"Snuff," says Friedrich Hayek. He is a 1974 Nobel laureate in economics. He is 83, a prize old bull of conservative intellectuals and the unwavering foe of the rationalist scientific mindset of most of the famous minds of our century. He is sitting in an office at the Heritage Foundation on Capitol Hill, and he is opening a leather snuff box.
"I buy it in London at a shop that has 36 varieties of it. This is called Dr. James Robinson Judge's mixture."
He deposits a pinch of brown powder in the hollow on the back of his hand behind his thumb. He points out that in the 18th century, "this bit of anatomy was called the 'snuff spot.' " He hoists the pinch to his right nostril and inhales briskly. This leaves a tiny brown stain on his white, toothbrush moustache.
"I find that I am not on the hook to it as much as I was to cigarettes, and it totally ends the craving for tobacco."
It is the perfect habit for a political and economic philosopher who has described himself as a "Gladstonian liberal," and a "radical antisocialist" who harks back for inspiration to Edmund Burke and the early John Stuart Mill.
He is everything you want an 83-year-old Viennese conservative economist to be. Tall and rumpled. A pearl stickpin in his tie. A watch chain across his vest, even though he wears a digital watch on his wrist. An accent which melds German Z's and British O's -- he's a British subject, having taught at the London School of Economics starting in the early '30s, back when he was attacking John Maynard Keynes, who was the man Richard Nixon was referring to when he said, to explain his wage and price controls in 1971, "We are all Keynesians now."
That is one reason the Heritage Foundation has brought Hayek to America. Hayek, as a favorite of conservatives from Irving Kristol to William Buckley, has spent a lifetime in opposition to Keynes; to the notion that government deficits and inflation cure unemployment; to the idea that value-free science can build a new world; and to socialism, the progressive income tax, affirmative action, the minimum wage, psychiatrists who hope to free us from psyches rooted in good and evil and the notion that central planning can improve our lives.
"Keynes never convinced me," says Hayek with the ease of a man who has weathered a lifetime of astonished protests from students, dinner party partners and fellow economists.
"He was a relatively sensible man. Unfortunately, he died in 1946, and so it was left to his very orthodox pupils, who out-Keynesed Keynes, which dominated the next 30 years, and so we have been living through a period in which Keynes became a sort of saint and any critic of Keynes became a third-class citizen. Now, they've discovered that Keynes was wrong," says this former third-class citizen with a dry little laugh. "And my reputation is reviving."
He adds: "When I was very young, only the very old believed in classical liberalism. Now that I am very old, we're winning a flood of very young people to our side."
He is much in demand. He just flew into Washington after a conference in Venezuela and he's due back home in Freiburg, Germany, Saturday. This, after two heart attacks, one of which left him incapacitated for five years and was misdiagnosed, he says, as "depression."
He no longer skis or climbs mountains, but beyond that he doesn't seem to worry about his health. Nevertheless, at one of his lectures in Tokyo last year Japanese doctors wired him up with full electrocardiogram apparatus and ran the wires under his clothes, back from the lectern to a room where they monitored readouts.
Conceivably, they wondered how anyone could stand the strain of flying in the face of orthodoxy the way he has. For instance:
He believes governments not only should stop trying to control the money supply, a la Keynes or Milton Friedman, but should stop printing money. No more dollars, pounds or deutsche marks. Instead, Hayek would leave it to banks to print their own money.
"They could choose whatever unit they want," he says."They could call it the 'stable.' "
(Forty years of being ostracized or worse, ignored, tend to give a man this kind of dry wit.)
He states that the Nazis were not a reaction to communism but merely another brand of socialism.
He believes that, contrary to environmentalists, we are suffering from a labor shortage and a surplus of raw materials.
"The environmentalists are naive," he says. "Except for one particular metal, I think, we've yet to be in danger of running out of anything. The constant trend is that the prices of raw materials fall and the price of labor rises."
And he fixes his listener with a stare that implies that the point is proved.
And in Hayekian terms, it is.
As he has said: "Prices act as guides telling you what you ought to do." With labor, the rising price tells us to worry about a shortage, and with raw materials, the falling prices tell us to contemplate surpluses.
The reason he opposes wage and price controls or any other planned manipulation of the marketplace is that modern economies, based on division of labor, were built only by "following the impersonal signals of prices which . . . enable us to utilize widely dispersed information. Now the idea that you can concentrate all of this information with the central government and let the central government plan is just absurd."
If we force the pricing system out of line, he says, we are killing, or at least confusing, the messenger who brings us the news.
The notion of scientific planning is absurd, he says, because the system is too complex to be understood.
"No scientific formula has room for more than two or three unknowns," he says. "Conclusions you draw to complex phenomena, with far more unknowns, are erroneous."
He is at ease with ignorance. His lack of faith in scientific omniscience may come from growing up as the son of a botanist and the grandson of a zoologist, both of them von Hayeks, a hereditary title he has dropped. After serving as an artillery officer in the Austrian army, Hayek studied law, psychology and economics at the University of Vienna. In his first job, at the university, he watched his salary go from 5,000 kronen to 8 million kronen a month in the great Austrian inflation. He first visited America in 1922, landing with $25, a letter of introduction from Joseph Schumpeter, one of the giants of economic theory, and the promise of a job as research assistant to an American professor, who unfortunately was on vacation.
"I saw an advertisement for a dishwasher at the corner of Sixth Avenue and 42nd Street in New York. I got the job. But that night, the man returned and called me at the YMCA, where I was staying. I've regretted ever since not being able to say that I'd worked as a dishwasher."
The next year, he returned to Austria, where he already had become a disciple of Viennese economist Ludwig von Mises, who said socialism wasn't necessarily a moral failure, but it was an intellectual one.
The problem, Hayek says, was that "all the intelligent and famous men of that time were socialists: Einstein, H. G. Wells, George Bernard Shaw, Bertrand Russell. But their thinking was based on a mistaken belief in social mastery."
As Hayek wrote in "Law, Legislation and Liberty" in 1979, "I believe people will discover that the most widely held ideas which dominated the 20th century, those of a planned economy with a just distribution, of freeing ourselves from repressions and conventional morals, or permissive education as a way to freedom, and the replacement of the market by a rational arrangement of a body with coercive powers, were all based on superstitions in the strict sense of the word.
"An age of superstitions is a time when people imagine that they know more than they do."
At the age of 32 he moved to the London School of Economics.
He wrote the kind of economic treatises that make your head hurt after four pages. He gained a reputation as a brilliant technician, albeit one opposed to Keynes.
He was attacked, but it wasn't until 1945, with the publication of his book "The Road to Serfdom," that he began his big slide into obscurity.
The book introduced him to a popular audience as a political theorist. It was an attack on the notion of central planning, saying that inevitably leads to a loss of freedom. It was published by the University of Chicago Press, certainly respectable enough in academic circles. But the publishers turned around and sold it to "Reader's Digest." Appearing there certified him as hopeless to the American intellectual establishment.
"It was received better in England, where they'd had a closer look at socialism, and disillusionment was already beginning to set in. George Orwell read it and reviewed it before he wrote 'Animal Farm' and '1984.' "
To add to Hayek's distress in America, the book sold well. And the University of Chicago informed him when he got off the boat that he would not be giving academic discourses, he would be opening a popular lecture tour at Town Hall, in New York.
"I had no idea how to give popular lectures. I got there, and stood up and began 'Ladies and gentlemen, no doubt you all know . . .' Of course, I had no idea what they knew. But I discovered I could do it! I had the actor's gift! I had already offended the dearest illusions of the intellectuals. This lecture tour offended my scientific colleagues even more. I remember getting off a train in Oklahoma. There was a bookstore across from the station with my picture in the window."
He returned to abstruse science to show his colleagues he hadn't gone soft. Except that the field was psychology this time, in a book called "The Sensory Order." He says with a certain delight: "It is a very difficult book." In it, he examined the way we process information that comes through our senses. It was a system too complicated to be understood in detail, he decided. It could be understood in principle, however, as "the conception of the spontaneous formation of an order, the formation of extremely complex structures."
He is not disturbed, just now, at the comment that this seems to be the same general idea he bases his economics on, too. In fact, he refers to the market as "an exo-somatic sense organ."
He takes a pinch of snuff. He talks. His sharp features seem to cruise through the morning sunlight with the inexorable calm of a ship's bow heading for the pier. After 40 years at sea, he has his Nobel, he has foundations sending him around the world, he sees the great Keynesian machine sputtering and shorting out. He has a wife (his second) and two children, both scientists in England. His teaching career has included the University of Chicago from 1950 to 1962, and the the University of Freiburg, where he is emeritus, but still lectures.
"I gave a series of lectures recently and not one student protested. Five years ago they would all have been. Now they agree with me."
He adds, however, that he has "no respect for the opinions of students -- they change every three years."
And he has answers, even if they are not exactly the kind of suggestions that will send Tip O'Neill scurrying to the library.
For instance, he proposes a new form of government, in which the legislature would be divided into two houses. One house would pass rules of a general and abstract nature. The other would be administrative. Only the first house would have enforcement powers.
He has little hope that high technology is the answer.
"Believing in technology as such is wrong. It's a belief that destroys the market mechanism."
But wait a second: Can he really deny the benefits of space technology, with its satellite communications and so on? And can he deny that no corporation or marketplace entity could have mustered the capital to create it?
Yes, he can, with lovely, aristocratic ease.
"Space technology is military technology," he says. "And even with the nonmilitary uses, does it give us as much as it has cost us?"
He has answers. A lot of us may still not be asking the right questions, but he has answers.
He also has a seminar to attend at George Mason University, followed by a lecture, followed by more meetings all week with economists, journalists and academics, a large number of whom might once have been assumed to be Keynesians.
He stands up. His car is waiting. He strolls out of the office and confers with the staff of the Heritage Foundation, which hovers around him with a combination of delight and awe that makes them seem like small boys around a football hero.
Keynes is dead. And Hayek, at 83, is more alive than ever.