The art of economics consists of looking not merely at the immediate but at the longer effects of any act or policy; it consists in tracing the consequences of that policy not merely for one group but for all groups.
If you want to know where American supporters of free markets learned economics, take a look at Economics in One Lesson by Henry Hazlitt. A brilliant and pithy work first published in 1946, at a time of rampant statism at home and abroad, it taught millions the bad consequences of putting government in charge of economic life. College students all across America and the world still use it and learn from it. It may be the most popular economics text ever written.
Mr. Hazlitt — journalist, literary critic, economist, philosopher — was one of the most brilliant public intellectuals of our century. He was born on November 28, 1894, and died on July 8, 1993, at the age of 98. In his final years, he often expressed surprise that Economics in One Lesson had become his most enduring contribution. He wrote it to expose the popular fallacies of its day. He did not know that those fallacies would be government policy for the duration of the century.
Hazlitt also wanted to be known for his other contributions, which include a novel, a trialogue on literary criticism, two large treaties on economics and moral philosophy, several edited volumes, some sixteen other books, and countless chapters in books, articles, commentaries, reviews. He once estimated that he had written 10 million words and that his collected works would run to 150 volumes.
Hazlitt was not trained as an economist, although few scholars are as familiar with the relevant literature. He was inspired initially by the writings of Philip Wicksteed, a disciple of the English economist William Jevons, and later by the works of Herbert Spencer. Yet he was familiar with the work of every important thinker in nearly every field. At an early age, he lacked in formal education but ended in knowing more than most learned men of any age; and he certainly was more principled than most.
Hazlitt was also the most important public intellectual within the Austrian tradition of Ludwig von Mises, F.A. Hayek, and Murray N. Rothbard, all of whom he credited as primary sources in economics. He wrote in every important public forum of his day, most prominently the Nation, the Wall Street Journal, the New York Times (frequently headlining the powerful book review section), the American Mercury, Century, the Freeman, National Review, Newsweek, and many more. His every article is unfailingly poignant, provocative, and learned. At various points in his career, he was among the most influential literary critics, editorialists, and financial writers in the country, as a biography of his life and influence would easily demonstrate. For example, Hazlitt's review of Ludwig von Mises's first book to be translated into English made Socialism an instant classic in this country. His review of F.A. Hayek's Road to Serfdom led Reader's Digest to publish the condensed version that catapulted Hayek to fame.
Henry Stuart Hazlitt was born in Philadelphia, son of Stuart Clark Hazlitt and Bertha Zaunder Hazlitt. Stuart died at the age of 28, when Henry was a baby. When Henry was six, his mother enrolled him in Girard College, a home for "fatherless white boys" set up by a local philanthropist. His mother remarried and they moved to Brooklyn when Henry was nine, where he attended public schools. His earliest ambition was to become a psychologist "like William James," but his family's financial situation forced him to give up that idea. After a year-and-a-half of night school at City College, he had to look for a way of earning money.
Late in life, he told the story of his job search to an interviewer, not passing up the opportunity to explain something about labor economics:
"I had no skills whatever. So I would get a job, and I would last two or three days and be fired. It never surprised me or upset me, because I read the Times early in the morning, went through the ads, and I'd practically have a job that day. This shows what happens when you have a free market. There was no such thing as a minimum wage at that time. There was no such thing as relief, except maybe there were places where you could get a soup handout for something, but there was no systematic welfare. You had a free market. And so I usually found myself at a job the next day, and I'd get fired about three or four days after that. ... I didn't have the skills. But each time I kept learning something, and finally I was getting about $3 or $4 a week.
"At some point I decided I wanted to be a newspaperman," he explains, "because it was the only way I could see to get into writing." At the age of 20, when he finally got a job at the Wall Street Journal as a stenographer, he had already finished his first book, Thinking as a Science, which was published by E.P. Dutton in 1915, reprinted one year later, and reissued again in 1969 with a new introduction.
His first book, as with everything he ever wrote, made a strong argument and made it well. "I don't think it's worthwhile," he told an interviewer late in life, "if you haven't made up your mind, to write a piece saying, 'Well, on one hand, but on the other hand.'" It's the kind of old fashioned attitude that made Hazlitt's work stand out.
Whatever Hazlitt wrote, it was always in virile and unsurpassed English. He adhered to the rule he set out for himself: "Aim first at the essential qualities — coherence, clarity, precision, simplicity, and brevity. Euphony and rhythm are of course also desirable, but they are like the final rubbing on a fine piece of furniture — finishing touches justified only if the piece has been soundly made."
In 1916, he left the Wall Street Journal to write editorials for the New York Evening Post and later the New York Evening Mail. While at the Mail in 1922, his second book appeared. Also published by Dutton, The Way to Will Power was a defense of individual initiative against the deterministic claims of Freudian psychoanalysis. By the late 1920s, Hazlitt's reputation as a writer and thinker had grown, thanks also to his reviews and essays in the New York Sun, which appeared weekly from October 1926 to September 1929.
In these years, he met the British philosopher Bertrand Russell, widely considered (probably incorrectly) as the most brilliant man alive. Russell so admired the young journalist's talent that Russell and his publisher W.W. Norton asked Hazlitt to write the philosopher's official biography. Hazlitt spent much of 1928 and 1929 interviewing Russell in New York, until one day, agreeing with Hazlitt, Russell announced: "You know, I have had a very interesting life. I think I'd like to do my own biography."
In the meantime, fortunately, the editors of the Nation had noticed his work and hired him as literary editor. The "Nation was pretty much a leftist magazine then, as it has always remained," he explained to an interviewer. "One of the reasons they took me on was that they wanted me not only to write and handle the book reviews, but to be able to write editorials on economic subjects." And his work there was extraordinary. He wrote on contemporary literature as a springboard to his own rich observations on philosophy, culture, history, economics, and politics. And while there, he penned an early refutation of literary deconstructionism, The Anatomy of Criticism (1933).
Throughout his life, Hazlitt became more and more opposed to government intervention in the economy, and time and again he refused to give in to pressure from publishers and editors to change his views. He chose principle and integrity over fame and fortune, and as a consequence, he was squeezed out of a series of prestigious jobs. The first such occurrence was when the New Deal brought state planning to national economic life. Hazlitt used his literary fame and post at the Nation to attack Roosevelt's regimentation. After some internal debate, and a series of public debates between Hazlitt and prominent socialist Louis Fischer, the magazine shifted to a pro-New Deal position. Hazlitt's adherence to principle led to his ouster.
In the early thirties, the literary set also turned against H.L. Mencken, founding editor of American Mercury, because of his opposition to the New Deal. When Mencken decided to turn the journal over to a new editor, he named Hazlitt, calling him the "only competent critic of the arts that I have heard of who was at the same time a competent economist, of practical as well as theoretical training." And, Mencken added, "he is one of the few economists in human history who could really write." True to his indefatigable spirit, his first article, "The Fallacies of the N.R.A.," was an implicit attack on the entire American left, including the Nation. Hazlitt was editor for nearly two years until he decided to go back into newspaper work.
In those days, even the New York Times was not as left-wing as it is today, and the paper hired Hazlitt to write unsigned editorials and signed review essays, which he did from 1934 to 1946. This bibliography reveals for the first time which editorials are his. Appearing almost daily, they covered an extraordinarily wide range: the dangers of economic controls, the evils of wartime price controls, the glories of Chesterton, the fallacies of Keynesian economics, the futility of foreign aid, the importance of a free market in securities, the stupidity of socialism and inflation, the ill-effects of unionization.
While at the Times, he did whatever he could to hold back the tide of statism. Whatever steps were taken away from price controls and unionization after the war could be due in part to his influence. His lengthy review essays on the covers of the New York Times Book Review demonstrated a brilliant grasp of contemporary literature, economics, and politics.
During this time he also met the emigre economist Ludwig von Mises, whose work Hazlitt had admired. Hazlitt and Mises became friends, and Mises thrilled to Hazlitt's editorial blasts against government planning and often consulted Hazlitt on editorial matters and contemporary politics. It is said that Hazlitt even prepared, at Mises's request, a version of Human Action as a journalist would have written it. Mises thanked him, but rejected most of the changes.
As with his previous positions, Hazlitt eventually came under pressure from the publisher to compromise himself. Hazlitt had taken on Keynes's plans to reconstruct the monetary system after the war, and predicted world-wide inflation in the decades ahead. The Times, however, was moving to the left and so wanted to endorse the Bretton Woods agreement, including the World Bank and International Monetary Fund.
"Now Henry," Times publisher Arthur Sulzberger said to him, "when 43 governments sign an agreement, I don't see how the Times can any longer combat this."
"All right," Hazlitt said, "but in that case I can't write anything further about Bretton Woods. It is an inflationist scheme that will end badly and I can't support it." Hazlitt was not fired, but at one point, management threatened to put a disclaimer under his editorials. Soon after, he was squeezed out, but landed a job with Newsweek magazine, and became one of the most influential financial writers in the country. His weekly "Business Tides" column was enduringly popular.
While at Newsweek, Hazlitt wrote Economics in One Lesson, which has sold nearly one million copies and is available in at least ten languages. Hazlitt argued that government intervention focuses on the consequences that are seen and ignores those that are not. The latter include wealth not created and even destroyed by regulation, inflation, and taxation. In 1947, he wrote Will Dollars Save the World?, a book attacking the Marshall Plan, which he saw as an international welfare scheme. The subsequent history of U.S. foreign aid shows just how right he was.
In 1950, Hazlitt became editor, along with John Chamberlain, of the fortnightly magazine, the Freeman; some of his best articles published there were later collected into The Wisdom of Henry Hazlitt. Also as a prophet, Hazlitt wrote The Great Idea (reprinted a year later as Time Will Run Back), a novel showing how a country can move from socialism to market economics at a time when most people thought socialism was the unstoppable wave of the future.
In 1959, Hazlitt came out with The Failure of the "New Economics," an extraordinary line-by-line refutation of John Maynard Keynes's General Theory. And though it was panned by the American academic journals at the time, it enlivened a growing movement favoring free markets over state planning and continues to be an essential resource. A year later, Hazlitt collected a series of scholarly attacks on Keynes as The Critics of Keynesian Economics, still in print today.
In the mid-sixties, Hazlitt turned his attention to the ethical basis of capitalism. Thus his book The Foundations of Morality, which Hazlitt has said is his proudest achievement, is the final product of a lifetime of thinking about philosophy. Also notable was his book Man vs. the Welfare State which demonstrated that welfare promotes what it pretends to discourage. This was 20 years before Charles Murray's Losing Ground showed that Hazlitt was right. Parts of these books also appeared in National Review. His last published scholarly article appeared in the first volume of The Review of Austrian Economics (1987).
On November 28, 1964, a group of friends gathered on the occasion of Hazlitt's 70th birthday. It was only weeks after Lyndon B. Johnson had been elected, and these freedom lovers were saddened at the state of the world, but at the time looked forward to the fight ahead.
Ludwig von Mises rose to the podium to pay tribute to his "distinguished friend." "In this age of the great struggle in favor of freedom and the social system in which men can live as free men, you are our leader. You have indefatigably fought against the step-by-step advance of the powers anxious to destroy everything that human civilization has created over a long period of centuries. ... You are the economic conscience of our country and of our nation."
"Every friend of freedom may today, in this post-election month, be rather pessimistic about the future. But let us not forget that there is rising a new generation of defenders of freedom." If we succeed, Mises said, "this will be to a great extent your merit, the fruit of the work that you have done in the first 70 years of your life."
Hazlitt then rose to the podium to reflect on his life, and in so doing painted a very dark picture of the state of human liberty. Yet, "none of us are yet on the torture rack; we are not yet in jail; we're getting various harassments and annoyances, but what we mainly risk is merely our popularity, the danger that we will be called nasty names."
So long that this is true he said, "We have a duty to speak even more clearly and courageously, to work hard, and to keep fighting this battle while the strength is still in us. ... Even those of us who have reached and passed our 70th birthdays cannot afford to rest on our oars and spend the rest of our lives dozing in the Florida sun. The times call for courage. The times call for hard work. But if the demands are high, it is because the stakes are even higher. They are nothing less than the future of liberty, which means the future of civilization."
The great voice of Henry Hazlitt, "the economic conscience of our country and our nation," is now stilled. But he will not be forgotten. In a time dominated by prevaricators and planners, and a nation threatened once again by statism, Hazlitt's written legacy will continue to inspire writers and scholars.
[Originally published August, 2007.]