Hayek: Hero or Villain?
One may wonder if Hayek’s utopian vision of unencumbered markets heralding freedom is not the antithesis (in the Marxist sense) to the Marxist’s utopian vision of freedom being found in the abolition of markets and private property. Does Hayek perhaps fall victim to doctrinaire and ideologically motivated thinking? Is Hayek, as Isiah Berlin once proposed, a hedgehog who knows one really big thing, who sees the world through the lens of an over-simplified mental model, as opposed to a craftier, more eclectic and variegated fox?
Hayek, so it may seem, knows one big thing for certain: human freedom, being the most important thing, is maximized when humans are able to exercise choices in free and unencumbered markets. Thus for Hayek state intervention in markets inherently limits and reduces human freedom by limiting choices. To Hayek, liberalism allows the individual an ultimate level of autonomy insofar as he/she is able to determine for him/herself what variant of the ‘good’ to pursue. Meanwhile, under socialism, the individual is co-opted into pursuit of the state sanctioned version of the good.
Hayek believes that the state, no matter how good and rational its ideals, will always act to constrict true freedom when it deigns to determine and enforce what the ‘good’ is for others (e.g. macro-level distribution patterns, social justice, etc.). In this way, Hayek believes socialism and liberalism are in inherent contradiction. To quote Hayek directly: “What our planners demand is a central direction of all economic activity according to a single plan, laying down how the resources of society should be “consciously directed” to serve particular ends in a definite way.” For Hayek, this is to supplant the superior market mechanism with an “inferior method of coordinating individual effort,” and more importantly, it is to abridge individual freedom.
Yet, in the neoclassical vein, and almost paradoxically, Hayek admits of ample room for state intervention. Certain interventions, applied equally to everybody, that limit such things as ‘poisonous substances’ are “fully compatible with the preservation of competition.” Additionally, Hayek believes that certain externalities can only be accounted for and remedied by a coercive body such as the state, and (quoting Adam Smith directly on this one) that certain public goods can similarly only be provided for by such an organization as the state. With these now well-known and widely agreed upon caveats (baked as they are into our neoclassical economic undergraduate textbooks), Hayek believably submits that “it is important not to confuse [his] opposition against this kind of [socialist] planning with a dogmatic laissez-faire attitude.”
Indeed, on the explicit question of whether or not Hayek is a hero or villain, I believe an old Shakespearian quote, slightly modified, applies well: he is neither good nor bad, but thinking makes him so. As Damien Cahill explores in his recent article on Embedded Neoliberalism, Hayek has been widely co-opted (and misunderstood) across the political spectrum. Many ‘free-marketeers’ commit the crime Hayek explicitly warned them against, that is of thinking of him as a dogmatic promoter of laissez-faire. Meanwhile, contemporary Marxists (who, admittedly, have the most legitimate gripe, given Hayek’s disparagement of their ideology) similarly, though with the opposite normative inflection, view Hayek as one of the linchpins of unbridled laissez-faire neoliberalism. At the risk of being trite: an analysis of whether Hayek is a hero or villain will likely reveal less insight about the man himself and more about the individual making the assertion.
Hayek has done more than his fair share to give both poles in this argument (hero vs villain) their ammunition. From his formation of the Mt Pelier society to his often times over-zealous incrimination of socialism (and of things that look like socialism), it is not difficult to see how he could be seen as a neoliberal ideologue. At the same time, though, he has also offered incisive and nuanced explanations for why liberalism and its free markets are an extremely good tool for promoting economic efficiency, as well as liberty: millions of decision makers working in unison to determine valuations of products and services is a second-to-none information mechanism in terms of efficiency (i.e. cannot be matched or beaten by a top-down system), and this mechanism simultaneously empowers human beings to make accurate and informed decisions about their lives (i.e. where to work, spend money, etc.) without the need for top-down intervention or coercion. And, perhaps surprisingly to some, Hayek even wrote that he would be in favor of a universal basic income insofar as it enabled individuals in desperate economic conditions to avoid coercion from their employers.[i] How fully Hayek appreciated employers’ power to curtail their employees freedom is, however, debatable.
Missing from Hayek’s reification of liberal market economies, and from his tepid concerns about them, is an appreciation for what both Polanyi and de Tocqueville have noted of them: their tendency to tear apart the social capital upon which they rest. The atomization and individuation of people within markets, their commodification into discrete work units pursuing their self-interest, exerts a corrosive effect on the social ties that make human life meaningful and that, prior to industrialization, largely characterized human existence. It would have been interesting to see Hayek contend with the tendency of markets to attenuate the social fabric upon which they rely, and in this way potentially sow the seeds of their own disintegration.
While I am biased against contemporary neoliberalism, I am not convinced of Hayek’s role as a lynchpin of it, and thus come out as neutral on the hero vs villain question. Hayek was a thought leader who doggedly (and, yes, sometimes dogmatically) believed in the supremacy of the liberal over socialist system. I believe Robert Solow, in a 2012 article published in the New Republic, astutely captures my feelings as he writes that there is both a ‘good’ and a ‘bad’ Hayek. The good Hayek makes nuanced and insightful observations on the shortcomings of socialism and the benefits of liberalism (and, at times, vice-a-versa). The bad Hayek, meanwhile, is prone to rhetorical flourishes that eschew nuance and border upon propaganda. I like the good Hayek.
Yet, even bad Hayek has a strong point to make, one that I would almost be tempted to agree with had his net not been cast so broad. Hayek’s view that socialism, and any ‘unnecessary’ interference in the economic domain, places one upon the steep and slippery slope toward totalitarianism is too facile (as a side note, Hayek’s own writings, as Keynes’ once pointed out in a written response to Hayek, leave very unclear exactly where this line of ‘unnecessary interference’ by the state is to be drawn). But history has certainly shown that Marxist doctrine, particularly as codified by Lenin, does have a profound and seemingly inherent tendency to degrade into totalitarianism (see Russia, Romania, China, Vietnam, Cambodia, Ethiopia, Cuba, etc.). Had Hayek stuck to a critique of Marxism-Leninism, he may have seemed more prescient.
[i] https://www.libertarianism.org/columns/why-did-hayek-support-basic-income
P.S. All direct quotes are taken from Hayek’s book ‘The Road to Serfdom’
