Opinion: Hayek unbound: Up from serfdom
This article was originally on a blog post platform and may be missing photos, graphics or links. See About archive blog posts.
From Arts & Letters Daily, Dissent has a thoughtful, unsympathetic piece on Friedrich Hayek by the writer Jesse Larner. The upshot: Hayek’s popular classic ‘The Road to Serfdom’ was right on a big point, but he was wrong on plenty of little ones. Here’s Larner describing the basics:
The core of Road is an exploration of why a planned, state-managed economy must tend toward totalitarianism. If this is one’s concept of socialism, it could hardly survive a fair-minded encounter with Hayek. He lays out the complex ramifications of a relatively simple set of ideas, always with their impact on individual agency at the center of his analysis. His argument takes a familiar classical liberal stance. 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?... 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 is the 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 that will not privilege the vision or depend on the limited information of a governing elite, and that will encourage further experimentation.
To the extent I’m familiar with Hayek’s work, Larner’s presentation of his ideas seems pretty fair, though he could have spent less time on the dated parts of ‘Road to Serfdom’ and more on later work. There’s plenty of material I disagree with throughout, but I’ll limit myself to his discussion of rent seeking, the tendency of large players (labor unions, trade groups, big corporations) to try and make money by manipulating law and government rather than by producing and trading:
Hayek’s solution is to deny the legitimacy of any movement to impose restraint on competition. The paradox is that forming spontaneous associations for the collective good of insiders seems to be a universal human activity. When individuals are free to make choices, this is invariably what they choose to do. Hayek’s principle might be sound, if applied universally, which it could never be.
I agree with the premises here but draw the opposite conclusion: If rent seeking is a universal behavior, that’s a reason to want to keep the mechanisms of coercion as weak as possible. Anybody who has read the following words of death in the paper knows what I mean: ‘Even industry leaders support the proposed regulations.’ The solution is not to restrain unions or companies but to devalue the goody that they spend all that money trying to obtain: the overwhelming force of state power. Maybe there are true monopolies that have come about without the active participation of government, but I can’t think of any.
OK, one other nit:
Hayek’s political philosophy recognizes only negative rights. Positive fulfillment beyond the most basic needs is a matter of individual striving.
Yes, positive fulfillment results only from individual striving, and even then only if you’re lucky. That’s not a part of Hayek’s philosophy or a tenet of free marketism. It’s the central fact of human existence.
But I come to praise, not to bury. It’s a well done piece, worth reading in full.