Is Hayek Still Relevant?

Jesse Larner has an interesting and much talked-about article on F.A. Hayek in the left-liberal journal Dissent (for links to other commentary on Larner's piece, see here). Larner gives Hayek credit for his pathbreaking critique of socialist central planning. But he argues that Hayek's thought is largely irrelevant today.

To very briefly summarize Hayek's two most important ideas, he argued that socialism can't work as an effective system for producing and distributing goods because it has no way of aggregating the necessary information about people's wants and needs. By contrast, the price system of the market is a very effective method for collecting and using information about people's preferences and the relative value of different goods. Hayek's 1945 article "The Use of Knowledge in Society" is the best short statement of this argument. Hayek also argued that government control of the economy under socialism necessarily leads to the destruction of democracy and personal freedom. The central planners' control of the economy enables them to crush potential opposition and strangle civil society. This, of course, was the main argument of Hayek's most famous book, The Road to Serfdom (1944).

Larner concedes the validity of both of these Hayekian claims. But he suggests that they are largely irrelevant today because the modern left has mostly abandoned central planning and because Hayek failed to recognize that "collectivism" could be a "spontaneous, nongovernmental, egalitarian phenomenon," not just a totalitarian order imposed by the state. He also suggests that "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)."

Larner makes some defensible points. For example, he is right to imply that Hayek's arguments are more compelling as a critique of full-blown central planning than of more modest forms of government intervention. It is also true that full-blown economic central planning has a lot less support among left-wing intellectuals today than fifty or sixty years ago. Nonetheless, Hayek's ideas are far more relevant to our time than Larner thinks.

I. The Persistence of Central Planning in Left-Wing Thought.

Although the modern mainstream left no longer favors central planning of the entire economy, many left-wingers do favor government control of large parts of the economic system. Most European leftists and a good many American ones favor government control of the health care industry, which constitutes some 10-15% of the economy in advanced industrialized society. Some forms of government planning are favored not only by left-wingers but also by many moderates and conservatives. For example, government owns and operates some 90% of the schools in Western Europe and the United States. However much we take public education for granted, it still represents the socialization of a vast swathe of the economy.

In addition, many mainstream liberals such as Cass Sunstein and Supreme Court Justice Stephen Breyer (as well as some conservatives and moderates) favor giving broad regulatory authority to "expert" government bureaucrats. This is not quite the same thing as government ownership of large enterprises. But it has important ideological affinities with it, to the extent that both policies rely on central planning by expert government bureaucrats. Hayek's arguments in "The Use of Knowledge in Society" are certainly relevant as potential critiques of these various forms of planning - both those that involve government ownership of large enterprises in health care and education and those that rely on regulations administered by expert bureaucrats. If Hayek is right, all these planners and experts don't know as much as they think they do, and certainly can't aggregate knowledge as effectively as the free market can.

Finally, it's worth noting that even full-blown socialism isn't as completely dead as Larner assumes. For details, see my September 2007 post on "Why the Debate Over Socialism Isn't Over."

Fundamentally, most liberals and leftists still look to the state to plan large portions of the economy and other aspects of our lives. So too do many conservatives and moderates, as witness the rise of "big government conservatism" under George W. Bush. Today's advocates of government planning are more modest in their ambitions than the mid-twentieth century socialists whom Hayek criticized. But they are not modest enough to make his arguments irrelevant.

II. Hayek and "Voluntary" Collectivism.

Larner also criticizes Hayek for ignoring the possibility that "collectivism" could be voluntary rather than imposed by the state. He suggests that Hayek was wrong to ignore the thought of socialist anarchists such as Proudhon and Kropotkin, who favored communal enterprise without state control.

Much depends on what is meant here by "collectivism." To the extent that it simply means voluntary cooperation between individuals and groups in civil society, Hayek not only didn't ignore it, he was a great advocate of it. Throughout nearly all his major works, Hayek stressed the importance of voluntary social cooperation and repeatedly emphasized that individuals can't progress or even survive for long without civil society institutions and traditions that are the product of cooperation. Hayek's famous theory of "spontaneous order" was of course based on the idea that society progresses through the development of social norms and customs produced by voluntary cooperation in civil society. Hayek favored free markets and strict limits on government power in large part because he thought that they fostered such voluntary cooperation better than government planning does. Far from denying 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," Hayek wrote that:

[T]rue individualism affirms the value of the family and all the common efforts of the small community and group . . . [and] believes in local autonomy and voluntary associations . . [I]ndeed, its case rest largely on the contention that much for which the coercive action of the state is usually invoked can be done better by voluntary collaboration.

Hayek, "Individualism: True and False," in Individualism and Economic Order (1948), pg. 23

Larner is right to point out that Hayek ignored the socialist anarchists in his writings on socialism. But he would not have objected to them in so far as they advocated the formation of purely voluntary communities based on socialist or egalitarian principles, such as the Israeli kibbutzim. Indeed, Hayek, like John Stuart Mill, emphasized the importance of social experimentation in voluntary civil society. In his essay "Why I am not a Conservative," Hayek criticized conservatives for their excessive suspicion of change and new ideas. Few other libertarians would disagree.

Conflict between Hayekian libertarians and advocates of voluntary collectivism arises when one asks what we should do if it turns out that most people don't want to live in a collectivist commune, but would prefer a "capitalist" lifestyle instead. This is exactly what happened in the case of Israel's kibbutzim, the most successful modern experiment in voluntary collectivism. If voluntary collectivists are willing to accept this result, then there is no major disagreement between them and most libertarians, Hayek included. If, however, they prefer to use state or private violence to force dissenters into the communes against their will, then this form of socialism is no longer voluntary. Unfortunately, real-world socialist anarchists often chose the path of violence when faced with this contradiction between their commitment to collectivism and their opposition to state coercion. This is exactly what happened when socialist anarchists achieved a high degree of influence in 1930s Spain, arguably the movement's greatest period of success.

Perhaps more importantly, advocates of socialist anarchism and other forms of voluntary collectivism have never been more than a minor part of the political left as a whole. The vast majority of left-wing intellectuals (to say nothing of left-wing political leaders) favor a high degree of government control of the economy and society. If they have even heard of voluntary collectivism, they don't have much sympathy for it. Indeed, they probably have a lot less sympathy for it than Hayek would have.

I don't claim that Hayek was right about everything or that he perfectly foresaw our situation today. To the contrary, he made his share of mistakes. But his most important arguments haven't lost their relevance.

The Continuing Relevance of Hayek's Critique of Conservatism:

My recent post on the continuing relevance of F.A. Hayek's critique of socialism brings to mind his critique of conservatism, much of which also remains relevant. Most of Hayek's work was focused on criticizing socialism and related left-wing ideologies. During his heyday (roughly form the 1930s to the 1960s), conservatism was a fairly marginal force in the intellectual world, while many perceived socialism as the wave of the future. Nonetheless, Hayek wrote a famous 1960 essay entitled "Why I am not a Conservative," some of which has continuing relevance as a critique of conservatism even today. In reading the essay, it's important to keep in mind that Hayek used the word "liberal" to denote something like what "libertarian" or "classical liberal" mean today. It is also worth noting that Hayek believed there were some important commonalities of interest between libertarians and conservatives, at least in the United States. Nonetheless, he also believed that conservatism has major shortcomings.

The word "conservatism" is a vague term that covers a wide range of ideas. Hayek's criticisms don't necessarily apply to every version of conservative thought. A few of his arguments are totally dated, and some perhaps were invalid even back in 1960. But several apply to various forms of conservatism that remain influential today. In particular, Hayek's criticisms of conservative for their excessive aversion to change, their attachment to discretionary government power, their willingness to use state power to enforce "moral" values, and their tendency towards "strident nationalism" all retain considerable force.

Hayek suggested that conservatives emphasize aversion to change at the expense of developing a clear alternative to left-wing progressivism:

Let me now state what seems to me the decisive objection to any conservatism which deserves to be called such. It is that by its very nature it cannot offer an alternative to the direction in which we are moving. It may succeed by its resistance to current tendencies in slowing down undesirable developments, but, since it does not indicate another direction, it cannot prevent their continuance. It has, for this reason, invariably been the fate of conservatism to be dragged along a path not of its own choosing. The tug of war between conservatives and progressives can only affect the speed, not the direction, of contemporary developments. But, though there is a need for a "brake on the vehicle of progress," I personally cannot be content with simply helping to apply the brake. What the liberal must ask, first of all, is not how fast or how far we should move, but where we should move. In fact, he differs much more from the collectivist radical of today than does the conservative. While the last generally holds merely a mild and moderate version of the prejudices of his time, the liberal today must more positively oppose some of the basic conceptions which most conservatives share with the socialists.

This point does not apply to all forms of conservatism. For example, "religious right" conservatives clearly do have a theologically inspired "alternative to the direction we are moving." However, it does apply to the still-common "Burkean conservatism" which defines itself primarily by its support for tradition and opposition to rapid change. Hayek's claim that conservatives share important "basic conceptions" with socialists (or at least with statist liberals), also has great resonance in the age of "big government conservatism," a platform adopted by Republicans such as George W. Bush, and Mike Huckabee. By no means all conservatives fall into this category. But a good many do.

Hayek's claim that conservatives are excessively tolerant of discretionary authority in government is also relevant at a time when many conservatives have embraced the Bush Administration's assertion of virtually unlimited executive power:

Let me return, however, to the main point, which is the characteristic complacency of the conservative toward the action of established authority and his prime concern that this authority be not weakened rather than that its power be kept within bounds. This is difficult to reconcile with the preservation of liberty. In general, it can probably be said that the conservative does not object to coercion or arbitrary power so long as it is used for what he regards as the right purposes. He believes that if government is in the hands of decent men, it ought not to be too much restricted by rigid rules. Since he is essentially opportunist and lacks principles, his main hope must be that the wise and the good will rule - not merely by example, as we all must wish, but by authority given to them and enforced by them. Like the socialist, he is less concerned with the problem of how the powers of government should be limited than with that of who wields them; and, like the socialist, he regards himself as entitled to force the value he holds on other people. [emphasis added]

Like the previous one, this criticism does not extend to all conservatives. But it does apply to a significant number of highly influential ones.

It is also difficult to dispute that many modern conservatives remain vulnerable to Hayek's criticism that they are overly eager to use the power of the state to impose their preferred "moral" values:

[T]o the liberal neither moral nor religious ideals are proper objects of coercion, while both conservatives and socialists recognize no such limits. I sometimes feel that the most conspicuous attribute of liberalism that distinguishes it as much from conservatism as from socialism is the view that moral beliefs concerning matters of conduct which do not directly interfere with the protected sphere of other persons do not justify coercion.

As I argue in this article, many social conservatives fail to see that the same shortcomings they see in government intervention in the "economic" sphere also apply to government regulation of "morals" and culture.

Finally, Hayek was on point in noting the connection between conservatism and nationalism, which he (correctly, in my view) viewed as a generally pernicious force:

Connected with the conservative distrust if the new and the strange is its hostility to internationalism and its proneness to a strident nationalism. Here is another source of its weakness in the struggle of ideas. It cannot alter the fact that the ideas which are changing our civilization respect no boundaries. But refusal to acquaint one's self with new ideas merely deprives one of the power of effectively countering them when necessary. The growth of ideas is an international process, and only those who fully take part in the discussion will be able to exercise a significant influence. It is no real argument to say that an idea is un-American, or un-German, nor is a mistaken or vicious ideal better for having been conceived by one of our compatriots.

A great deal more might be said about the close connection between conservatism and nationalism . . . I will merely add that it is this nationalistic bias which frequently provides the bridge from conservatism to collectivism: to think in terms of "our" industry or resource is only a short step away from demanding that these national assets be directed in the national interest [by the government].

This point has all sorts of applications to conservative positions on trade, immigration, and other policy debates in the US. Certainly, it is reflected in assertions by many conservatives that foreigners and immigrants must be prevented from competing with "our" industries, taking "our" jobs, using "our" resources, and so on.

Outside the US, the connection between conservative nationalism and xenophobia on the one hand, and statism on the other is even more evident. For example, the use of nationalism as a "bridge from conservatism to collectivism" was a central tenet of Nazi and Fascist ideology.

Not all conservatives are strident nationalists, just as not all are averse to change or enamored of broad executive power. Because the word "conservatism" applies to so many different movements and ideas, it would be wrong to assume that Hayek's criticisms are relevant to all conservatives. But they do still apply to a great many.

Happy 110th Birthday F.A Hayek!

Today is F.A. Hayek's 110th birthday. Hayek was perhaps the most influential libertarian thinker of the 20th century. Books such as The Road to Serfdom, The Constitution of Liberty, and Law, Legislation, and Liberty had a major impact on economics, political theory, and legal thought. Hayek also won a Nobel Prize in Economics for his technical work on monetary policy and business cycles. My personal favorite among Hayek's works is his famous 1945 article, "The Use of Knowledge in Society," which explains why private sector institutions generally do a better job of gathering and using information than government.

Last year, I wrote a post explaining why Hayek's central ideas are still relevant today, decades after he wrote his most important works. Hayek's criticism of central planning remains important in an age where governments once again seek to nationalize and restructure large sectors of the economy. His less well-known critique of conservatism also retains a great deal of relevance in our time, for reasons I elaborated here.

UPDATE: It looks like Hayek's birthday is actually May 8, rather than May 5. Sorry about the confusion. However, the silver lining of this particular cloud is that I get to post about Hayek again on Friday!

Today, it Really is F.A. Hayek's 110th Birthday!

Today really is F.A. Hayek's 110th Birthday. I incorporate by reference my post from three days ago, which I wrote under the mistaken impression that Hayek's birthday was really May 5. My mistake was soon corrected by other bloggers. Hayek would say that this was a small example of how free markets and civil society make good use of information and effectively correct errors.

In any event, happy 110th birthday to one of the truly great economists and political philosophers of the last century. His most important ideas remain highly relevant today, as does his trenchant critique of conservatism.