George Soros Attacks Hayek

Text of George Soros’s presentation at the Cato Institute today here. At the same Cato Institute event today Hayek scholar Bruce Caldwell — who is funded by Soros — explained to Soros that he has Hayek all wrong and that at a fundamental level Hayek’s work actually supports many of Soros’s views and opinions on thinking about the market. Video to be posted here when it is available.

Soros calls for a middle ground between Popper and Hayek, between the far left and Hayek. What Soros doesn’t explain is why there is no middle ground in his political activities — or why he funds so many fundamentally dishonest and hard left “Think Tanks”, people who have no problem mischaracterizing or even smearing the ideas of Hayek — and those who teach them — at the drop of a hat.

UPDATE: Tom Woods on Soros on Hayek:

Soros said, “Friedrich Hayek is generally regarded as the apostle of a brand of economics which holds that the market will assure the optimal allocation of resources — as long as the government doesn’t interfere. It is a formalized and mathematical theory, whose two main pillars are the efficient market hypothesis and the theory of rational expectations. This is usually called the Chicago School, and it dominates the teaching of economics in the United States.”

Where to begin? If you think Hayek was a member of the Chicago School, you are not entitled to an opinion on matters of economic thought, period. Hayek was of course an Austrian. The Austrians are not the same as the Chicago economists, differing in method, capital theory, monopoly theory, monetary theory, policy implications, and quite a bit more. And the Austrians certainly do not dominate the teaching of economics.

What is confusing Soros is probably that during the 1950s Hayek taught at the University of Chicago, on its committee on social thought. That does not make him a “Chicago School” economist. That is a freshman mistake, one that nobody who knew anything about Hayek or either of the relevant schools would have come within a million miles of making.

To associate Hayek with the efficient markets hypothesis (EMH) — or to call Hayek’s approach “mathematical,” for that matter — is to add cringe-inducing error upon cringe-inducing error. Here are a few Austrian takes on EMH.

UPDATE II: Here’s the video of Bruce Caldwell, Richard Epstein and George Soros on Hayek’s The Constitution of Liberty at Cato on Thursday:

Download the broadcast in various media here.

4 comments to George Soros Attacks Hayek

  • Lio

    Soros’s wealth is inversely proportional to his understandings of economics. He beleives everyone is totally irrational, confuses causes and consequences or real causes with epiphenomena etc.
    What is Caldwell doing with this Guy?

  • Greg Ransom

    As I Tweeted yesterday, having dozens of billions of dollars means never having to pretend you actually read the book.

    Bruce Caldwell is a stand up guy and a wonderful scholar — he’s his own man, as independent as they come. Soros is actually doing a great public service funding scholarship in the history of economic thought, and sponsoring a forum for rethinking economic science. Soros is a complex character. Not everything he’s done horrible, and he often seems to be dabbling in areas where he’s simply out his realm of competence.

  • Ken

    Soros’s characterization of Hayek — and I reckon it’s not a coincidence — sounds much like the relativists in the “science wars,” where everyone who wasn’t a relativist was a “discredited logical positivist.”

  • Lio

    Tom Woods is right about Soros on Hayek and Soros is wrong on the efficient market hypothesis and the theory of rational expectations. These theories are generally more relevant than those proposed by Soros.

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