Soros said, “Friedrich Hayek is generally regarded as the apostle of a brand of economics which holds that the market will assure the optimal allocation of resources — as long as the government doesn’t interfere. It is a formalized and mathematical theory, whose two main pillars are the efficient market hypothesis and the theory of rational expectations.
“This is usually called the Chicago School, and it dominates the teaching of economics in the United States.”
Where to begin? If you think Hayek was a member of the Chicago School, you are not entitled to an opinion on matters of economic thought, period. Hayek was of course an Austrian. The Austrians are not the same as the Chicago economists, differing in method, capital theory, monopoly theory, monetary theory, policy implications, and quite a bit more. And the Austrians certainly do not dominate the teaching of economics.
What is confusing Soros is probably that during the 1950s Hayek taught at the University of Chicago, on its committee on social thought. That does not make him a “Chicago School” economist. That is a freshman mistake, one that nobody who knew anything about Hayek or either of the relevant schools would have come within a million miles of making.
To associate Hayek with the efficient markets hypothesis (EMH) — or to call Hayek’s approach “mathematical,” for that matter — is to add cringe-inducing error upon cringe-inducing error. Here are a few Austrian takes on EMH.
Not coincidentally, the blog comments at ThinkProgress are routinely filled with equally inane statements — e.g. (and here I paraphrase), “That laissez-faire, Ayn Rand cultist Alan Greenspan caused so many problems with his crazy devotion to pure capitalism!” Greenspan, a monetary central planner, abandoned his Randianism decades ago, as should be obvious from the fact that he is, well, a monetary central planner.