The Theory of Capitalism: Hayeks Arguments

The Authors Arguments

Friedrich Hayek strove to defend traditional concepts of morality in economics and fought the progressive representatives of the new era who sought to destroy the classical canons. In his book, he compares rationalizers to Christians who tolerate human sinfulness but do their best to prevent it (Hayek 1960). In this regard, the approaches of the Austrian philosopher to the formation of market relations were largely based on rational concepts with a favorable background for the largest number of interested parties. Based on this position, he argues that wage-fixing (whether by unions or by authority) will make wages higher (Hayek 1960, 389). This idea justified Hayeks condemnation against minimum wage laws that impeded economic progress and were obstacles to the development of free-market relations.

Rand spoke negatively of libertarianism as a greater threat to freedom and capitalism than modern liberalism and conservatism. The American author focused on objectivism and condemned manifestations of publicity in the economy. She viewed objectivism as an integral philosophical system and doctrine. Libertarianism, in her opinion, conversely, is a purely political philosophy that is only to establish the nature of the principle and to demonstrate that it is practicable (Rand 1964, 84). The similarity of Rands ideas to those of Hayek is that they both advocated free markets and economic freedoms. However, the American philosopher believed that her ideas of objectivity did not leave open loopholes for corruption schemes. Regarding the condemnation of minimum wage laws, such a concept implied rather the violation of human rights than formal economic ideologies.

By taking into account both philosophers practical experiences, one can assume that Hayek and Rand did not hold identical views on the same aspects of the formation of economic relationships. The analysis of their books suggests that they approached their arguments from different directions by putting forward individual theories. Therefore, Hayeks and Rands standpoints may be considered similar in the final analysis but distinctive from the perspective of premises and drivers.

The Sources of the Authors Ideas

The analysis of Hayeks and Rands approaches allows highlighting their unique ideas and hypotheses regarding the freedom of economic relations and providing examples of sources to which both philosophers referred. Thus, many of Hayeks economic works were based on the ideas of Ludwig von Mises, the American economist who was also a supporter of liberalism but had more radical views on the principles of free-market relations. Misess academic work helped Hayek to come to the conclusion that traditions needed protection, and leftist doctrines were a threat to capitalism as a progressive movement. Due to Mises, the Austrian philosopher reinforced his beliefs about the need to maintain market relations as a guarantor of economic dynamics, and the works of both authors are often compared.

Rand was also inspired by the work of some of her predecessors, whose ideas she thought were objective and fair. One of the greatest influences on her activities was the personality of Lenin, the leader of the Russian Revolution and the communist who promoted the doctrine of equality and brotherhood. Due to Lenins postulates, Rand created her movement of objectivism in which she denounced the shortcomings of society and recommended ways to correct them based on the hypothesis of justice. Thus, both Hayek and Rand can be characterized not only as outstanding specialists in their field but also as those who refined and expanded the ideas of their predecessors in optimal directions.