For the past few months, Lev Deych and I have been intermittently doing battle over Friedrich Hayek. Lev is a ardent admirer of the Austrian economist whose ideas he finds relevant and applicable to our present day economic problems, while I am, to put it mildly, a skeptic. First I took Lev to task on historical grounds arguing that the dire predictions Hayek makes in his "Road to Serfdom" simply haven't come to fruition. Then I presented an article by the well-known historian Timothy Snyder who sees the current right-wing embrace of Hayek (along with Ayn Rand) as evidence of an ideological indoctrination akin to Marxism. Lev, it's fair to say, found this more than a little bit objectionable and made the point that Snyder (and me by extension) were not dealing with the real Hayek at all, only with a kind of grotesque set of misconceptions with little relation to Hayek's true beliefs. Perhaps to remedy this shortcoming, Lev posted on Facebook a link to a new article in the Stanford Encyclopedia of Philosophy that explains Hayek's ideas in a way that meets his approval. The philosophical lingo made the article a bit tough going at times, but I think it did help me to better understand Hayek's theories. What follows are some more or less random thoughts that occurred to me as I was reading the piece.
1) This is a rather strange way to write an encyclopedia article. Ordinarily I would expect an encyclopedia article to present a neutral overview of the subject's life and career along with a survey of major works and ideas. This article in contrast is more of an interpretive essay that seeks to advanced a particular position--i.e. that Hayek's rejection of "social justice" was an integral and inevitable outcome of his core ideas. I was also slightly taken aback by occasional off handed quips that made it quite clear the author was writing from the libertarian point of view. I thought writers of encyclopedia articles weren't supposed to do that. Where were the editors?
2) Hayek, at first glance, comes across as much more moderate and reasonable than his current day disciples. Even his libertarian interpreter feels obliged to use words like "community" and "common interest" in describing his ideas. Moreover, it turns out that Hayek had no problem with basic welfare state functions, thought the state had a legitimate rule to play in establishing the "rules of the game" and even believed that citizens should be guaranteed a basic income. Ouch! That sounds like socialism! Hayek's core theoretical teachings on spontaneous order, the limitations of economic knowledge and market price mechanisms also seem reasonable and uncontroversial. So why all the fuss? Most of the time Hayek seems to be charging through an open door. There must be a reason for this...
3) Hayek's ideas are the ideas of a bygone era. Hayek died in 1992, the year after the fall of the Soviet Union, and if he felt some satisfaction, even vindication, in his final days at this turn of historical events, it was for good reason. The entire edifice of his economic theory seems to be directed against Soviet style economic planning. He spends a great deal of time, for example, talking about prices and why they must be set through the market. He also makes a fairly compelling argument on he limitations of knowledge: since we can never know enough to predict how an economy will actually behave, it is a delusion to think that government can fully and unilaterally structure and manage all aspects of an economy. Who would argue with these points in this day and age? How many governments still think that they can arbitrarily fix prices and plan all aspects of economic activity? But back in the 1930s, when Hayek came of age as an economist, these ideas were taken very seriously indeed. Westerners were flocking to the Soviet Union on guided tours and coming back saying "I have seen the future, and it works!" A theoretical case against the planned economy was an important contribution back then, and Hayek's points, its fair to say, were largely vindicated. But those were very different times, and its hard to see how Hayek's arguments against economic planning are applicable in the present day. There is after all, a world of difference between the Soviet planned economy and modern capitalism in which the state acts within the context of the market to regulate economic activity and facilitate growth. So how can Hayek's ideas be made relevant to the present day? Hayek's present day right wing admirers have made an attempt, and I'm not all that impressed with the results.
4) To apply Hayek's thinking to the present day his followers need to show that his criticisms of the planned economy are applicable to any and all government intervention in the market. This is problematic if for no other reason than the fact that Hayek himself openly endorsed a number of these interventions. (I have to admit, I'm still a little puzzled by this point. My recollection of Road to Serfdom is that it was addressed mainly to economic planning, but the popular takeaway always seems to be presented as welfare state+government regulation=totalitarianism. Is this really what Hayek meant?) So how to separate legitimate government action from improper intervention? Hayek, according to author of the article, suggests a distinction between end-directed action, intended to create a specific outcome, and process-directed or procedural actions intended to establish the rules of the game, the framework within which spontaneous order can emerge. It seems to me, however, that this is really a distinction without a difference. When are actions ever not to some degree end-directed? Even purely regulatory measures are promulgated with an end in mind--the existence of a regulatory system which is deemed to be more advantageous than other possible regulatory regimes, and will presumably be beneficial to society. Hayek's supporters would probably respond by saying that actually they are only referring to a particular type of end-state involving redistribution of wealth--taking from the makers to give to the moochers to fulfill a vision of social justice. But is that what social justice really means? I have my doubts.
5) It seems to me that in their struggle against "redistribution" modern-day Hayekians are once again battling with Bolsheviks. Redistribution evokes the image of Leninist calls to "expropriate the expropiaters, exploit the exploiters." I imagine the scene in Dr. Zhivago when the hero returns from the front to find his family's home filled with gruff and grimy workers. "Yes, Comrades," Omar Sharif murmurs, "it is only fair that you should have more and we should have less." But is this really the way that modern day welfare state programs work? I don't think so. I believe, social programs are best envisioned in two ways neither of which involve outright redistribution of wealth. The first way to think of social programs is as a sort of insurance policy. I may not need unemployment benefits right now, since I am gainfully employed, but it is important to me to know that should I lose my job, I will receive support so that my family will not face total destitution. One could view food stamps, welfare, disability and social security in much the same way. I don't need these things now, but as a member of the middle class all that separates me from destitution is a few turns of bad luck. Should this happen I'm very glad that there will be something there to cushion the fall and help me get back on my feet. This is no more a distribution of wealth than my car insurance which takes money from me (a safe driver, I'd like to think) and gives to people who drive like maniacs and get into accidents. But should one of those maniacs hit me, I'll be awfully glad I paid for the insurance. "But wait!" the Hayekians say. "taxes are involuntary and therefore using tax revenues to pay for a social safety net is forced expropriation of wealth from the rich to be redistributed to the irresponsible moochers." But is this really such a coercive set-up? People who don't want to pay taxes to support social programs do have an option--they can emigrate. Nothing is forcing them to stay in this country. I hear there's some great real estate in Mogadishu going cheap. "Oh, but you don't want to live in a country with no law and order, no infrastructure, no education, where corruption is out of control and dire poverty and misery confront you everywhere you turn?" Then, pay up! Paying for a social safety net is not coercive redistribution of wealth; it's the price of admission to a civilized society.
6) Getting back to my point on social justice, David Schmidtz, the author of the piece on Hayek, drawing, I believe, on the ideas of Robert Nozick, condemns social welfare program on the grounds that they are intended to create some kind of artificial "end state" based on an abstract notion of justice. Again, it seems to me the Hayekians are substituting Leninist visions of a communist utopia (along the lines of State and Revolution) for the actual functioning of the modern state. Social programs, as I understand them are designed not to equalize the end result of participation in the market but rather the initial conditions. To use the 'rules of the game' analogy that Hayek's followers seem to like, the idea is not to weigh the dice, making winners out of losers, but rather to allow as many people as possible to play in the first place. This is why so many social programs are directed toward the needs of children and young people. It's about equal opportunities, not equal outcomes. Social justice does not mean taking from those with more and giving to those with less; it means insuring that the rules of the game apply evenly to everyone involved. You would never have a baseball game in which one team comes in with state of the art bats and gloves and the other team plays with broom handles and oven mitts. But when one sector of the population is expected to enter the economic fray of the market having grown up undernourished, undereducated, surrounded by crime and disease, it amounts to the same kind of unequal game. Granted, it will never be possible to completely level the playing field, and even under the best of circumstances, not everyone will succeed. But it is clearly in the best interest of society as large for as many people as possible to have the opportunity to participate in the market with a reasonable chance of success. This is what is meant by social justice.
7) To sum up, I see Hayek as an interesting and productive thinker whose ideas took shape in the context of the anti-communist struggles of the mid 20th century. Applying Hayek's ideas to the present day requires certain interpretive leaps displacing Hayek's teachings from their original setting and placing them on new and much more shaky ground. Present day Hayekians tend to envision a state pared down to almost nothing in which even the most basic public functions such as education, law and order and infrastructure are entrusted to the power of the market. There is almost a kind of quasi-religious faith that in all cases, under all conditions, the market will find the optimal solution. We don't really know why this is or how this works (Hayek taught that we could never really know) yet we believe that what the unfettered market produces will always be the best outcome in the best of all possible worlds. In this regard, I do think that there is a utopian strain to Hayekian/libertarian thought that is comparable (though certain not identical) with orthodox Marxism. Both claim to have uncovered the mechanism that governs all economic and social relations past, present and future and which, if allowed to function without interference will result in the emergence of an optimal state of existence. The fact that this optimal state has never actually been achieved, does not deter the believers from seeking its realization in the future through a program of purposeful political action. We've seen this before. It did not turn out well....
1) This is a rather strange way to write an encyclopedia article. Ordinarily I would expect an encyclopedia article to present a neutral overview of the subject's life and career along with a survey of major works and ideas. This article in contrast is more of an interpretive essay that seeks to advanced a particular position--i.e. that Hayek's rejection of "social justice" was an integral and inevitable outcome of his core ideas. I was also slightly taken aback by occasional off handed quips that made it quite clear the author was writing from the libertarian point of view. I thought writers of encyclopedia articles weren't supposed to do that. Where were the editors?
2) Hayek, at first glance, comes across as much more moderate and reasonable than his current day disciples. Even his libertarian interpreter feels obliged to use words like "community" and "common interest" in describing his ideas. Moreover, it turns out that Hayek had no problem with basic welfare state functions, thought the state had a legitimate rule to play in establishing the "rules of the game" and even believed that citizens should be guaranteed a basic income. Ouch! That sounds like socialism! Hayek's core theoretical teachings on spontaneous order, the limitations of economic knowledge and market price mechanisms also seem reasonable and uncontroversial. So why all the fuss? Most of the time Hayek seems to be charging through an open door. There must be a reason for this...
3) Hayek's ideas are the ideas of a bygone era. Hayek died in 1992, the year after the fall of the Soviet Union, and if he felt some satisfaction, even vindication, in his final days at this turn of historical events, it was for good reason. The entire edifice of his economic theory seems to be directed against Soviet style economic planning. He spends a great deal of time, for example, talking about prices and why they must be set through the market. He also makes a fairly compelling argument on he limitations of knowledge: since we can never know enough to predict how an economy will actually behave, it is a delusion to think that government can fully and unilaterally structure and manage all aspects of an economy. Who would argue with these points in this day and age? How many governments still think that they can arbitrarily fix prices and plan all aspects of economic activity? But back in the 1930s, when Hayek came of age as an economist, these ideas were taken very seriously indeed. Westerners were flocking to the Soviet Union on guided tours and coming back saying "I have seen the future, and it works!" A theoretical case against the planned economy was an important contribution back then, and Hayek's points, its fair to say, were largely vindicated. But those were very different times, and its hard to see how Hayek's arguments against economic planning are applicable in the present day. There is after all, a world of difference between the Soviet planned economy and modern capitalism in which the state acts within the context of the market to regulate economic activity and facilitate growth. So how can Hayek's ideas be made relevant to the present day? Hayek's present day right wing admirers have made an attempt, and I'm not all that impressed with the results.
4) To apply Hayek's thinking to the present day his followers need to show that his criticisms of the planned economy are applicable to any and all government intervention in the market. This is problematic if for no other reason than the fact that Hayek himself openly endorsed a number of these interventions. (I have to admit, I'm still a little puzzled by this point. My recollection of Road to Serfdom is that it was addressed mainly to economic planning, but the popular takeaway always seems to be presented as welfare state+government regulation=totalitarianism. Is this really what Hayek meant?) So how to separate legitimate government action from improper intervention? Hayek, according to author of the article, suggests a distinction between end-directed action, intended to create a specific outcome, and process-directed or procedural actions intended to establish the rules of the game, the framework within which spontaneous order can emerge. It seems to me, however, that this is really a distinction without a difference. When are actions ever not to some degree end-directed? Even purely regulatory measures are promulgated with an end in mind--the existence of a regulatory system which is deemed to be more advantageous than other possible regulatory regimes, and will presumably be beneficial to society. Hayek's supporters would probably respond by saying that actually they are only referring to a particular type of end-state involving redistribution of wealth--taking from the makers to give to the moochers to fulfill a vision of social justice. But is that what social justice really means? I have my doubts.
5) It seems to me that in their struggle against "redistribution" modern-day Hayekians are once again battling with Bolsheviks. Redistribution evokes the image of Leninist calls to "expropriate the expropiaters, exploit the exploiters." I imagine the scene in Dr. Zhivago when the hero returns from the front to find his family's home filled with gruff and grimy workers. "Yes, Comrades," Omar Sharif murmurs, "it is only fair that you should have more and we should have less." But is this really the way that modern day welfare state programs work? I don't think so. I believe, social programs are best envisioned in two ways neither of which involve outright redistribution of wealth. The first way to think of social programs is as a sort of insurance policy. I may not need unemployment benefits right now, since I am gainfully employed, but it is important to me to know that should I lose my job, I will receive support so that my family will not face total destitution. One could view food stamps, welfare, disability and social security in much the same way. I don't need these things now, but as a member of the middle class all that separates me from destitution is a few turns of bad luck. Should this happen I'm very glad that there will be something there to cushion the fall and help me get back on my feet. This is no more a distribution of wealth than my car insurance which takes money from me (a safe driver, I'd like to think) and gives to people who drive like maniacs and get into accidents. But should one of those maniacs hit me, I'll be awfully glad I paid for the insurance. "But wait!" the Hayekians say. "taxes are involuntary and therefore using tax revenues to pay for a social safety net is forced expropriation of wealth from the rich to be redistributed to the irresponsible moochers." But is this really such a coercive set-up? People who don't want to pay taxes to support social programs do have an option--they can emigrate. Nothing is forcing them to stay in this country. I hear there's some great real estate in Mogadishu going cheap. "Oh, but you don't want to live in a country with no law and order, no infrastructure, no education, where corruption is out of control and dire poverty and misery confront you everywhere you turn?" Then, pay up! Paying for a social safety net is not coercive redistribution of wealth; it's the price of admission to a civilized society.
6) Getting back to my point on social justice, David Schmidtz, the author of the piece on Hayek, drawing, I believe, on the ideas of Robert Nozick, condemns social welfare program on the grounds that they are intended to create some kind of artificial "end state" based on an abstract notion of justice. Again, it seems to me the Hayekians are substituting Leninist visions of a communist utopia (along the lines of State and Revolution) for the actual functioning of the modern state. Social programs, as I understand them are designed not to equalize the end result of participation in the market but rather the initial conditions. To use the 'rules of the game' analogy that Hayek's followers seem to like, the idea is not to weigh the dice, making winners out of losers, but rather to allow as many people as possible to play in the first place. This is why so many social programs are directed toward the needs of children and young people. It's about equal opportunities, not equal outcomes. Social justice does not mean taking from those with more and giving to those with less; it means insuring that the rules of the game apply evenly to everyone involved. You would never have a baseball game in which one team comes in with state of the art bats and gloves and the other team plays with broom handles and oven mitts. But when one sector of the population is expected to enter the economic fray of the market having grown up undernourished, undereducated, surrounded by crime and disease, it amounts to the same kind of unequal game. Granted, it will never be possible to completely level the playing field, and even under the best of circumstances, not everyone will succeed. But it is clearly in the best interest of society as large for as many people as possible to have the opportunity to participate in the market with a reasonable chance of success. This is what is meant by social justice.
7) To sum up, I see Hayek as an interesting and productive thinker whose ideas took shape in the context of the anti-communist struggles of the mid 20th century. Applying Hayek's ideas to the present day requires certain interpretive leaps displacing Hayek's teachings from their original setting and placing them on new and much more shaky ground. Present day Hayekians tend to envision a state pared down to almost nothing in which even the most basic public functions such as education, law and order and infrastructure are entrusted to the power of the market. There is almost a kind of quasi-religious faith that in all cases, under all conditions, the market will find the optimal solution. We don't really know why this is or how this works (Hayek taught that we could never really know) yet we believe that what the unfettered market produces will always be the best outcome in the best of all possible worlds. In this regard, I do think that there is a utopian strain to Hayekian/libertarian thought that is comparable (though certain not identical) with orthodox Marxism. Both claim to have uncovered the mechanism that governs all economic and social relations past, present and future and which, if allowed to function without interference will result in the emergence of an optimal state of existence. The fact that this optimal state has never actually been achieved, does not deter the believers from seeking its realization in the future through a program of purposeful political action. We've seen this before. It did not turn out well....
Matthew 7:16 is a good measuring aid. Difference in the outcomes should mean something.
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