Randal K Quarles: Friedrich Hayek and the price system

Speech by Mr Randal K Quarles, Vice Chair for Supervision of the Board of Governors of the Federal Reserve System, at "The Road to Serfdom at 75: The Future of Classical Liberalism and the Free Market", Ninth Annual Conference of the William F. Buckley, Jr., Program at Yale, New Haven, Connecticut, 1 November 2019.

The views expressed in this speech are those of the speaker and not the view of the BIS.

I am delighted to be back in New Haven and particularly to be in the company of so many students interested in thinking rigorously about ideas. And I am honored to be participating in the William F. Buckley, Jr., Program's conference today on Friedrich Hayek and the future of classical liberalism.

Over the course of this afternoon, you will hear a series of presentations that put Hayek's thinking in the context of contemporary developments and that offer a variety of perspectives on his intellectual legacy. Hayek was a prolific-some might even say profligate-thinker. He was at various times, and in various modes, an early neuropsychologist, an epistemologist, a theoretical economist, a political philosopher, a moral philosopher, a philosopher of science, a historian of ideas, a public intellectual, and a social polemicist. This vast range has caused some to undervalue his contributions as an economist, notwithstanding his eventual Nobel Prize-when Hayek moved to the United States in 1950, the University of Chicago Economics Department would not hire him because, as Milton Friedman said, "At that stage, he really wasn't doing any economics," and Paul Krugman famously said that "the Hayek thing is almost entirely about politics, not economics." Others believe his broader thought, while seminal, was inconsistent across these various areas, and Hayek himself never demonstrated how it all hung together. In my contribution to the discussion today, I want to examine a particular example of the lasting effect that Hayek has had on economic thinking-one pertaining to the importance of freely determined prices for producing efficient economic outcomes-and consider how Hayek's insights in this area can, in fact, tie together the various strands of his larger philosophy.