Hayek and the Welfare State, Yet Again

by Henry on May 21, 2012

In lieu, I presume, of a reply to my previous posts disagreeing with him on Hayek and Judt, Tyler Cowen links to this post by Kevin Vallier on Bleeding Heart Libertarians which frames the debate thusly:

Every once in a while folks in the political corner of the blogosphere start talking about Hayek’s argument in The Road to Serfdom. As Matt Yglesias said Monday, lots of people, conservatives and liberals alike, say that Hayek believed that any welfare state inevitably leads to totalitarianism. Then some people who have actually read Hayek reply that he always supported social insurance, safety nets, public goods provision and many forms of regulation. Then confusion ensues.
… Obviously Farrell and Judt’s claims are over the top due to their use of various “of any sort” “unequivocally” “at all” and “Hitler” modifiers … instead of beating up on them, let’s use our collective annoyed-by-someone-on-the-internet energy in a constructive fashion: to see what we can learn about Hayek’s real arguments against socialism and the welfare state. … Caldwell concludes, rightly, that Hayek was right about this. But he points out that Hayek’s criticism of the welfare state is subtler and involves two claims. The first problem with the welfare state is that it is a philosophically slippery target. … when Farrell reads this, he concludes that Hayek basically made the same claims about the welfare state and socialism, namely that both institutions will lead, eventually, to totalitarianism, even if the socialism gets us there sooner than the welfare state. … In my last post, I pointed out that even the later Hayek defended a universal basic income … Thus, Hayek supported what we typically call a welfare state throughout his career. … In my view, then, Hayek’s target is not “the welfare state” as such, that is, not a social insurance or safety net state, but rather a state based on a robust conception of distributive justice applied to its economic components … Hayek’s critique of the welfare state simply falls out of his broader conception of the legal order of a free people. … So let’s distinguish between two kinds of welfare states: the welfare state of law and the welfare state of administration. Hayek’s preferred welfare state is limited by his insistence that the law be regulated by clear, public, general principles rather than administrative bodies.
Hayek opposes the welfare state of administration. … But the second problem with the welfare state of administration is that it contains an internal dynamic that pushes in a socialist direction. … Of course, this is not totalitarianism by any means. For one thing, if citizens affirm even modest economic freedoms (as most members of liberal democracies do), then they will resist this accretion effect before things get too bad. And that’s the pattern we see: even in Scandinavian countries, people resist regulation due to their concerns about efficiency and, yes, concerns about property rights (sometimes more effectively than we supposedly libertarian Americans). …
Hayek overplayed his hand by arguing that the tinkerer’s welfare state will inevitably lead to totalitarianism, but not by much. The most free and economically successful liberal democracies hybridize welfare states of law and welfare states of administration. They’re hybrids largely due to the fact that most citizens of liberal democracies endorse elements of both liberalism and socialism. But if citizens of liberal democracies gave up liberalism entirely and stopped minding regulation so much, then I think the dynamic of the administrator’s welfare state would lead to significant authoritarianism that, while not totalitarian, would be uncomfortably close.

There are a couple of things going on here. First – the question of whether Hayek argued in favor of some kind of basic income scheme. This is, in fact, agreed to by all parties – hence my suggestion in the original post that “Hayek clearly believes that there are non-statist, non-paternalist ways of achieving some (if not all) of the same ends.” But the reason why Hayek sees this as allowable, as Vallier acknowledges in his own defense of Hayek, is that it is not statist – it involves coercion, but does not have the statist logic that Hayek views as pernicious.

Which brings us to the second, and more important point. Vallier can bring up the “Swedish welfare state is not all-overpowering because of citizens’ natural inclination to liberty argument” on his own behalf if he wants to. He cannot use it as a general defense of Hayek, for the simple reason that it flatly contradicts Hayek’s own arguments. To quote the relevant bit from Hayek again, filling in the ellipses so as to make it quite clear that I’m not patching together some kind of Frankenstein’s monster from disparate chunks of his thought:

… Of course, six years of socialist government in England have not produced anything resembling a totalitarian state. But those who argue that this has disproved the thesis of The Road to Serfdom have really missed one of its main points: that the most important change which extensive government control produces is a psychological change, an alteration in the character of the people.
This is necessarily a slow affair, a process which extends not over a few years but perhaps over one or two generations. The important point is that the political ideals of a people and its attitude toward authority are as much the effect as the cause of the political institutions under which it lives.
This means, among other things, that even a strong tradition of political liberty is no safeguard if the danger is precisely that new institutions and policies will gradually undermine and destroy that spirit.
The consequences can of course be averted if that spirit reasserts itself in time and the people not only throw out the party which has been leading them further and further in the dangerous direction but also recognize the nature of the danger and resolutely change their course. There is not yet much ground to believe that the latter has happened in England.
Yet the change undergone by the character of the British people, not merely under its Labour government but in the course of the much longer period during which it has been enjoying the blessings of a paternalistic welfare state, can hardly be mistaken. These changes are not easily demonstrated but are clearly felt if one lives in the country.
In Illustration, I will cite a few significant passages from a sociological survey dealing with the impact of the surfeit of regulation on the mental attitudes of the young. It is concerned with the situation before the Labour government came into power, in fact, about the time this book was first published, and deals mainly with the effects of those war regulations which the Labour government made permanent:

At school, in the place of work, on the journey to and fro, even in the very equipment and provisioning of the home, many of the activities normally possible to human beings are either forbidden or enjoined. Special agencies, called Citizen’s Advice Bureaus, are set up to steer the bewildered through the forest of rules, and to indicate to the persistent the rare clearings where a private person may still make a choice…[The town lad] is conditioned not to lift a finger without referring mentally to the book words first. A time-budget of an ordinary city youth for an ordinary working day would show that he spends great stretches of his waking hours going through the motions that have been predetermined for him by the directives in whose framing he has had no part, whose precise intention he seldom understands, and of whose appropriateness he cannot judge…The inference that what the city lad needs is more discipline and tighter control is too hasty. It would be nearer the mark to say that he is suffering from an overdose of control already…Surveying his parents and his older brothers or sisters he finds them as regulation bound as himself. He sees them so acclimatised to that state that they seldom plan and carry out under their own steam any new social excursion or enterprise. He thus looks forward to no future period at which a sinewy faculty of responsiblility is likely to be of service to himself or others…[The young people] are obliged to stomach so much external and, as it seems to them, meaningless control that they seek escape and recuperation in an absence of discipline as complete as they can make it.

Is it too pessimistic to fear that a generation grown up under these conditions is unlikely to throw off the fetters to which it has grown used? Or does this description not rather fully bear out De Tocqueville’s prediction of the “new kind of servitude”

after having thus successively taken each member of the community in its powerful grasp, and fashioned him at will, the supreme power then extends its arm over the whole community. It covers the surface of society with a network of small complicated rules, minute and uniform, through which the most original minds and the most energetic characters cannot penetrate to rise above the crowd. The will of man is not shattered but softened, bent and guided; men are seldom forced by it to act, but they are constantly restrained from acting. Such a power does not destroy, but it prevents existence; it does not tyrannize, but it compresses, enervates, extinguishes, and stupefies a people, till each nation is reduced to be nothing better than a flock of timid and industrial animals, of which government is the shepherd. I have always thought that servitude of the regular, quiet, and gentle kind which I have just described might be combined more easily than is commonly believed with some of the outward forms of freedom and that it might even establish itself under the wing of the sovereignty of the people.

What De Tocqueville did not consider was how long such a government would remain in the hands of benevolent despots when it would be so much more easy for any group of ruffians to keep itself indefinitely in power by disregarding all the traditional decencies of political life.
Perhaps I should also remind the reader that I have never accused the socialist parties of deliberately aiming at a totalitarian regime or even suspected that the leaders of the old socialist movements might ever show such inclinations. What I have argued in this book, and what the British experience convinces me even more to be true, is that the unforeseen but inevitable consequences of socialist planning create a state of affairs in which, if the policy is to be pursued, totalitarian forces will get the upper hand.

If mild doses of Speenhamland and Beveridge have had such pernicious consequences on the moral constitution of the stalwart yeomen of England, what then would we expect from Sweden, after decades of the more vigorous physic of Meidner and his acolytes? More succinctly – one cannot rescue the argument of someone who specifically and explicitly claims that welfare statism ineluctably creates a sheep-like public, by smuggling the contention that the spark of economic freedom can never be quenched in the hearts of free citizens. Hayek doesn’t “[overplay] his hand … but not by much.” He is flatly empirically wrong. For Hayek, the only way in which the spirit of the people can counteract the enervations of welfarism is by re-asserting itself, throwing out the socialists, and resolutely changing course, before it is all too late. More succinctly still – if we want to talk about people who are annoying on the internets, I personally find it quite annoying to be accused of not reading Hayek, by someone who doesn’t appear especially interested himself in reading the emphatic and unequivocal words that Hayek has himself used to express his views on the topic.

On points of general politesse – it is not contra Vallier, ‘over the top,’ to talk about Hitler with respect to explicit and extended claims that the welfare state will lead to Nazi/Stalinist authoritarianism. Godwin’s law indeed applies here, but at t=0. On this, see further how Bruce Caldwell, whose reading Vallier relies on, and who is hardly unsympathetic to Hayek, relates Hayek’s argument about the welfare state to “jackboots and gulags.” Vallier suggests that I, and Matthew Yglesias, should start from the position of “charity” – the charitable reading here, contra Vallier, is that Hayek’s claims on welfare-statism are separable from, and perhaps contradictory to, his arguments elsewhere. We should distinguish between the things that Hayek got right (e.g. much of his critique of state planning), the things that he got wrong but that still have some worthwhile thoughts (e.g. his arguments about evolution), and the things that he got wrong, but are not worth further investigation except as a species of intellectual pathology (e.g. this). As dsquared said in comments to the original post :

really, the only sensible thing for Hayekians to do with “Road to Serfdom” is to treat it like Marx and “the tendency of the rate of profit to fall”, or Einstein and “god doesn’t play dice”, or Keynes and eugenics or Heidegger and “more or less everything” and just say that it was a clear error but obviously doesn’t invalidate the whole rest of his work.

It’s rather odd that the Hayekians don’t seem willing to acknowledge that the Master might sometimes have been wrong – indeed, it suggests a distinct element of personality-cultism.

(Updated when I realized that I had not, in fact, included all the material in the ellipses)

Update 2: Kevin Vallier replies and is still, I think, quite wrong. First – he says that Hayek did too think that “people can resist the welfare state of administration’s road to serfdom via cultural resistance.” But this is, I think (and like him, I have read the passage multiple times), a misreading of what Hayek is saying here. Hayek doesn’t rely on the “spirit of political liberty” to do the work on its own – he claims that this spirit can prevail if people take action in time by throwing out the socialists and fundamentally changing the course of politics. This is because his argument is very clearly an institutional determinist one – as his minatory picture of the future makes quite explicit, he believes that welfare state and other regulatory institutions will, over time, sap the independence of the population so that they will become easy prey for authoritarians. The ‘spirit’ can start the process of resistance, if it inspires people to take action in time. But it does not serve itself as an enduring bulwark against welfare socialism. Hayek is quite specific. Second: he may, if he likes “continue to insist that [Farrell’s] original claim – that Hayek claimed that Swedish-style welfare states as such lead inevitably to totalitarianism – is wrong.” But however much he insists, he needs to reconcile this claim with e.g. Hayek’s statement that:

At the time I wrote [The Road to Serfdom], socialism meant unambiguously the nationalization of the means of production, and the central economic planning which this made possible and necessary. In this sense Sweden, for instance, is today very much less socialistically organized than Great Britain or Austria, though Sweden is commonly regarded as much more socialistic. This is due to the fact that socialism has come to mean chiefly the extensive redistribution of incomes through taxation and the institutions of the welfare state. In the latter kind of socialism the effects I discuss in this book are brought about more slowly, indirectly, and imperfectly. I believe that the ultimate outcome tends to be very much the same, although the process by which it is brought about is not quite the same as that described in this book.

Slowly. Indirectly. Imperfectly. But “the ultimate outcome tends to be very much the same.” This seems pretty definitive to me. Vallier’s interpretation seems indefensible. Hayek did believe that welfare state socialism was going to end up in the same place as direct economic-planning socialism, and he explicitly stated this belief in his writings. To be clear: you could, if you were a libertarian so inclined, try to rescue something from the wreckage, and tone down his predictions so as to make them instead, identifications of trends, much in the same way as Marxists have tried to rescue some of Marx’s less inspired predictions. Alternatively, you could claim that Hayek was arguing about the very long run, and that we simply haven’t seen the final desuetude of the welfare state yet. But you can’t say that Hayek didn’t believe that welfare states lead inevitably to totalitarianism, because he did demonstrably believe exactly this thing. Perhaps a more “imperfect” form of totalitarianism, but still, “very much the same.”

On three smaller points. Vallier suggests that The Road to Serfdom was “Hayek’s introduction to his most popular and least scholarly work” (with the implication that we should extend some charity to his claims here). This is a disputed point – I’ve had some correspondence from Andrew Farrant and Ed McPhail over the last few days which touched on this in passing, and suggested that this is an ex post rationalization by latter day Hayekians – their take is that The Road to Serfdom was explicitly aimed at the intelligentsia.

Further to this, he argues that when you think a:

really smart and important social philosopher and economist said something pretty dumb about a topic on which he was an expert, you should doubt your own judgment first.

I’m neither a philosopher nor an economist, so perhaps I’m biased – but I’ve read far too many smart and important philosophers and theoretical economists (including philosophers and economists whom I am far more ideologically sympathetic towards than I am to Hayek) make stupid empirical claims to feel at all inclined to grant this kind of latitude. In my experience, both philosophers and theoretical economists often tend to employ factual material rather disrespectfully, treating it merely as a means to illustrate ideas that they already have arrived at through more abstract forms of speculation. Sometimes, this can have intellectually bracing results – it can force you to look at the world in new ways, and hence have enormous value. But very often, it leads to bizarre and baroque intellectual constructions. The appropriate attitude to empiricizing philosophers and theoretical economists is one of cautious skepticism – with a reasonable degree of probability, they have interesting ideas about how the world actually works; with a lower degree of probability they have useful ideas; and with a lower degree still, they have right ideas. It certainly isn’t one of deference, beyond the usual kinds of deference one should demonstrate to other participants in conversation.

Finally, and most trivially – it’s genuinely terrifying to be told that Crooked Timber was being read by an assistant professor when he was an undergraduate. We’ve been at this for a long time, and become a sort of institution I suppose, but it still feels weird to be reminded of it.

{ 117 comments }

1

Bruce Wilder 05.21.12 at 3:40 pm

Hayek insists, “the law be regulated by clear, public, general principles rather than administrative bodies”? Well, that clears it right up. Let’s get busy, and hire some General Principles to run things.

What do you suppose the going, market rate is, on General Principles?

2

AcademicLurker 05.21.12 at 3:50 pm

It’s rather odd that the Hayekians don’t seem willing to acknowledge that the Master might sometimes have been wrong – indeed, it suggests a distinct element of personality-cultism.

It always seemed to me that Hayek appeals primarily to those who are just self-aware enough to realize that reading Atlas Shrugged doesn’t qualify them as geniuses, but not are quite able to get a clue otherwise.

3

Sebastian 05.21.12 at 3:58 pm

“It always seemed to me that Hayek appeals primarily to those who are just self-aware enough to realize that reading Atlas Shrugged doesn’t qualify them as geniuses, but not are quite able to get a clue otherwise.”

I thought that was what appealing to the veil of ignorance while still weighting your examples for the preferred outcome was for…

4

Ben Alpers 05.21.12 at 4:05 pm

You continue to have the better side in this discussion, Henry.

I’d add i/r/t dsquared’s quoted comment that I suspect that Road to Serfdom is more difficult for Hayekians to give up than, say, Einstein’s rejection of quantum mechanics or Marx on falling rates of profit because it’s much more central to Hayek’s public reputation. The book was–and is–Hayek’s calling card among the “educated” general public. Indeed, it played a key role in, if you’ll pardon the expression, creating a market for Austrian School economics among American opinion makers.

5

AcademicLurker 05.21.12 at 4:05 pm

distinct element of personality-cultism.

My copy of The Road to Serfdom is the newer version, and there is a distinct element of trying too hard in the presentation. It has something like 4 introductions and 6 afterword by various people, as if to say “Hey, this book must be super important. After all, no one would write 4 introductions and 6 afterwords for a book that wasn’t super important!”

6

Shane Taylor 05.21.12 at 4:22 pm

Geoffrey Hodgson is worth reading on Hayek’s conception of economic evolution, and you can find his critique here.

7

piglet 05.21.12 at 4:27 pm

Here’s another right-winger expending considerable effort defending Hayek, and explicitly pointing to Hayek’s support for social insurance. Why then is it that so few of Hayek’s supporters – make that not a single one as far as I can tell – support social insurance, especially universal health insurance? Are modern-day Hayekians even more radical than their master ever was, or was Hayek’s support for some kind – “the right kind” – of welfarism never meant to be serious? I’m sure somebody can help us clarify that…

8

piglet 05.21.12 at 4:39 pm

Btw Bruce already won the thread.

9

Josh McCabe 05.21.12 at 5:22 pm

Isn’t that Hayek quote about wartime regulations (i.e. planning) and not about welfare? I don’t see how it vindicates your viewpoint.

10

Dan 05.21.12 at 5:22 pm

one cannot rescue the argument of someone who specifically and explicitly claims that welfare statism ineluctably creates a sheep-like public, by smuggling the contention that the spark of economic freedom can never be quenched in the hearts of free citizens

I think this is the crux, and the problem is that it’s utterly unclear that Hayek even says this, let alone specifically and explicitly says it. Perhaps he does, but as I read them, it doesn’t follow from the passages you quote.

Even the alleged smoking gun, the last quoted paragraph, diagnoses the pressure towards totalitarianism as stemming from socialist planning. Not the welfare state, or income tax, or beveridgean social policies — socialist planning. Indeed if you look at the list of complaints that Hayek cites, they virtually all concern state control: “the forest of rules” or “the motions that have been predetermined… by the directives in whose framing he has had no part” or “external and… meaningless control”. Again, the emphasis is wholly on the direction of activities by the state, and not on redistributive policies per se. I just don’t see that there’s a critique of, say, Sweden there.

11

Dan 05.21.12 at 5:25 pm

Basically, what Josh McCabe said.

12

Shelley 05.21.12 at 5:29 pm

Last week there was a two-day free dental clinic here. People lined up and slept on wet streets for days ahead of time in hopes of getting a “maybe ticket” to get in. Many of them who were there wanted to have infected teeth removed. I saw one man interviewed who had just had all of his teeth removed. He had no money for dentures, but was delighted, because the infected teeth had been ruining his stomach.

I’m just saying.

13

William Timberman 05.21.12 at 5:31 pm

Bruce is even righter here than he usually is. Libertarians who go on endlessly about the evils of collectivism and the virtues of voluntary association have nothing at all to say about what you do, or who you appeal to, when a Hell’s Angels chapter — or nameless other barbarian tribe — moves into the house down the street.

Civilization realized has all sorts of deplorable rigidities, even in the theoretical case of a perfect democracy, but referring every disappointment to an ad-hoc committee of Libertarians hardly seems a remedy. When there’s an actual social problem to be solved, the last thing any civilization needs is a gaggle of narcissists armed only with a copy of The Road to Serfdom and a bullhorn.

Politics is a messy business, but not a contemptible one, no matter what glibertarians have to say about it. As I see it, the fact that they’re far too fastidious to get down and dirty with the rest of us is a genuine blessing.

14

nick s 05.21.12 at 5:38 pm

The self-similarity of libertarianism is remarkable to behold: from the quibbling truck grow quibbling branches.

15

Henry 05.21.12 at 5:53 pm

Josh McCabe, when the quote about wartime planning is immediately preceded by a crack about:

bq. Yet the change undergone by the character of the British people, not merely under its Labour government but in the course of the much longer period during which it has been enjoying the blessings of a paternalistic welfare state, can hardly be mistaken. These changes are not easily demonstrated but are clearly felt if one lives in the country.

actually no, it’s not just about “wartime planning.” Hayek is explicitly citing the wartime planning experience as one snapshot from a longer moral collapse, caused not only by Labour socialism, but by the “blessings of a paternalist welfare state” over a long period of time. This is quite clear from the text, I would think.

16

AcademicLurker 05.21.12 at 5:55 pm

These changes are not easily demonstrated but are clearly felt if one lives in the country.

The rigor for which libertarian argument is justly famous.

17

js. 05.21.12 at 6:10 pm

A time-budget of an ordinary city youth for an ordinary working day would show that he spends great stretches of his waking hours going through the motions that have been predetermined for him by the directives in whose framing he has had no part, whose precise intention he seldom understands, and of whose appropriateness he cannot judge…

So, Hayek was totally opposed to the modern corporation and managerial control, right?

(I realize that the quote is from a “sociological survey”, but it’s not as if Hayek is disagreeing.)

18

Josh McCabe 05.21.12 at 6:50 pm

Henry: I’m still not convinced that this is evidence that Hayek argued welfare states lead to totalitarianism. Everything in that quote points to planning and regulation while you pick out the one line where he uses the term “welfare state.” He doesn’t just say “welfare state” though but rather, “paternalistic welfare state” which implies some substantive degree of social engineering, does it not? I think the distinction is an important one. Whereas programs like AFDC/workfare are highly paternalistic because they seek to change the behavior of the beneficiaries, UBI or UI are not paternalistic because they make no such attempts to regulate behavior. It’s all about who gets to decide what is good for you – bureaucrats or yourself. Hayek was concerned about exactly who did the planning in society. Paternalism implies authority ceded to the government to make those choices. Hayek might worry about Speenhamland but not about Beveridge. That is the slippery slope to which he was refering here and this is the point Kevin was trying to make over at BHL. Thoughts?

19

Henry 05.21.12 at 7:13 pm

Josh – the question here, at least as I understand it, is not whether Hayek was OK or not OK with spending money on poor people, under some circumstances. It is whether Hayek believed (a) that modern actually-existing welfare states were an example of the kind of paternalism that he thought would lead to authoritarianism (unless it were completely stopped in its tracks), and (b) that hence we should have expected actually-existing welfare states to devolve into one or the other form of totalitarianism by now. As I read Hayek, he is indeed arguing (a) in a manner that entails (b) – that Sweden (and other such states) have not become authoritarian, and show no signs of having so done, provide a decisive empirical refutation of Hayek’s arguments (unless Hayek was arguing only over the _very very_ long run). Nor can they be rescued by Vallier’s suggestion that things will be OK as long as “citizens affirm even modest economic freedoms,” given that Hayek himself specifically disavows this line of argument (“a strong tradition of political liberty is no safeguard “). Finally, my understanding, perhaps incorrect, is that _The Road to Serfdom_ was intended in part precisely as an attack on the Beveridge plan (that Hayek and Beveridge were at least somewhat friendly was surely a complicating factor). Certainly, the Beveridge proposals and the post-WWII British welfare state embodied the various aspects of interference and open-endedness that Hayek argued were pernicious.

20

js. 05.21.12 at 7:22 pm

Bruce Wilder at 1 is entirely right, but it’s even worse. Because this:

the law be regulated by clear, public, general principles

is essentially saying: The law should be regulated by law. And that is well-nigh nonsense.

21

Henry 05.21.12 at 7:29 pm

See further Bruce Caldwell (who is obviously a friendly source for Hayekians.

bq. The Beveridge Report was an immediate success. The British economy had been stagnant throughout the interwar period, and no one wanted a return to such deprivation. The common sacrifices that the war necessitated bred a feeling that all should similarly share more equally in the reconstruction to come. Universal medical provision was itself virtually a fact of life during the first few years of the war, certainly for anyone injured by aerial bombing or whose work was tied to the war effort—and whose work was not, in one way or another? The war, then, was transforming the climate, and Beveridge’s hope—and he was not alone—was to build on this transformation in the future. Indeed, the first of the “Three Guiding Principles of Recommendations” with which he began his report made the link explicit: “Now, when the war is abolishing landmarks of every kind, is the opportunity for using experience in a clear field. A revolutionary moment in the world’s history is a time for revolutions, not for patching.”

bq. Having come to his majority in interwar Vienna, Hayek doubtless experienced an intense and disquieting sense of déjà vu on reading such words. In his book he sought to reverse the trends that were everywhere evident in Britain. Making the economic case against socialist planning was not enough. He needed to remind the British of their liberal democratic heritage, to contrast it with the collectivist or corporativist authoritarian modes of social organization promoted by its enemies, and finally, to make clear (notwithstanding the rhetoric of “planning for freedom”) that the actual implementation of a centrally planned society would be inimical to liberty.

From the ‘doubtless,’ I am assuming that Caldwell does not have smoking gun textual evidence here (perhaps this can be attributed to the fact that Beveridge hired Hayek at LSE), but nonetheless thinks that Beveridge was a key factor prompting Hayek to write the book.

22

GiT 05.21.12 at 7:47 pm

“is essentially saying: The law should be regulated by law. And that is well-nigh nonsense.”

I’ve no interest (or ability) to defend Hayek, but he did write some books on this distinction, so nonsense might be a bit strong…

http://en.wikipedia.org/wiki/Law,_Legislation_and_Liberty

23

js. 05.21.12 at 9:22 pm

GiT:

Fair enough. Though if “law” in “the welfare state of law” is supposed to mean natural law, then I’m not sure that makes a whole lot more sense. Actually in any sense of “natural law” that I am familiar with, “Natural law should be regulated by human law” is at best a bizarre view (generally the “regulation” is supposed to go the other way, if anything). But maybe Hayek also had an idiosyncratic notion of natural law.

24

BillCinSD 05.22.12 at 12:09 am

“provide a decisive empirical refutation of Hayek’s arguments”

Did I fall through a wormhole and land in a universe where Austrian economists cared about empricism?

25

Andrew F. 05.22.12 at 12:28 am

Apologies if someone else has already quoted it, but here is Hayek at the close of his preface to the 1976 edition of The Road to Serfdom:

At the time I wrote [The Road to Serfdom], socialism meant unambiguously the nationalization of the means of production, and the central economic planning which this made possible and necessary. In this sense Sweden, for instance, is today very much less socialistically organized than Great Britain or Austria, though Sweden is commonly regarded as much more socialistic. This is due to the fact that socialism has come to mean chiefly the extensive redistribution of incomes through taxation and the institutions of the welfare state. In the latter kind of socialism the effects I discuss in this book are brought about more slowly, indirectly, and imperfectly. I believe that the ultimate outcome tends to be very much the same, although the process by which it is brought about is not quite the same as that described in this book.

I have the barest familiarity with Hayek, and I’ve learned much from reading the various posts and threads on the subject. It seems to me that Hayek never described his thesis with sufficient precision to render it amenable to empirical testing. Does Sweden today constitute a problem for Hayek? Perhaps, but “empirical refutation” seems a bit strong. What did he mean precisely by “more slowly” or “the process…is not quite the same”? Much rests on this. What does Hayek mean when he writes that citizens must “resolutely change course” in order to thwart progress on the road to servitude? Who knows. Obviously we can guess that he means an opposition to a thorough state control of the means of production (in a socialist condition) and to a thorough state control of the distribution of income (in the type of welfare-state he seemed to view as the evolutionary replacement for socialism). But how far must that opposition go to be a resolute change in course? Who knows. Did Hayek ever claim to know?

Perhaps there is so much heat in this dispute because Hayek’s own views on the subject are inconclusive.

26

shah8 05.22.12 at 12:51 am

Well, *Andrew F.*…

Hayek never really intended to have rigor, because he never really approached his thesis with any intellectual honesty. In a previous thread, I compared Hayek and his follows to Lysenko, as opposed to people who honestly believed in an invalid (or as it turns out, invalidly broad, but correct in extremely narrow senses) Lamarkian theory.

You can see the same reaction to Scalzi’s “White Men are the lowest difficulty setting”. There was a great deal of temporizing, passive aggressive, and bad faith argumentation by people who are reasonably aware of their privilege and like it that way. You can’t ever win this argument with them, because the focus of the argumentation is about preserving the norm. They’re not arguing with you, specifically, they’re trying to preserve the sense that what you are attempting to raise consciousness about is controversial for some strange, unsavory reason, and that all the onlookers should move along now. And they’ve brought megaphones, and people marinated in Fox News agprop. That’s just going to be the way it is, for anyone offering constructive ideas that takes assets away from unproductive members of society. There will be plenty of supporters for jailing as many members of that group you don’t like–the public funds the jail and gives the jailers fat contracts. There will be wailing and gnashing of teeth whenever any suggests that, oh, there should be max administration consumption on anything…health insurance payouts, nonprofit organizations, etc, etc, etc.

Responding to Hayek people is not a productive endeavor, in this sense. They will always have more ammunition than you, and they’ll always be able to slime you, and it will always be harder to maintain the savoryness of your position vis á vis theirs. Just call them profiteering, but deluded psuedoScientologists and move on. Always important to pick favorable ground, like Obama with the Catholic Compromise, and pour fire on even the numberless hordes of wingbats from the high fort.

I think this method works well, especially when one senses how juvenile Ayn Rand is perceived today compared to what it was like in the 80’s and 90’s. They’ll come up with something new, but so much less energy is expended on trying to stomp yet another groundchuck.

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Henry 05.22.12 at 12:58 am

shah8 – the difference is though that there is definitely something worth rescuing from Hayek. The two key articles on the market and information are both beautiful and profound. This doesn’t mean that they are _right_ (as Stiglitz and others have pointed out) – but they are enormously intellectually valuable, open up interesting ways of thinking about the world &c&c.

28

piglet 05.22.12 at 1:40 am

Dan:

“Not the welfare state, or income tax, or beveridgean social policies—socialist planning. Indeed if you look at the list of complaints that Hayek cites, they virtually all concern state control: “the forest of rules” or “the motions that have been predetermined… by the directives in whose framing he has had no part” or “external and… meaningless control”. Again, the emphasis is wholly on the direction of activities by the state, and not on redistributive policies per se.”

“Socialist planning”? Public schools. City planning. The TSA. The tax code. Any kind of regulation of anything. And yes, as js. 17 points out, any kind of corporate management. Each of us not owning their own island is to some extent subject to rules “in whose framing he has had no part”. If by your definition every kind of bureaucratic control falls under the rubric of “socialist planning”, then you are proving either too little or too much.

And also, just to remind everybody, right-wingers don’t seem to think that government meddling in women’s reproductive choices or gay people’s spousal preferences are at all related to “road to serfdom” state control. Curiously, it’s only things like health insurance mandates that turn us into serfs (and that although Hayek also really totally approved of social insurance, which is another mystery which solution I am still waiting for).

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Lee A. Arnold 05.22.12 at 2:15 am

Look at where Hayek went with his arguments though. He went into the “taxis vs. cosmos” thing, which is the difference between a legislated, “made” order of things, and a naturally “emergent” order of things. Naturally emergent is better. –The problem is, it is imaginary. I used a different illustration in the other comments thread, but this “taxis-cosmos” distinction is another example of protosystems imaginary thinking, very common to the early theorists. It is like a structural approach, indeed the “taxis vs. cosmos” distinction, as such, is an example of the “constructivist rationalism” which Hayek decried in the genesis of institutions. But whether it should be a normative prescription for how-to-run the system should have been another question entirely — and that mistake is symptomatic of the systems theorists, well into the late 1970’s, with very few exceptions. Perhaps the wildlife ecologists understood this first. Anyway the problem for economic policymaking, the problem for the purposes of investigating socio-economic relations, is that almost everything that appears to be socio-politically “emergent”, thus suggesting some natural law of the Way Things Are, was REALLY at one time or another legislated: it was given forth by someone who was trying to solve a problem. Hayek is trying to say, in other words, “We sort of fell into this market system thing, and we shouldn’t try to knock it too hard” — which I happen to agree with, every other day — but his systems-theoretical reasoning is misplaced. This sort of thinking is a local grammar of how to think about systems, it is NOT prescriptive.

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ezra abrams 05.22.12 at 2:32 am

william @13
actually, they do have an answer about what to do when a chapter (HA)moves in next door: if you are a goodperson, you would have worked hard and moved into a gated private community (this is sop in Texas)
the people on the outside of the gate are clearly the grasshoppers who didn’t save/work

31

geo 05.22.12 at 2:55 am

Henry @27: The two key articles on the market and information are both beautiful and profound.

Which ones are those? (Sorry if you’re already cited them.)

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shah8 05.22.12 at 3:20 am

/me makes a bit of a face…

Well, yeah, sorta…

However, *Henry*, just how often is it that we see insightful creativity in service to base political goals? I think we see much of this, and it permeates the our world of culture. In other words, I think you’re setting the bar too low. I’m sure you could stand at some museum, with a visiting exhibit that includes Napoleon at the Saint-Bernard Pass by Jacques-Louis David. It can inspire thoughts about history and heroism and what the end of idealism meant. You could also read the writings of the Marquis de Sade and get quite a bit out of them as well. Both of these examples were written in the full spirit of human capacity, with all of what that means.

Hayek’s practical importance as a theoretical economist pales in comparison with the ferment of his period. The debates that he lost, were backed by other theoretical economist/management theorists, not just Keynes or other famous people, but a bunch of people who are all but nameless now and probably only known to insiders before. It should not be understated just how revolutionary the changes were about information and decision theory were around the time Hayek lived. Shannon was only the tip. Furthermore, it should not be understated about the lack of uniqueness that surrounds Hayek. Earlier today, I was reading about Robert Michels. Do you think Hayek has any sort of real merit more than Michels? Hirschman?

*Henry*, the bullshit is pretty, because it must be gilded so as to avoid being composted, somewhere safely far away.

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Henry 05.22.12 at 3:41 am

George – this and this are the ones at stake. Charles Lindblom is very good on the virtues of Hayek’s account of markets.

Lee – I think there is something to be said for the ‘struggling with emergence and not quite ever getting there’ argument.

Shah8 – Michels’ best work is profound (one of my small blows for the betterment of humankind was introducing Chris Hayes to his work – Chris’s forthcoming book uses Michels’ theories) – but in his own way, substantially creepier than Hayek. If Hayek was at best pretty dubious on Pinochet, Michels was rather worse than dubious on 1930’s fascism. Schumpeter, similarly, was an evil old fuck, but even so, is someone who really deserves careful and appreciative reading. I genuinely stand by what I say on Hayek. For all the horrors of the Road to Serfdom, people really, really ought to read the economics as knowledge stuff. _Especially_ if they want to contribute to the forthcoming _Red Plenty_ discussion …

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Lee A. Arnold 05.22.12 at 4:16 am

Henry — I think that the question is of the provenance of things which are presumed to be emergent. Much of the “emergent order” was probably actually legislated, i.e. instigated by certain individuals on certain days. They were ancient apelike patriarchs perhaps, their names or grunts now lost in the mists of prehistory, and their errors weeded-out by countless trials since then. And yes it has all been layered-over by a rich brew of additional connections.

But the list of things that might be now upset, upset to our detriment, because you (let’s say) now elect to institute a new change, is not given by this account. There is no easy way to argue from the current status of “the system”, to any certainty that the use of the mind in this or that policy is now to be discounted. This cannot make an argument against solving new problems by constructive rationalism, since constructive rationalism is where it all came from.

I think that the best you could say along Hayek’s avenue, is that the whole system has now become so complicated that if you upset it, you do so at your own peril.

I think it is worse, that it has become so complicated that every individual is in substantial ignorance of it. This latter condition could go contra Hayek’s ministrations, because with widespread ignorance, the market system could not adjudicate desire and scarcity. Regarding, say, climate change, every consumer could be ignorant, or misinformed, or (at best) in acceptance of a rather nonpredictive statistical risk situation.

The useful feature of institutions isn’t what has emerged or what has been imposed. It is what has been agreed to. You don’t need taxis and cosmos. Agreement is the central precondition of all. What “emerged” was, is, really what was AGREED-TO. The most important thing, even now, is widespread agreement. What is in widespread agreement may be currently a myth or a falsehood, but that doesn’t invalidate the need for agreement, the substance of the agreement just has to be corrected. The real solution to the problem of What Should Be Done, is first to gain agreement from everyone, peacefully.

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William Timberman 05.22.12 at 4:23 am

ezra abrams 05.22.12 at 2:32 am

Now and then, when I’m full up with earnest thinking about what’s festering in the wreckage of our half-hearted social democracy, and what, if anything, can be done to set it right again, certain fantasies intrude.

A recurring one has to do with your goodpersons in their fortress subdivisions, and the underpaid security guards manning the drawbridges. Suppose, here and there, these guards turn out to have a brother-in-law in the aforementioned Hell’s Angels chapter, who thinks to supplement his income by selling the chapter’s imported dope to the goodpersons’ teenaged children, or lets his brother-in-law know when a certain villa will be unoccupied, and looks the other way when said brother-in-law and other members of the local brotherhood pull up in a plumber’s van and clean out the place.

Inequality, and bloody-mindeness about it, tends to breed mistrust, and mistrust has a way of spreading beyond the capacity of even very sophisticated security arrangements to contain it. The underclass has talents of its own, and no reason to confine them to the paths laid out for them by the lords of consumption. The Mexican and Italian oligarchies have lived with similar levels of uncertainty about their own invulnerability for years, so maybe it is possible, at least in the medium term for them to maintain their illusions. Even for the privileged, though, living in an unjust society is never going to be the cakewalk that our libertarian prigs seem so certain it will be.

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Jim Rose 05.22.12 at 6:12 am

henry,
If you marked people down as not to be read because they apologised for fascism or Stalinism in the 1930s, there would have to be one hell of a book burning.

see http://markhumphrys.com/left.tyranny.html

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Barkley Rosser 05.22.12 at 6:39 am

Hayek lived a long life, and it is clear that his views on the welfare state changed at least somewhat over time. He clearly supported elements of it in RtS, but came to be more critical later, particularly of parts that he saw as arbitrary or directed at redistribution per se, such as progressive income taxation.

On national health insurance he supported it in the 1940s RtS. He was critical later of UK socialized medicine that his son worked for. He did not note that one can have national health insurance without having such a full-bore socialized medicine system. Indeed, that is what nearly all OECD countries have: universal national health insurance, but not socialized medicine of the UK sort. Of course, the only OECD country that does not have universal national health insurance is the US, even after Obamacare.

It should also be noted that his partial support for elements of a welfare state lie at the base of why many Misesians, Rothbardians, and anarcho-capitalists consider Hayek to be a “socialist.”

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Tim Worstall 05.22.12 at 7:08 am

“Why then is it that so few of Hayek’s supporters – make that not a single one as far as I can tell – support social insurance, especially universal health insurance?”

We’re not all that rare Piglet. Social insurance, including as Barkley Rosser points out, universal health insurance, is just great.

It’s the specific type and form of each which needs to be discussed. I would prefer a citizens’ basic income to what the UK currently has for example. Or the French, German, Dutch etc largely market provided but universal insurance paid for health care systems rather than the UK’s near government care provision monopoly.

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Zamfir 05.22.12 at 7:49 am

@Tim, despite appearances, Dutch health care insurance is hardly provided by ‘ the market’, unless you consider any non-governmental entity ‘ the market’.

The content of the main insurance package is entire defined by the government (and is changed at will). Insurers can’t refuse clients. Most of the price is also set by the government as a fraction of your income, automatically withheld by the Tax Service, and divided over the insurers based on their number of clients. There’s also an amount you pay directly to the insurer, and theoretically insurers could use this amount to compete on price. But since they cannot influence the contents of the package nor their mix of clients, they all charge nearly the same amount. Most people don’t bother to shop around for the small differences in price, and insurers mostly compete on the contents and price of the extra packages (which cover far less essential things). On top of that, most insurers are non-profits.

You could call this a ‘market’. But the important part of it, the essential health care package, hardly behaves like one. In practice, it behaves more as if the government has outsourced the admininstration of the government health insurance package to third parties.

Most health providers are non-profits, by law. They are literally not allowed to pay out dividends. They are expected to cooperate and coordinate which each other to provide geographical coverage, and local and central government will intervene if this doesn’t go smoothly. Some specific sectors are allowed to be run commercially on a competitive basis, but few people are jumping to expand that a lot.

Long story, but the result is that the Dutch health care system is horrible by hayekian standards. All the freedom and information-efficiency that the market is supposed to deliver has been quenched out of it, very much on purpose, and mostly with major popular support. Liberal parties try to make room for more commercial activity , but privatizing health care is a political minefield. People start whispering about “American practices”, “two-tier health care”, “anti-social behaviour”, “lack of solidarity”.

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Jim Rose 05.22.12 at 8:10 am

under James buchanan’s generality norm, governments that impose uniform regulation and use flat taxes on uniform tax bases to fund an equal-per-head demo-grant (or guaranteed minimum income) to replace all existing government cash transfers and would be a very large government as a share of GDP.

James Buchanan has said that all successful welfare states (such as Sweden) apply a generality norm in some form or another.

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Del Cotter 05.22.12 at 9:11 am

When I think of a paternalistic welfare state, I don’t think of the left, I think of the right. It is the right that plants so many mean rules around just giving money to all the people.

A British example is the current removal of universal child benefit from people making “too much money”, supposedly in the name of being fair to the poor people. This welfare is already too conditional for my taste (here’s some money, but not if you’re childless), but the Conservative/Liberal coalition thinks it doesn’t have enough hoops to jump through.

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Roger Gathman 05.22.12 at 9:39 am

I think in the end Hayek simply missed the drivers of authoritarianism in the post-War period, which was the security state – war – not the guarantor state. The Austria that Hayek grew up in had already adopted many of the provisions of the welfare state – for instance, free public schools, industrial accident insurance (workman’s comp), etc. Universal health insurance on the British model was a triumph of freedom – there is nothing that makes you freer than not having to worry about not being able to afford bad health. In that sense, the welfare state is the road to Surfdom – more people than ever before can afford surfing! which is exactly what came about in the thirty glorious years when the social democatic societies were a-building. But there was an authoritarian mindset that was changing the character of the people in Hayek’s time, one that accepted the terror bombing of cities, the building of the atom bomb, the establishment of huge, destablising intelligence agencies, etc. If Hayek in 1946 were living in the United States, he could have felt it – it was called McCarthyism. But it was more than McCarthyism. It was, for instance, the destruction of constitutional provisions, in the U.S., to keep the executive branch from arbitrarily leading the country into war. It was the turn about in Japan, as former war criminal there became U.S. allies in setting up a one party state – which it remained for fifty years, with Japanese officials, as we now know, on the U.S. dole. In Britain it was the passage of increasingly dire state security acts. All of which occured as traditional opposition to such structures (promoting external aggression and internal repression) were muted. Certain of Hayek’s American allies saw at least part of this. There is the fairly comic story, told in The Road From Mount Pelerin, of Hayek’s coming to the University of Chicago just as the great anti-trust debate was going on. Back then, there were U. of Chicago economists who actually took the term “competition” seriously, and thus produced many a pamphlet radically opposed to monopoly and the big corporation. These people were quietly shut up, as the Chicago school made an about face and is discovered the how to love monopoly. This had formerly been a socialist position – after all, it made it much simpler for the state to take over an industrial sector that had been vacated of all businesses by one or two giants. But the Chicago-ites soon developed a new love for the monopoly corporation themselves. This was very much in tune with the newfound love for the security state – they came out of the same mindset, in which freedom became identified with an armed “free world” in which the military wing was freed from democratic scrutiny or control.
Thus, Hayek is not only wrong about the social welfare state, but he was wrong, again, about the drivers of authoritarianism. A mistake that has now become the program of the glibertarians.

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High Plains Lawyer 05.22.12 at 10:30 am

Whenever I see a slippery slope argument, I think of that commercial that reasons “When your cable is on the fritz…you get a grandson with a dog collar.”

Ultimately, slippery slope arguments become silly arguments. They always assume that intelligent people cannot put on the brakes, or that somehow regulating fraud turns a society into a police state. In the case of right wing economics, it assumes people are rational actors in the economic sphere but not the political.

Also, most rules are transactional, that is governing the relationship between two people, rather than the state compelling obedience. The government, for example, tells creditors that it cannot break kneecaps to collect debts. While policies like this do limit one’s freedom the engage in violence, rules like this are necessary for the maintenance of public order. Similarly, while a prohibition on snuff films may limit a filmmaker’s “freedom of expression,” civilized societies embrace such limitations as necessary to avoid a descent into barbarism.

Taken down the other slippery slope, it could be said that libertarianism leads to a return to Hobbes’ state of nature, where life is nasty, brutish and short.

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gordon 05.22.12 at 11:04 am

Oh, come on. He was just another middle-class white boy who was scared shitless by the Bolshevik Revolution. Moving on…

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Jim Rose 05.22.12 at 11:29 am

McCarthyism dates from 1950, not 1946. Hayek arrived in the USA in 1950.

Hayek was not and never was a member of the Chicago school of economics. He was not offered a job in the economics department.

Hayek was a member of the Austrian school of economics.
– To be influential, you must have followers.
– All the Austrian school economists in the world could still meet in one room.

Hayek was largely forgotten by the public and his profession by 1974. Hayek faded again by his death in 1992 so his obituaries are hard to find through google. Hayek is described in the NYT as an intellectual forebear and an early free-market economist.

Milton Friedman declared himself “an enormous admirer of Hayek, but not for his economics”.

Aaron Director started work in the law school in 1946. He published little and relied on a strong oral tradition at the law school at the University of Chicago

The Chicago school of antitrust had to wait until Director’s students flourished and the journal of law and economic starting in 1958. Bork and Posner hit their straps with their famous books in the late 1970s. Demsetz’s writing date mostly from the 1970s.

Coase did not publish the problem of social cost until 1961.

46

ajay 05.22.12 at 11:45 am

McCarthyism dates from 1950, not 1946. Hayek arrived in the USA in 1950.

This turns out not to be true. HUAC was established in 1938 and became a permanent committee in 1945. The Hollywood Ten trial was in 1947. Chambers and Hiss appeared before the committee in 1948. While it’s true that McCarthy only became a public figure in 1950 – the year that the term “McCarthyism” was invented – Red Scare paranoia, McCarthyism avant la lettre, was definitely a feature of the US between 1946 and 1950, and it’s dishonest of you to try to nitpick in order to suggest otherwise.

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Tim Worstall 05.22.12 at 11:45 am

Zamfir: apologies if I did not make myself clear. I’ve no problem with health insurance being provided through the government, via taxation, whatever. It’s the provision of health care itself that I would like to be market based, not the financing method.

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chris 05.22.12 at 11:53 am

At the time I wrote [The Road to Serfdom], socialism meant unambiguously the nationalization of the means of production, and the central economic planning which this made possible and necessary. In this sense Sweden, for instance, is today very much less socialistically organized than Great Britain or Austria, though Sweden is commonly regarded as much more socialistic. This is due to the fact that socialism has come to mean chiefly the extensive redistribution of incomes through taxation and the institutions of the welfare state. In the latter kind of socialism the effects I discuss in this book are brought about more slowly, indirectly, and imperfectly. I believe that the ultimate outcome tends to be very much the same, although the process by which it is brought about is not quite the same as that described in this book.

Not to put too fine a point on it, this reads very much like someone well aware that he has been refuted by the march of events, and frantically trying to weasel out of it. “Of course I didn’t really mean what I explicitly said, I meant something much vaguer and harder to falsify!”

…How can anyone take him seriously after that? Hayek, like a stopped clock, can be right twice a day, but that doesn’t make him a reliable source.

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Ben Alpers 05.22.12 at 12:31 pm

AEI’s Arthur C. Brooks (author if The Road to Freedom) was just on NPR suggesting that having “the government pay for healthcare” was a step on the “road to serfdom.”

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Jim Rose 05.22.12 at 12:39 pm

McCarthyism has a specific meaning: making accusations of disloyalty, subversion, or treason without proper regard for evidence see http://en.wikipedia.org/wiki/McCarthyism

Between 1946 and 1950, there were plenty of communist traitors in government as the Venona tapes showed until it was betrayed by a Russian spy in 1945.

The VENONA transcripts identify 349 Americans who had a covert relationship with Soviet intelligence, though fewer than half were matched to real-name identities.

McCarthy was a a wild-eyed demagogue got his number of 205 spies out of a whisky bottle, but died never knowing that the Soviet spy rings were far greater than he dreamed. Google List of Americans in the Venona papers

The communist party was financed and directed by a hostile foreign power. The party recruited spies and planned renewed subversion in the event of war. The communist parties were subversive to the war effort when Hitler and Stalin were allies

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Jim Rose 05.22.12 at 12:43 pm

Chris, see F. A. Hayek’s Influence on Nobel Prize Winners by David Skarbek, Review of Austrian Economics, Vol. 22, No. 1, 2009

Abstract:
Hayek’s broad research program has led some to conclude that his impact on economics has been minimal. This citation study examines the frequency of Nobel laureates cited by other laureates in the official Prize Lectures to understand how elite economists influence other elite economists.

It finds that Hayek is the second most frequently mentioned laureate in the Prize Lectures, and he has the second most publication citations of the laureates. Hayek’s influence on the top-tier of economists is substantial.

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bexley 05.22.12 at 12:49 pm

Hayek insists, “the law be regulated by clear, public, general principles rather than administrative bodies”? Well, that clears it right up. Let’s get busy, and hire some General Principles to run things.

What do you suppose the going, market rate is, on General Principles?

I think you are missing the point here Bruce. Hayek was actually calling for a military dictatorship run by his friend General Principles. His works don’t make sense until you read them in this light.

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Alex 05.22.12 at 1:10 pm

I think of that commercial that reasons “When your cable is on the fritz…you get a grandson with a dog collar.”

What on earth does this mean?

Regarding McCarthy, it is indeed the case that there were actual Soviet agents running about the United States in the 40s and 50s, and VENONA identified some of them, but they weren’t the people McCarthy bullied and terrorised. If I was to call Jim Rose a rapist, nobody would accept my explanation that there are plenty of them out there and therefore I must be right.

A lot of rightwing people imagine that VENONA somehow vindicated McCarthy, but this is idiotic. They had to do fundamentally new cryptography and hoover up enormous quantities of collateral documentation and research in order to break the VENONA cypher – not just bully people because of their opinions. In fact, whole point of VENONA was that you couldn’t tell who was a Soviet agent just by barking at them – you needed actual real evidence and stuff. It wasn’t a problem amenable to aggressive real estate sharks yelling a lot. Professionalism was required.

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bianca steele 05.22.12 at 1:32 pm

@Ezra Abrams, William Timberman, re. motorcycle gangs moving in down the street

Actually, I’m told that there are places where motorcycle gangs perform the function of local enforcers and are welcomed by the good people of the neighborhood, and it’s difficult to see what objection libertarians could have to them. “Paid law enforcement: great! Drug dealing: who cares! They look funny: who cares! Obscure membership guidelines: who cares! They preserve the kind of unity we like here.”

Maybe there are two different kinds of libertarians, the kind who really object to people with tattoos and the kind who don’t.

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Jason Brennan 05.22.12 at 1:44 pm

Vallier responds here:
http://bleedingheartlibertarians.com/2012/05/hayek-was-not-dumb/

Seems to me he’s winning this debate with you.

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bianca steele 05.22.12 at 1:49 pm

@Lee A. Arnold: This sort of thinking is a local grammar of how to think about systems, it is NOT prescriptive.

This matches what I’ve seen of systems theory writing (in English). To me, however, given the way I’ve seen people using the ideas (or misusing them), it looks like the very beginnings of a fully formal science that hasn’t progressed much (because progress would mean moving into areas that are less easy to formalize, or else enumerating lots of things in an informal-appearing way), which because it hasn’t changed in so long begins to look like a complete science anyway. It absolutely is not my experience that true believers in formal systems would be happy to stop at “not prescriptive,” though a pragmatist probably would.

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William Timberman 05.22.12 at 1:52 pm

Bianca, I didn’t mean to pick on Hell’s Angels in particular. I meant them to represent subcultures which have their own rules, their own customs, and enjoy using either the threat of force, or actual force, to extract things they’re not entitled to from other people who depend on good will and a very distant and disinterested police force to keep order. Worms in the apple of of a rickety civilization, if you like. That isn’t the whole story about them, certainly, but it’s not an entirely crazy interpretation either.

If I remember correctly, in 1970, after a famous reconciliation effort a couple of years earlier by Allen Ginsberg, who had more love in him than common sense, a local Hell’s Angel chapter was hired to provide security for a Rolling Stones concert in Altamont, CA. They took exception to something a kid said to them, and wound up beating him to death with a sawn-off pool cue.

I can’t imagine what people who call them good local enforcers are on about, but I don’t think I’d want them enforcing anything for me.

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Roger Gathman 05.22.12 at 1:53 pm

Huh, the communist party was part of a hostile power? And here I was, thinking that the U.S. and the U.S.S.R. were allies in WWII!
No, Alger Hiss shouldn’t have been sending vital statistics on crop productivity to the U.S.S.R. in the 30s. However, to use that as an excuse to, basically, shut down the freedom of association and to make the security state opaque – and to allow it to do things like monitor all overseas messages, a la the Venona transcripts – is what I mean by the authoritarian mindset. Hayek didn’t get it; his followers don’t get it today.
But I have to exclude Ronald Reagan from this condemnation, who offered, in a very friendly and levelheaded manner, to share information about his anti-ballistic system with the Russians in 1985. Such information should have simply been shared in 1945. Association, whether with communists, anarchists, or fascists, should have been free in 1946. Instead of which, Hayek was on the side of those destroying those political freedoms in the name of some bogus threat posed by a “hostile power”. There will always be a hostile power, another global war – and if freedom is dependent on that not being the case, then it is an endlessly deferred fake. It was the mindset that gladly sacrificed the liberty of the people and democracy in the cold war that shaped the acceptance of these things in the parody Cold war called the Global War on Terror. Hayek did little or nothing for liberty, and didn’t like it when he saw it. This isn’t to say he was a fruitful theorist in some ways – just, he didn’t know buttkis about freedom.

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asdf2 05.22.12 at 2:02 pm

It’s clear that Hayek can be used against his self-proclaimed followers. Why not do it?

This exercise might provide a somewhat more clear view of the man, too. His distinction between (proper, not nominal) law and administrative command, for example, has value, and the thread above suggests that it hasn’t been learned.

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bianca steele 05.22.12 at 2:18 pm

William, maybe there are two more kinds of libertarians: those who like a neutral, distant police force even when it’s run by people unlike themselves and occasionally makes different decisions than they would make themselves and occasionally takes actions that feel like impositions, and those who prefer something that’s at least able to disguise itself as “local” (“those nice young men who stopped a bunch of drunk teenagers from sitting on my stoop and only ask a few dollars a week in return and always say ma’am”).

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William Timberman 05.22.12 at 2:58 pm

Mmm… I don’t think I know any libertarians that resemble any of your four types, Bianca. Maybe I’m just a little short on irony this morning. It’s easy to see, however, that there are all sorts of voluntary associations, and however much you hate the Federal Reserve, or the Environmental Protection Agency, you shouldn’t be deceived about what you’d be taking on if you abolished them tomorrow. From the things that Libertarians say, at least the capital L sort of Libertarians who hang out at the Cato Institute and such-like, I gather that they think of themselves as a natural aristocracy, which, when I finish scratching my head in disbelief, seems like the sort of self-delusion that all of us, Hell’s Angels included, would be better off treating as a harmless delusion.

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William Timberman 05.22.12 at 3:02 pm

Ugh. Let’s try that last clause again:

when I finish scratching my head in disbelief, seems like the sort of self-delusion that all of us, Hell’s Angels included, would be better off treating as a harmless fantasy.

There, that’s better, I think.

63

Henry 05.22.12 at 3:03 pm

Jason@55 – it’s probably no more surprising to you that I disagree with this assessment, than it’s surprising to me that you would make this assessment in the first place. In any event I’ve updated this post to respond.

64

piglet 05.22.12 at 3:05 pm

Tim 38: “We’re not all that rare Piglet. Social insurance, including as Barkley Rosser points out, universal health insurance, is just great.”

Well I don’t know about Hayekian libertarians in Britain but in the US, I’m sure you have heard about that, US politics for the last few years has been dominated by right-wing demagoguery against the health insurance mandate. The argument here has been that the “Obamacare” mandate is not just the road to serfdom, but serfdom tout court. Now the universal mandate should really be the kind of welfarism that Hayek would have approved of if his disclaimers about not being against all state intervention, just the bad ones, are to be taken seriously. Twenty years ago, precisely this kind of arrangement was proposed by right-wingers often with Hayekian sympathies. And yet, in the current debate, have you seen anybody stand up, brandishing a copy of The Road to Serfdom, and intonating that Hayek “always supported social insurance, safety nets, public goods provision and many forms of regulation” (as Vallier claims)? Has anybody?

We never hear Hayekians quote Hayek’s “support for social insurance” when it actually politically counts. Never ever ever. Prove me wrong.

65

Tim Worstall 05.22.12 at 3:17 pm

“We never hear Hayekians quote Hayek’s “support for social insurance” when it actually politically counts. Never ever ever. Prove me wrong.”

I can’t really speak for the US but I’m associated with the Adam Smith Inst in London which is about as Hayekian as you can get there and I’ve regularly pointed out on their site that social insurance is just great. Including a cbi and tax financed health care. True, that’s not directly quoting Hayek’s support for it but close enough?

66

mds 05.22.12 at 3:52 pm

when you think a: “really smart and important social philosopher and economist said something pretty dumb about a topic on which he was an expert, you should doubt your own judgment first.”

Oh, I’m sorry, I thought we were talking about Hayek.

Congratulations are due to Vallier, however, for the authentic use of begging the question.

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ajay 05.22.12 at 3:58 pm

mds beat me to it. One could equally well argue “when you think someone is a really smart and important social philosopher and economist, despite the fact that the central thesis of his best-known work consists of him saying something pretty dumb about a topic on which he ought to have been an expert, you should doubt your own judgment first.”

68

ajay 05.22.12 at 4:00 pm

50 is misleading and irrelevant to the question.

69

Consumatopia 05.22.12 at 4:20 pm

Was Road to Serfdomactually on a topic on which Hayek was an expert? It seems like more of a work of political science than economics. It isn’t even like public choice theory in which politics is somehow translated into economics–the quoted passage makes claims about culture and psychology, not markets or prices.

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Bernie 05.22.12 at 4:28 pm

Tim Worstall writes: “It’s the specific type and form of each which needs to be discussed. I would prefer a citizens’ basic income to what the UK currently has for example. Or the French, German, Dutch etc largely market provided but universal insurance paid for health care systems rather than the UK’s near government care provision monopoly.”

Right – Hayek might favor a ‘welfare state’ (eg – a not particularly generous BIG or similar) but he thinks everything else you mention will lead to serfdom. Hayek might favor the ‘welfare state’ but he thinks the welfare state as actually exists will lead to Hitler.

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Andrew F. 05.22.12 at 4:42 pm

Well… reading over Henry’s update, and having skimmed some additional pages from Hayek, I continue to believe that Hayek is simply, perhaps appropriately, undetermined on the question.

I do not know what Hayek means when he says that thoroughly redistributionist welfare-state will more slowly, and more imperfectly, and more indirectly, “tend” to have the same ultimate outcome. Even in speaking about Great Britain at a time when it furnished a closer example of Hayek’s central case of socialism, Hayek speaks of effects occurring over generations (albeit while in the same breath offering evidence of effects he claims to have occurred in the space of a decade or so). Various timelines and scenarios seem therefore compatible with Hayek’s written claims.

We could try to extrapolate from Hayek’s general argument. He claims – I believe – that socialism as central-planning erodes a society’s belief in liberty by removing the practice and spirit of moral agency from individuals. As individuals are acclimated to having some of the most important decisions of their lives made by and at the discretion of others, they cease the practice of independent evaluation and choice of different alternatives; and in doing so, they gradually lose the sense of why that practice is important.

A thorough welfare-state redistributionism has the same effect because – perhaps – in Hayek’s view this is simply socialism approached from the side of income rather than production. Thus, for example, in The Constitution of Liberty, Hayek writes in chapter 19 that “[i]t is as a means of socializing income, of creating a sort of household state which allocates benefits in money or in kind to those who are thought to be most deserving, that the welfare-state has for many become the substitute for old-fashioned socialism.” This facet of the welfare-state, Hayek writes earlier in chapter 17, “[i]nsofar as this means that the coercive powers of ogvernment are to be used to insure that particular people get particular things, it requires a kind of discrimination between, and an unequal treatment of, different people which is irreconcilable with a free society. This is the kind of welfare state that aims at ‘social justice’ and becomes ‘primarily a redistributor of income.’ It is bound to lead back to socialism and its coercive and essentially arbitrary methods.”

To the extent, then, that Sweden continued along a path towards greater control of the distribution of income, and greater discrimination in how the state distributed income, Hayek’s argument predicts effects such as the loss of the “spirit” of liberty and the likelihood of an eventual complete servitude.

But suppose Sweden at one point rescinded a certain amount of such control, and liberalized to a degree (as it did, I believe)? I agree with Henry that a moderation does not fit well with Hayek’s insistence at one point on a “resolute” change in course, but such a moderation does fit well with Hayek’s diagnosis of Great Britain (found in the same preface to the 1956 edition of The Road to Serfdom as the earlier quoted paragraphs concerning the effects of socialist policies in Great Britain). Hayek claims that it had bought itself a “breathing space” and that, because it had not sufficiently “revised” its conception of “social aims” to secure liberty, it would therefore likely “drift” in the same direction towards socialism, though at a much slower speed.

I’m hesitant to ascribe much predictive power to a tentative prognosis of “drift,” particularly when, as we must in the case of a welfare-state, combine this with Hayek’s “slower,” “more indirectly,” and “more imperfectly” qualifiers.

On this,

Vallier suggests that The Road to Serfdom was “Hayek’s introduction to his most popular and least scholarly work” (with the implication that we should extend some charity to his claims here). This is a disputed point – I’ve had some correspondence from Andrew Farrant and Ed McPhail over the last few days which touched on this in passing, and suggested that this is an ex post rationalization by latter day Hayekians – their take is that The Road to Serfdom was explicitly aimed at the intelligentsia.

I’m not sure there’s a dispute. Hayek himself claims explicitly in the foreward to the 1956 American paperback edition that the book “gradually took shape as a warning to the socialist intelligentsia of England….” That said, he elsewhere says it was aimed at the British public, is a political, rather than scientific or social philosophical, work, and notes that he has generally thought of it as a “pamphlet.” The fair assessment is probably that it is a “popular” work in the sense of being less formal – as well as less precise and less thorough – than an academic work, though certainly an intellectual work.

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Metatone 05.22.12 at 4:50 pm

To echo Consumatopia:
Since culture is one of my areas of expertise, I think it’s worth point out that Hayek’s models of culture and cultural change are pretty flaky. As such, we should treat the cultural ramifications of the welfare state with a lot more rigour than he (and indeed many of his followers) have done.

When we apply a bit of rigour, it’s hard to find any evidence either of the effects that they cite or any evidence that their model of cultural change corresponds to reality.

On that topic, that’s why I’m much less in favour of people reading the “economics as knowledge” stuff than Henry seems to be. Yes there are gems of truth in there – but you need to work pretty hard – and read plenty of other works by modern theorists – if you are to avoid picking up some nasty bad habits of thought about knowledge in particular (but economics too.)

One needs to take seriously Lee’s point about local descriptive grammar vs a prescriptive ruleset for a system, one needs to read (and appreciate) Stiglitz’s work… I’d nominate others too, but it’s a subject bigger than I keep track of in my head. That’s not a small amount of corrective work…

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ajay 05.22.12 at 4:50 pm

69: “Hayek is wrong in RTS because he just didn’t know what he was talking about” is an alternative explanation which I am happy to accept.

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J. Otto Pohl 05.22.12 at 5:11 pm

Interestingly enough I was reading an essay published in 1971 by Peter Wiles recently who brings up the fact that Hayek was wrong in _Road to Serfdom_ in suggesting that democratic states implementing various forms of economic planning would end up as tyrannies. So the debate is not new and seems to have been settled when I was an infant. A Soviet style dictatorship can really only come to power through violent revolution or being forcibly imposed by outside military force. It can not evolve along Fabian lines in a democratic system as an outgrowth of gradually enlarging the role of the state in the economy. The Nazi analogy works a little better in that they came to power through legal means in what was by that time a very dysfunctional democratic state. But, the problems of Weimar Germany that led to its replacement by the Nazi dictatorship have nothing to do with economic planning as far as I can tell. Maybe Hayek was just trying to warn members of the intelligentsia with socialist inclinations that a completely nationalized and centrally planned economy like the USSR required political dictatorship?

75

piglet 05.22.12 at 5:29 pm

Tim 65: the proof of the pudding would be to see a Hayekian defend Hayek-compatible welfare policies against right-wing assault on account that Hayek himself supported such policies. In other words, if Hayek had a principled position towards welfare policies in which he firmly rejected some forms of welfarism (based on verifiable “road to serfdom” criteria) but as firmly supported other forms (social insurance and all the rest, which do not lead to totalitarianism), then we would not expect Hayek and his followers to always be on the right of every policy dispute. Or again in other words, we would expect Hayekians to actually support some actual welfare policy in a real-world dispute that matters, for example the one about the insurance mandate. As opposed to claiming theoretically that Hayek is compatible with some welfare policies but then in practicality always unfailingly oppose those welfare policies that actually exist or might have a chance of being enacted.

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the bard 05.22.12 at 6:11 pm

Time for Hayekians to confess: tis’ a slippery slope sloppiness mess, no less!

77

Phil 05.22.12 at 6:24 pm

I agree with Henry that a moderation does not fit well with Hayek’s insistence at one point on a “resolute” change in course, but such a moderation does fit well with Hayek’s diagnosis of Great Britain (found in the same preface to the 1956 edition of The Road to Serfdom as the earlier quoted paragraphs concerning the effects of socialist policies in Great Britain). Hayek claims that it had bought itself a “breathing space” and that, because it had not sufficiently “revised” its conception of “social aims” to secure liberty, it would therefore likely “drift” in the same direction towards socialism, though at a much slower speed.

HAYEK: The soc1alists and central planners will soc1alise the economy and institute serfdom!
[time passes]
HAYEK: As I was saying, the piecemeal implementation of reforms will lead to an inexorable encroachment of soc1alism! Once in place, the soc1alist government will never fall, people will get used to living under soc1alist rule and the result will be serfdom, eventually!
[time passes, government falls]
HAYEK: Fortunately the soc1alist government has now fallen, but the danger remains of an unstoppable drift towards soc1alism! If this tendency is not arrested people will eventually get used to soc1alist encroachments on liberty, perhaps over a period of generations, and the inevitable ultimate result will be serfdom!

Some years later, we’re sagely advised to attend to the moderate and qualified judgments made by Hayek #3, in preference to the crude first thoughts of Hayek #1.

78

Barkley Rosser 05.22.12 at 6:33 pm

J. Otto,

You are much closer to the nub of the issue. The real basis of the slippery slope argument in RtS is his discussion of Weimar Germany, with its change to a Nazi state being the central example and focus of the book. He argued that Weimar Germany gradually increased the role (and relative size) of the state in the economy under a democratic system in Germany, and that this laid the foundation for the ultimate Nazi takeover. That almost none of this expansion involved either central command planning (that did occur under the Nazis) or nationalizations (which did not occur under the Nazis) is not made clear, nor that that the major part of this was in fact due to an expansion of welfare state activities. However, one could impute from this that such an expansion of welfare state policies might well be the slippery slope as he in effect argues that it was in the German case, even as he did not focus or even really bring out that this expansion of the state role was tied to an expansion of the welfare state in that case.

piglet,

Frankly, I think that anybody supporting either the individual mandate of Obamacare or a more thoroughgoing universal health insurance coverage should cite Hayek repeatedly in doing so, given the current tendency of Obamacare critics to denounce it as “socialism,” even though many of these same people were supporting the individual mandate prior to Obama doing so as a way of derailing the push for a Canadian-style single payer system. It is American non-classical liberals who should be ashamed of themselves for failing to use this very valuable source in advocating their positions, when it is just sitting there available for them to do so. That Hayek is the second most cited economist by Nobel Prize winners in their Nobel acceptance speeches, along with being worshipped by many libertarians, makes this clearly very potentially effective. So, stop trying to marginalize Hayek and use him for a good cause!

79

bianca steele 05.22.12 at 6:41 pm

I don’t see how it helps that some of Hayek’s books may not be entirely scholarly. Yes, it does dispose neatly of arguments along the lines of Phil’s Monty Python dialogue a few comments back. But since a big argument of the part of the right in question (admittedly, especially on the Internet, but this includes online publishing by bricks-and-mortar entities) is “Take up and read,” with the text being Hayek,

80

bianca steele 05.22.12 at 6:49 pm

(Sorry, borrowed computer. I think I accidentally leaned on the enter key.)

There are only two obvious ways to go (obviously there are others, but these are both plentily available, for free, in many places including on the Internet): (1) “You don’t know how to read, and your first lesson is that Hayek means what I say it means.” (2) “Everything you read is false, but doesn’t matter, because it’s totally disconnected from Hayek’s real, scholarly work, which is too difficult for you, but means what I say it means. And if you don’t like the implications of the first part of that, it isn’t Hayek’s fault but his opponents’.”

81

Bernie 05.22.12 at 7:18 pm

Barkley Rosser is quite right about the importance Hayek placed on Weimar. I copied from a pdf Henry linked to a few posts back: “the general tendency towards a paternalistic welfare state, which is the
result of a misunderstood rationalism . . . is constantly producing results
which are only too similar to those produced by economic planning
and which also had shown themselves clearly in Germany long before
they became visible elsewhere. They contribute almost as much as the
economic factors to that profound transformation of society which follows
from increasing governmental regulation and leads towards another direction
not in the least intended by those who advocated these regulations. (Hayek
1948, 14–15, quoted in Farrant and McPhail 2010, emphasis added)

82

ptl 05.22.12 at 8:58 pm

33 If Hayek was at best pretty dubious on Pinochet, Michels was rather worse than dubious on 1930’s fascism.

But almost all his work pre-dates that. And though he supported Mussolini from the moment of his accession to power (I think), Political Parties pre-dates that. I suppose you can argue the creepy was already there in 1911… .

(I’ve never read Hayek so have nothing on-topic to add.)

83

Phil 05.22.12 at 9:28 pm

Bernie – that’s pretty extraordinary. I don’t know the literature on the regulation of German capitalism under Nazism, but it certainly wasn’t state-owned or centrally planned. It is true that the Nazi welfare state was substantial – and popular – and in that respect there was a degree of continuity with what had gone before. But this is just a roundabout way of remembering the ‘Soc1alist’ in ‘National Soc1alist’, and why it was there. Coming to power when they did, it was a grounding assumption for the Nazis that you had to give the workers what they wanted in the way of social provision; what was distinctive about their programme was that it *also* gave the workers omnipresent thuggery, brutal hierarchy, a myth of the nation, aggressive war and genocidal racism. To focus on the welfare state is a remarkable feat of point-missing.

84

Jim Rose 05.22.12 at 9:59 pm

alex, I did not that ‘McCarthy was a a wild-eyed demagogue got his number of 205 spies out of a whisky bottle’

85

piglet 05.22.12 at 10:33 pm

“He argued that Weimar Germany gradually increased the role (and relative size) of the state in the economy under a democratic system in Germany, and that this laid the foundation for the ultimate Nazi takeover.”

If that is what he argued, then the fact that he has ever been taken seriously at all becomes only more mysterious. Because that narrative of Weimar Germany is obviously flawed and in 1944 that was obvious to anybody with half a brain.

86

TheF79 05.22.12 at 10:56 pm

In my enviro econ course I always assign Hayek’s AER article on prices, information and decentralized planning, and contrast it with Samuellson’s ReStat article on public goods, as an intro to discussing market success vs. market failure. Inevitably someone will ask if we’ll be discussing RtS. I usually respond with a “Ha! No.” (Though I also mention that RtS does state that “In such instances [negative externalities] we must find some substitute for the regulation by the price mechanism.”)

87

Jim Rose 05.22.12 at 11:14 pm

TheF79, Coase’s idea that no single resource allocation mechanism dominates.

Notions of market failure lose their meaning when there is no reason for prices to allocate everything. One might as well refer to government failure or firm failure in cases where prices do allocate resources.

88

Bruce Wilder 05.22.12 at 11:17 pm

bianca steele @ 80

Of course, Hayek’s proponents and admirers are going “hear” any interpretative deconstruction of Hayek’s arguments as a failure in reading comprehension and/or intellectual capacity to comprehend.

Hayek, in the Road to Serfdom, is writing for a popular audience, and like any polemicist, he’s putting makeup on the pig he’s selling. It’s a failure in reading comprehension to not notice. Saying Hayek was some big advocate of social insurance or effective government regulation is crediting the makeup job, and denying that there’s a pig behind it. It’s b.s.

To gaze out on an economy of markets and hierarchies, prices and rules, knowledge and uncertainty, promises and frauds, insurance and risk, conflict and cooperation, and see the functions of one and not the other requires a special kind of teh stupid, which only a brilliant man with one eye firmly shut, can put over. Noticing what he refuses to acknowledge, observing the 3-D world he insists is a 2-D world, is always a sufficient refutation.

89

Barkley Rosser 05.23.12 at 6:56 am

Phil 83,

Hitler did not expand the welfare state beyond what Weimar moved it to, indeed, if anything, cut it back slightly in order to make way for its massive expansion of its war machine. The latter was driven by direct command backed by a plan, although the overall economy was not centrally planned, but the parts related to the military were. It remained privately owned, however, hence is most accurately labeled as a command capitalist economy. The father of command planning in Germany under Hitler initially was Hjalmar Schacht, although Germany had some of this during WW I, with that effort being the model that inspired Lenin’s initial efforts to move toward central planning in the Soviet Union.

90

Tim Worstall 05.23.12 at 8:39 am

Piglet@ 75. US health care, indeed US politics in general isn’t really my thing. But to take a slightly different example:

“(Though I also mention that RtS does state that “In such instances [negative externalities] we must find some substitute for the regulation by the price mechanism.”)”

For over a decade now I’ve been arguing that we really do need to have a carbon tax to deal with climate change. On those entirely Hayekian (or Pigouvian if you prefer) lines. So much so that this is the corporate line at the ASI (as evil a bunch of neoliberal right wing baby eaters as you’ll ever find).

91

Jim Rose 05.23.12 at 8:50 am

It seems to me that one side is dancing on the head of a pin.

The other is simply noting that an ordinary reading of hayek’s writings is that he made a prediction that did not turn out to be right.

What might be more interesting is why he was wrong? the democratic consolidation took him by surprise? what rules and process stopped the rise of illiberal democracies?

why prediction was wrong is usually more interested and instructive. Democracy and the universal franchise were still young when Hayek first wrote.

92

ajay 05.23.12 at 8:59 am

89 sounds about right judging by a recent reading of “The Wages of Destruction”, which is rather good by the way. Especially during wartime there was quite a lot of central planning, especially in terms of allocating scarce resources (steel, nonferrous metals, that sort of thing).

“A Soviet style dictatorship can really only come to power through violent revolution or being forcibly imposed by outside military force. It can not evolve along Fabian lines in a democratic system as an outgrowth of gradually enlarging the role of the state in the economy.”

But yet you still hear a huge amount along these lines from the right especially. In fact, there aren’t many examples in history of a democracy becoming a dictatorship at all, by any means, and those that are can be neatly broken down into:

Fascists elected and set up dictatorship: 2
Communists seize power in military coup: 1
Fascists, ditto: 1
democratic government toppled by invading Fascists: 8
ditto, invading Communists: 3
ditto, invading Spartans: 1
ditto, CIA: 2
popular military leader seizes power in coup backed by very rich men keen on tax cuts: 1

Am I missing any?

93

Geoffrey de ste. croix 05.23.12 at 9:42 am

@92

Macedonia defeats Democratic Athens and other Greek states at the Battle of Crannon (322BC). Athens, forced into unconditional surrender also submits to an imposed peace which has democracy replaced with an oligarchy. 322BC is normally taken to be the end of Athenian democracy.

94

Data Tutashkhia 05.23.12 at 9:57 am

As long as individuals with power remain in power, there is no reason for violent revolutions. They’ll change ostensible political arrangements peacefully, if they feel they need to.

95

IM 05.23.12 at 10:06 am

Ajay, you seem to ignore the history of eastern and southern Europe in the thirties. There was a nice map in my school book that showed democracy as the rule in 1927 and democracy almost as an exception in 1934.

You also seems to ignore a lot of coups in South America.

But all these examples don’t help Hayek at all. Almost all of these dictatorships were right-wing dictatorships – one exception – and almost all of the right-wing regimes were conservative, not fascist.

In a lot of circumstances the great depression caused the authoritarian regime and the authoritarian regime was instituted to enforce austerity.

And the difference between authoritarian regimes and democracies wasn’t their economic policies, but rather the length of their democratic tradition.

96

Jim Rose 05.23.12 at 10:20 am

Before you get carried away with the resilience of democracy and origins of autocracy, remember the second turnover test for democratic consolidations.

The people who won the election after the autocrat or the colonial government left are not always keen to give up the reins of power.

Huntington’s Two Turnover Test: when a nation moves from an emergent to a stable democracy, it must undergo two democratic and peaceful turnovers of ruling parties.

After an emerging democracy’s first turnover, the new administration often reverts to authoritarian rule. Russia under Yeltsin and Putin?

In illiberal democracies shows, elections can coexist with systematic abuses of political rights and the disenfranchisement of much of the population. An example was pre-1973 Northern Ireland. Russia under Yeltsin and Putin? Elections count for something in Iran, but not much, but they are for more than show.

More than a few successions are from less than liberal democracies. Ireland before independence? I read that the second turnover in Ireland in the later 1920s or so was bit hairy. The Irish civil war was just a few years previous.

Taiwan had a second turnover in 2000. Thailand seems to still struggle with the second turnover.

97

Jim Rose 05.23.12 at 10:29 am

Has Pakistan had a second turnover ever? India’s second turnover was delayed for a few years by emergency rule in 1975?

In countries with grand corruption, but elections that count – mexico and the philippines are examples – leaving office can result in criminal prosecution.

98

IM 05.23.12 at 10:33 am

What the hell are you babbling about?

Do you really want to argue that was a problem in e. g. the UK in 1951?

I remember only a single example in the post war west, namely Greece. And if that is really a example of the bad influence of the welfare state…

And Hayek was surely not talking about Tawain or Thailand in 1944.

99

IM 05.23.12 at 11:08 am

But has been pointed out here, the prognosis of Hayek was falsified long ago. After all, in the the first election after the war, his opinions were ignored everywhere. In the UK in 1945 where his pamphlet was defeated directly but also in the first french elections were communists, socialists and christian democrats won. Even were the right wing did win , like in Italy and Germany, the christian democratic parties did win – typical proponents of the paternalistic welfare state in other words.

And whene the tories did regain power in 1951, they left most of the labour settöemetn in place. As did Eisenhower with the New Deal. When France turned right with de Gaulle, they followed, well, gaullist policies.

You had nationalizations, you had planing, you had everywhere an expansion of the welfare state. And that state of affairs lasted thirty years or longer.

And what happened to democracy and individual freedom? If anything it expanded during this thirty, forty years. The old paternalist traditions still alive in the forties crumbled quickly.

100

Roger Gathman 05.23.12 at 11:37 am

Hayek, if he had been looking and if he had cared, could have used the VA and the FHA as an instance of a racist (although probably not on the Hitler level) welfare state bureaucracy – one that certainly expanded and deepened the racial divide in the U.S. by discriminating systematically against black families. Since the VA and FHA were the major makers within the mortgage market from the 40s through the 60s, they were major contributors of a truly Hitler like result – the ghettoization of the black population. But I believe you won’t read word one about this in Hayek, who lived during this time. Hmm, perhaps this is because in conservative circles, they thought racist neighborhood covenants and segregation were just hunky dory. Here, just as Hayek said, state planning took a housing population that was for the most part integrated (especially in the North) in 1900 and segregated it. Just another reminder that if Hitler had not existed, the twentieth century history of racism would in the developed world would, of course, have been dominated by the U.S. The U.S. federal government, up until 1964, was a major player in creadting apartheid in the U.S. – as has been pointed out by, among others, Douglas Massey and Nancy Denton in American Apartheid.
That said, when the government began reversing itself, it was able to do so – there was no structural contradiction between promoting apartheid and promoting civil rights. The structure seems to have been neutral with regard to racism. Which would go against Hayek’s thesis.

101

IM 05.23.12 at 11:41 am

There wasn’t a coulour line, say in 1940?

And if is all this is true, why did the black voting population switch to the democrats?

102

Phil 05.23.12 at 12:15 pm

Especially during wartime there was quite a lot of central planning, especially in terms of allocating scarce resources

Point taken, particularly as it actually strengthens my argument. Hayek’ s argument from continuity goes something like this:

1. Weimar had a paternalistic welfare state (and some economic planning, but that’s not important right now)
2. And guess who else had a paternalistic welfare state? (And some economic planning, but that’s not important right now.) And guess who came straight after Weimar? Makes you think!

The Nazi regime was so clear a break with Weimar in so many ways that this struck me as fatuous. Thanks for pointing out that they (the Nazis) *did* introduce Teh Evil Central Planning – but as part of a war effort which was nothing like anything that a Weimar government did, and which sprang from a broader political programme which, again, wasn’t greatly reminiscent of any Weimar government.

103

Roger Gathman 05.23.12 at 12:29 pm

It is an anachronism to speak of the black vote switching. The vast majority of black America lived in the South until the 30s, and the South was characterized by two things: one party rule by a virulently racist Democratic party, and the suppression of the black vote.
What black vote there was existed in some urban pockets in the South, and in the North.
In 1928, Hoover, who was running as a republican, saw a chance to garner some votes in the South, since he was running against a Catholic. So he generally ditched the black voters to appeal to racist white Southerners.
This could have been an aberration, save for the swing towards Northern Democratic liberals with FDR. This swing benefited black voters in the North. Plus, the “spirit” of Northern progressive politics changed to a more anti-discriminatory bent. But, as progressive politics in the North succeeded only because of the alliance with Democratic populists in the South, who were solidly racist, a sort of gradualism became the word of the day. Meanwhile, the GOP lost its place as the party of the black voter. Since it had no chance in the South, it didn’t simply switch to the anti-black side. But as it opposed progressive programs, it landed, de facto, on the anti-black side.
The compromise with Southern Populists put in place socially democratic programs with a racist codicil. So the black voter – Northern, Urban – was faced with a choice, on the federal level, of voting for a party that would do some things for Black America and some things against, versus a party that was generally indifferent, the GOP, but was opposed to progressive programs that held some benefit for working class people (thus, generally, black Americans).
It is a pattern that should look familiar. This is how American politics works. I suppose you could compare it to liberals defending Obamacare in spite of the fact that it is really Romneycare, and they all know that it sucks. It is better than the alternative.

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ajay 05.23.12 at 12:33 pm

102: I think we may be violently agreeing with each other here. 89 and 102 are both correct in my opinion…

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Data Tutashkhia 05.23.12 at 12:51 pm

I think the lesson from history is – and that’s at least 2000 years of history (bread and circuses!) – that whenever you don’t institute a sufficiently strong welfare state and a sufficient degree of central planning, you’re likely to have your head chopped off. That’s not theory, that’s an empirical fact.

Therefore, it stands to reason that welfare state is simply a product of evolution. Arguing against it is like arguing that the human method of procreation is aesthetically unappealing (or something). Maybe it is, but so what, what’s the alternative?

One could try, of course, to keep one’s welfare state and central planning to the minimum, but, it seems to me, only at the cost of high volatility, instability, unpredictability. So, why risk it? Most people in power will trade some of it for a peace of mind, and those who are too greedy will eventually lose it all.

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Jim Rose 05.23.12 at 1:07 pm

RG, did Hoover pioneer the southern strategy? Al Smith lost several states that had been members of the Solid South since Reconstruction

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IM 05.23.12 at 3:23 pm

It is not an anachronism. You yourself described why and how the northern black vote switched. The new Deal brought genuine advantages to the black population in the North.

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Tim Wilkinson 05.24.12 at 9:43 am

‘McCarthyism’ is a highly misleading label. McCarthy was a product of the Red Scare (which had been under way before the war, too) – a kind of blowback. It was HUAC that aimed at opinion formers such as screenwriters and at the general public such as low-level state employees, while McCarthy was a true believer who aimed at the army and the government. His popularity and attacks on the Truman admin. was useful to the Republicans in opposition, but once they got into power, they considered him a thorough nuisance and in IIRC 53 he was dispreferred, then investigated and generally smeared (couldn’t happen to a nicer fellow). He was increasingly discredited through 53 and even Murrow piled on. He was finally censured and his career ended (and possibly only then, if at all, was he driven to serious drinking). In a way, McCarthy’s brief ascendancy put a brake on ‘HUACism’. He also serves to obscure that phenomenon in popular history – the classic ‘rogue operator’ story.

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Tim Wilkinson 05.24.12 at 9:49 am

There’s quite a distance between (1) treating RTS as an isolated error in an otherwise impressive oeuvre, and (2) finding some nuggets of value in two key articles (which in any case, as others have suggested, were neither particularly original nor very cogent).

RTS as a whole can’t be treated as an aberration, in any case, since much of it I think is consistent or continuous with Hayek’s other work.

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Bern 05.24.12 at 1:35 pm

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Bernie 05.24.12 at 8:35 pm

I don’t usually frequent the site below, but Bruce Caldwell argues that RTS is only about command planning. Since when has partial planning and command planning been the same beast?

Seriously, all should check out the link below: A Hayek 1945 piece reflecting on his message in RTS.

http://mises.org/daily/4690

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Tim Wilkinson 05.24.12 at 9:54 pm

Religious anti-Darwinists only ever denied the existence of macro-evolution. Since when has macro-evolution and micro-evolution been the same beast?

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Jim Rose 05.24.12 at 10:16 pm

tim, you do seem to be making what is a good point that the road to serfdom is a good read despite some failed major predictions

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Hedlund 05.25.12 at 1:31 am

R. Murphy (the blogger at Increasing Marginal Utility, not Mises.org’s Bob Murphy) has read an ungodly lot of Hayek and very recently made a post on how to read Hayek and where he was coming from that may be of relevance to this discussion.

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Silly Wabbit 05.25.12 at 3:26 am

I’ve read the posts associated with this topic. Its really cool to see the internet facilitate discussion across multiple blogs.
A few observations:

1) I really wish Hayek, Mises, Rothbard- really anyone who calls themselves an “Austrian” would distinguish between when they are doing “praxeology” and when they are just pontificating. It makes their work very hard to read because you can’t sort through the stuff that is irrefutable (at least in the eyes of Austrians) and the more conjectural stuff.

2) In other words, if you’re an Austrian you could argue that Hayek simply wasn’t using Austrian deductive logic and therefore we shouldn’t take his “creeping socialism” arguments very seriously. It would be sort of like a great social scientist making an incorrect citation in the lit review of a journal article-a mistake but not a major problem.

3) This whole thing might be a case in which “The Author has dissappeared” as Foucault would say. It seems that everyone has been reading Hayek a certain way for so long that his “true views” may be beyond our cognition. For good or bad his work has been imbued with generations of interpretation and its original intent may be impossible to know because we cannot take it as it is.

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Jim Rose 05.25.12 at 9:36 am

se, In his “Economics and Knowledge” Hayek stated that praxeology was a mere collection of empirically empty tautologies and that applications of praxeology involved unacknowledged auxiliary assumptions about the dissemination and use of knowledge by market participants.

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Silly Wabbit 05.26.12 at 3:19 pm

Jim,

Thanks for the info! I’ve never been able to figure out what Hayek really thought about methodology…….

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