Hayek on Interstate Federalism and Free Trade

Course Outline

Hayek on Interstate Federalism and Free Trade

In 1939, right before the outbreak of World War II, F.A. Hayek published an essay titled “The Economic Conditions of Interstate Federalism.” Friedrich Hayek looked beyond the turmoil of the time to wonder what type of European community may bring peace and free trade down the line. Decades before the formation of the European Union, Hayek argued that regional protectionism would have to cease and that the need for a common foreign policy would likely lead to common economic policy. Then, a common monetary policy would evolve. With respect to economic policy, Hayek believed the most important point member nations would agree on would be free trade. Hayek expressed concern over a new form of protectionism in this system, namely that of administrative regulation on trade and commerce. Hayek’s adherence to 19th century liberalism – a system embracing free trade and limited government – becomes clear toward the end of this essay.

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