to present a painful choice between competing aims.#
• We must not overlook the fact that the market has, on the whole, guided the evolution of cities more successfully, though imperfectly, than is commonly realized and that most of the proposals to improve upon this, not by making it work better, but by superimposing a system of central direction, show little awareness of what such a system would have to accomplish, even to equal the market in effectiveness.#
• The housing problem is not an independent problem which can be solved in isolation: it is part of the general problem of poverty and can be solved only by a general rise in incomes.#
• We should be showing more respect for the dignity of man if we allowed certain ways of life to disappear altogether instead of preserving them as specimens of a past age.#
• It may be better even that some children should go without formal education than that they should be killed in fighting over who is to control that education.#
• Since the chief contribution of any individual is to make the best use of the accidents he encounters, success must to a great extent be a matter of chance.#
• To live and work successfully with others requires more than faithfulness to one’s concrete aims. It requires an intellectual commitment to a type of order in which, even on issues which to one are fundamental, others are allowed to pursue different ends.#
• Like all moral principles, [freedom] demands that it be accepted as a value in itself, as a principle that must be respected without our asking whether the consequences in the particular instance will be beneficial. We shall not achieve the results we want if we do not accept it as a creed or presumption so strong that no considerations of expediency can be allowed to limit it.#
• One of the strongest arguments against [the establishment of welfare programs] is that their introduction is the kind of politically irrevocable measure that will have to be continued, whether it proves a mistake or not.#

Studies in Philosophy, Politics, and Economics (1968)

• Until we have definite questions to ask we cannot employ our intellect; and questions presuppose that we have formed some provisional hypothesis or theory about the events.#
• The statistical method is of use only where we either deliberately ignore, or are ignorant of, the relations between the individual elements with different attributes, i.e., where we ignore or are ignorant of any structure into which they are organized.#
• Nobody would probably seriously contend that statistics can elucidate even the comparatively not very complex structures of organic molecules, and few would argue that it can help us to explain the functioning of organisms. Yet when it comes to accounting for the functioning of social structures, that belief is widely held.#
• Nor is the claim invalidated that we can explain the principle on which a certain mechanism operates if it is pointed out that we cannot say precisely what it will do at a particular place and time. From the fact that we do know that a phenomenon is determined by certain kinds of circumstances it does not follow that we must be able to know even in one particular instance all the circumstances which have determined all its attributes.#
• Even if the assertion of a universal determinism were meaningful, scarcely any of the conclusions usually derived from it would therefore follow.#
• If what is called the Sprachgefühl consists in our capacity to follow yet unformulated rules, there is no reason why, for example, the sense of justice (the Rechtsgefühl) should not also consist in such a capacity to follow rules which we do not know in the sense that we can state them.#
• The capacity to respond to signs of which we are not conscious decreases as we move from members of our own culture to those of different cultures, but in some measure it also exists in our mutual relations to (and also between) higher animals. . . . It guides not only our perception of expression but also our recognition of action as directed or purposive; and it colours also our perception of non-human and inanimate phenomena.#
• Our capacity to imitate someone’s gait, postures, or grimaces certainly does not depend on our capacity to describe these in words. We are frequently unable to do the latter, not merely because we lack the appropriate words but because we are unaware both of the elements of which these patterns are made up and of the manner in which they are related. . . . In one sense we thus know what we observe, but in another sense we do not know what it is that we thus observe.#
• The phenomenal (sensory, subjective, or behavioural) world in which an organism lives will therefore be built up largely of movement patterns characteristic of its own kind (species or wider group). These will be among the most important categories in terms of which it perceives the world and particularly most forms of life. Our tendency to personify (to interpret in anthropomorphic or animistic terms) the events we observe is probably the result of such an application of schemata which out own bodily movements provide. It is they which make, though not yet intelligible, at least perceivable (comprehensible or meaningful) complexes of events which without such perceptual schemata would have no coherence or character as wholes.#
• Recognizing an action pattern as one of a class determines merely that it has the same meaning as others of the same class, but not yet what that meaning is. The latter rests on the further pattern of action, or set of rules, which in response to the recognition of a pattern as one of a certain kind the organism imposes upon its own further activities.#
• Intelligibility is certainly a matter of degree and it is a commonplace that people who are more alike also understand each other better. Yet this does not alter the fact that even in the limiting case of the restricted understanding which occurs between men and higher animals, and still more in the understanding between men of different cultural backgrounds or character, intelligibility of communications and other acts rests on a partial similarity of mental structure.#
• The ‘final cause’ or ‘purpose’, i.e., the adaptation of the parts to the requirements of the whole, becomes a necessary part of the explanation of why structures of the kind exist: we are bound to explain the fact that the elements behave in a certain way by the circumstance that this sort of conduct is most likely to preserve the whole—on the preservation of which depends the preservation of the individuals, which would therefore not exist if they did not behave in this manner. A ‘teleological’ explanation is thus entirely in order so long as it does not imply design by a maker but merely the recognition that the kind of structure would not have perpetuated itself if it did not act in a manner likely to produce certain effects, and that it has evolved through those prevailing at each stage who did.#

“Competition as a Discovery Procedure” (1968)

• Competition represents a kind of impersonal coercion that will cause many individuals to change their behavior in a way that could not be brought about by any kind of instructions or commands.#
• A high growth rate is more a sign of bad policies in the past than good policies in the present.#

Liberalism (1973)

• The endeavours to prolong the prosperity and to secure full employment by means of the expansion of money and credit, in the end created a worldwide inflationary development to which employment so adjusted itself that inflation could not be discontinued without producing extensive unemployment.#
• The liberal demand for freedom is thus a demand for the removal of all manmade obstacles to individual efforts, not a claim that the community or the state should supply particular goods.#
• The decline of liberal doctrine, beginning in the 1870s, is closely connected with a reinterpretation of freedom as the command over, and usually the provision by the state of, the means of achieving a great variety of particular ends.#

Denationalisation of Money (1976)

• In a world governed by the pressure of organised interests, the important truth to keep in mind is that we cannot count on intelligence or understanding but only on sheer self-interest to give us the institutions we need.#
• As regards Professor Friedman’s proposal of a legal limit on the rate at which a monopolistic issuer of money was to be allowed to increase the quantity in circulation, I can only say that I would not like to see what would happen if under such a provision it ever became known that the amount of cash in circulation was approaching the upper limit and that therefore a need for increased liquidity could not be met.#Quoted in Lawrence White, Competition and Currency (1989)

“A Free-Market Monetary System” (1977)

• The monopoly of government of issuing money has not only deprived us of good money but has also deprived us of the only process by which we can find out what would be good money.#

Law, Legislation, and Liberty (1978)

• The spontaneous character of the resulting order must therefore be distinguished from the spontaneous origin of the rules on which it rests, and it is possible that an order which would still have to be described as spontaneous rests on rules which are entirely the result of deliberate design.#
• [Freud’s] basic aim of undoing the culturally acquired repressions and freeing the natural drives, has opened the most fatal attack on the basis of all civilization.#Quoted in Erwin Dekker, The Viennese Students of Civilization (2016)
• So long as collaboration presupposes common purposes, people with different aims are necessarily enemies who may fight each other for the same means; only the introduction of barter made it possible for the different individuals to be of use to each other without agreeing on ultimate ends.#
• In a sense it is even true that such a [market] system gives to those who already have. But this is its merit rather than its defect, because it is this feature which makes it worthwhile for everybody to direct his efforts not only towards immediate results but also towards the future increase of his capacity of rendering services to others.#

“The Moral Imperative of the Market” (1986)

• If it is true that prices are signals which enable us to adapt our activities to unknown events and demands, it is evidently nonsense to believe that we can control prices. You cannot improve a signal if you do not know what it signals.#
• The essential basis of the development of modern civilization is to allow people to pursue their own ends on the basis of their own knowledge and not be bound by the aims of other people.#
• The essential function of prices [is] to tell people what they ought to do in the future and … prices [can] not be based on what they [have] done in the past.#

The Fatal Conceit (1988)

• I doubt whether there exists a single great work of literature which we would not possess had the author been unable to obtain an exclusive copyright for it; it seems to me that the case for copyright must rest almost entirely on the circumstance that such exceedingly useful works as encyclopaedias, dictionaries, textbooks and other works of reference could not be produced if, once they existed, they could freely be reproduced.#
• These rules, precisely by limiting the range of means that each individual may use for his purposes, greatly extend the range of ends each can successfully pursue.#
• Priding itself on having built its world as if it had designed it, and blaming itself for not having designed it better, humankind is now to set out to do just that.#
• While it is true that traditional morals, etc., are not rationally justifiable, this is also true of any possible moral code.#
• These rules ‘are not derived from any utility or advantage which either the particular person or the public may reap from his enjoyment of any particular good‘. Men did not foresee the benefits of rules before adopting them, though some people gradually have become aware of what they owe to the whole system.#
• This delusion [that macroeconomics is useful] is encouraged by its extensive use of mathematics, which must always impress politicians lacking any mathematical education, and which is really the nearest thing to the practice of magic that occurs among professional economists.#
• The disdained middleman, striving for gain, made possible the modern extended order, modern technology, and the magnitude of our current population. The ability, no less than the freedom, to be guided by one’s own knowledge and decisions, rather than being carried away by the spirit of the group, are developments of the intellect which our emotions have followed only imperfectly.#
• Relations between individuals can exist only as products of their wills, but the mere wish of a claimant can hardly create a duty for others. Only expectations produced by long practice can create duties for the members of the community in which they prevail, which is one reason why prudence must be exercised in the creation of expectations, lest one incur a duty that one cannot fulfill. #
• Recognizing that rules generally tend to be selected, via competition, on the basis of their human survival-value certainly does not protect those rules from critical scrutiny.#