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QUIET ECONOMIST HAD A PROFOUND EFFECT ON WORLD

Ask the average American to tell you something about Friedrich A. Hayek, who died this week in Freiburg, Germany, and you're likely to get a baffled shrug. Hayek never made a hit record, held elective office or wrote campaign speeches for a New Hampshire primary. But the 92-year-old Austrian-born economist helped change our lives in ways far more profound and enduring.

Hayek, whose final years were spent, like most of his life, in teaching, was decades ahead of his time in challenging the statist orthodoxies of left and right alike. His central message was that good governmental intentions are no substitute for the miracles of freedom. He lived long enough to see the remarkable triumph of that simple idea across the globe."More than almost anyone else in the 20th century," observed one White House official, "this guy was vindicated by the events in Eastern Europe." And, one might add, in Western Europe and Asia as well - not to mention the United States, where candidates still argue (with greater passion than sense) about how much more to expand government interventionism, and then become surprised that their dazzling new programs inevitable create unintended economic ills.

Such praise would have unsettled Hayek, despite his extraordinary influence on such key Americans as Milton Friedman and Ronald Reagan. Even the Nobel Prize for Economics he received in 1974, at the age of 75, after having written 25 books, and more than 130 seminal articles, had little effect on this modest man.

My friend James U. Blanchard III, who has been holding major investment conferences for two decades, recalls hosting a dinner for Hayek in 1976 after a meeting in Lausanne, Switzerland. Rising for a toast in that Swiss chalet, Blanchard tried to explain to the quiet professor that his ideas were already having a great effect on many investors, economists and philosophers in the United States. "He was genuinely surprised by this news," Blanchard remembers.

No wonder. Hayek was definitely "outside the mainstream" when, living in Britain, he wrote his 1944 classic, "The Road to Serfdom," which astonished him and others by being read by millions within months of publication. For, in an intellectual world dominated (then and for another generation) by the "planning" nostrums of John Maynard Keynes, Hayek argued that conventional divisions into "left" and "right" are meaningless, that totalitarianism from either side endangers human freedom.

Most significantly, he pointed out what is still so imperfectly comprehended in our own domestic debate - that even moderately socialist measures, which always seem wonderfully humanitarian when first proposed, in practice move us down the road toward tyranny. Those who are convinced that the "solution" to problems like education and health can only be found in further surrenders of individual freedom might well stop and ponder this, before racing to the trendy barricades.

Hayek understood that the price mechanism of the marketplace itself is the world's most intelligent "planner," sending signals and permitting growth beyond the imagination of the loftiest academic, legislator or bureaucrat. He stressed that government's role should be to purify the free market, not frustrate it. In short, he believed in capitalism, at a time when it was assumed to be not just a dirty word but a doomed one.

To many, Hayek seemed quaint and outmoded - a decent man, surely, but what was all this talk about sound money and trusting the marketplace when the world was so full of new problems and new ideas? And so we heard about the "social justice" of the Eastern European countries, and the alleged feats of central planning in monster societies like the Soviet Union and China. And even here in America, "naive" concepts of freedom were discarded at the top; "We are all Keynesians now," said Richard Nixon.

Then something funny happened. The "progress" of socialism and communism turned out to have been a sham all along, and - at a time when we Americans are still arguing about whether it's OK to believe in our dream - that dream has been newly, fervently embraced from Managua to Moscow. The role of ever more powerful governments in actually improving human life becomes ever more rightfully suspect. Individual freedom, a concept derided and shadowed in the 20th century, becomes the hope and goal of the 21st. Hayek's monuments are all around us.