Summary:
Jesse Larner reviewing Hayek's Road to Serfdom. Good critique of central planning. Not as extreme a position as that of some of his followers. Hayek's main concern is human freedom. Not dissimilar to some versions of socialism (even libertarian collectivism). Hayek's limitation is that he only considers one type of socialism (Stalin's). Hayek admits that there are economic circumstances in which market forces cannot deliver the optimum result, and when the state may legitimately intervene. (Published: Winter 2008)
Notes:
- Hayek revered at
- American Enterprise Institute
- Cato Institute
- National Review
- Weekly Standard
- book: The Road to Serfdom (1944)
- Hayek nowhere near as extreme as his ideological descendants
- admits that there are a few rare economic circumstances in which market forces cannot deliver the optimum result, and that when these occur, the state may legitimately intervene
- recognizes such a thing as the social interest and will even endorse some limited redistributionalism
- goes so far as to suggest that the state ensure a minimum standard of living
- idea surely to embarrasses people at Cato
- Hayek concerned with human freedom
- in contrast to many modern conservative intellectuals
- writes with passion against class privilege
- not as rational and irrefutable as the right would have it; often eccentric
- makes a powerful and far-ranging critique of state control of economic life in Road to Serfdom
- Keynes on Road:
- “it is a grand book. . . . Morally and philosophically I find myself in agreement with virtually the whole of it; and not only in agreement with it, but in deeply moved agreement.”
- but followed up his seven famous lines of praise with eighty-four little-known lines in favor of expanded economic planning
- George Orwell on Road:
- “In the negative part of Professor Hayek’s thesis there is a great deal of truth . . . collectivism is not inherently democratic, but, on the contrary, gives to a tyrannical minority such powers as the Spanish Inquisitors never dreamt of.”
- core of Road is an exploration of why a planned, state-managed economy must tend toward totalitarianism
- Road: Economic planning assumes a social goal at which the plan aims.
- But whose goal?
- In a society of competing interests—a condition that would describe every human society—any goal, any plan, inevitably favors some interests against others.
- Who is to say whether the favored interests are “better” for society as a whole?
- There may be consensus in government, or on a delegated planning board, but this only reflects the consensus of immediately interested parties.
- A complex economy is something no person or institution can understand.
- But it can generate a sustainable order, with a rational allocation of resources, as individuals respond to their own circumstances and make choices as consumers and entrepreneurs, signaling the subjective value that they place on goods and capital stock through the price mechanism
- One of Hayek’s most original contributions to economic theory:
- insight that economic systems are based primarily on information rather than resources
- To plan an outcome and to direct economic inputs and outputs toward this outcome is to stifle the emergence of a spontaneous, democratic response to the needs of the individuals who make up the community
- a response that will necessarily have winners and losers
- but will not privilege the vision or depend on the limited information of a governing elite
- furthermore, will encourage further experimentation
- responsibility of a government that fosters individual freedom is
- to set up transparent and impartial rules so that the legal reaction to personal choices can be predicted for all, regardless of social station;
- to tolerate no privileged access to the law;
- to provide security; and
- to protect contracts and private property
- so long as doing so does not conflict with the very small set of social assumptions on which there truly is broad consensus
- ensure a minimum standard of living (?)
- Hayek disapproved of prebendal institutions that increase the wealth and power of an elite at the expense of other members of the class in whose interests the elite is supposedly working, and of society at large
- whether that elite be composed of
- holders of exclusive concessions,
- recognized that institutions that interfere with the price mechanism encourage relations of patronage.
- Hayek understood at least one very big thing:
- that the vision of a perfectible society leads inevitably to the gulag
- human societies are jerry-built structures, rickety towers of ad hoc solutions to unforeseen problems.
- their development is evolutionary
- as in biological evolution, they do not have natural end-states
- Comprehensive models of how society should work reject the wisdom of solutions that work and deny the legitimacy of individuals who demonstrate anti-orthodox wisdom
- models from Lenin to Mussolini to Mao to Ho to Castro to Qutb deny the very right to exist of individuals who demonstrate anti-orthodox wisdom
- Hayek makes little distinction between socialism, communism, and collectivism
- the only kind of socialism he considers in Road is state-managed, perfect-society utopianism, in which the direction of the economy and all of its inputs and outputs are planned, with the accompanying political and moral degradation that Hayek demonstrates quite convincingly
- this focus on state-led socialism should not be particularly surprising in 1944
- but: other visions of socialism, and other socialistic traditions, were certainly available to Hayek when he wrote
- libertarian, less top-down approaches
- socialisms of Luxembourg, Kropotkin, Proudhon, many others
- the possibility of nontotalitarian models of social democracy, like those that emerged in Europe after the war
- therein lies limitation of Hayek
- Hayek’s ideological descendants often assume, either sincerely or disingenuously, that in a world very different from that of 1944, socialism by definition still means state control of the economy in the interest of perfecting social relations
- Because they understand very little of the thoughtful left, it is hard for many on the right to acknowledge that as a critique of socialism, Hayek’s ideas are limited rather than devastating
- Hayek doesn’t seem to grasp that human beings can exist both as individuals and as members of a society, without necessarily subordinating them to the needs of an imposed social plan
- although he acknowledges that the state can legitimately serve social needs, he contradictorily views collective benefits as incompatible with individual freedom
- Hayek rejects the very concept of social justice
- for much the same reasons that he rejects the arbitrary valuation of labor
- in Hayek’s view there is no way to put an objective value on a grievance or to weigh it against other claims
- because he locates all responsibility and agency only at the level of the individual, he sees no way in which any claim can be generalized to society
- Hayek’s political philosophy recognizes only negative rights.
- Positive fulfillment beyond the most basic needs is a matter of individual striving.
- brief survey will show that there are all kinds of imaginative ways in which libertarian collectivism can coexist with capitalism and markets
- e.g. fishing co-operatives
- investors and crew are paid in shares of the catch
- form of economic organization that is found wherever fishing is pursued as a way of life
- has ancient origins.
- corporate stock ownership plans or the limited employee ownership of companies like Avis or United Airlines
- This is a socialism that is not incompatible with democracy, markets, or liberty.
- It is not subject to the perfectionist fallacy
- public disbursements in the social interest don't necessarily start us down a slippery slope to the totalitarian state
- Hayek, in suggestively conflating government spending with government planning, pulls a bit of a sleight of hand in Road.
- Democracy turned out to be a lot stronger than Hayek expected.
