Do You Believe in Life After Hayek?

by Corey Robin on March 4, 2019

Sorry about the title; advertisements for The Cher Show are all over New York these days, so the song is in my head. Anyway…

In the Boston Review, the left economists Suresh Naidu, Dani Rodrick, and Gabriel Zucman offer an excellent manifesto of sorts for a new progressive economic agenda. I was asked to respond, and in a move that surprised me, I wound up returning to Hayek to see what we on the left might learn from him and his achievement. Here’s a snippet:

Far from resting neoliberalism on the authority of the natural sciences or mathematics (forms of inquiry Hayek and Mises sought to distance their work from) or on the technical knowledge of economists (as Naidu and his co-authors claim), Hayek recognized that the argument for capitalism had to be won on moral and political grounds through the political arts of persuasion.

Here’s where things get interesting. Though Hayek famously abandoned formal economics for social theory after the 1930s, his social theory remained dedicated to elaborating what he saw as the essential problem of economics: how to allocate finite resources between different purposes when society cannot agree on its most basic ends. With its emphasis on the irreconcilability of our moral ends—the fact that members of a modern society do not and cannot agree on a scale of values— Hayek’s point was fundamentally political, the sort of insight that has agitated everyone from Thomas Hobbes to John Rawls and Jürgen Habermas. Hayek was unique, however, in arguing that the political point was best addressed, indeed could only be addressed, in the realm of the economic. No other discourse—not moral philosophy, political theory, psychology, or theology—understood so well that our ultimate moral values and political purposes get expressed to others and revealed to ourselves only under conditions of radical economic constraint—when one is forced to assign a limited set of resources to different ends, ends that favor different sectors of society.

Morals are not really morals if they are not material, Hayek believed. Outside the constraining circumstance of the economy, our moral claims are so much wind. Inside the economy, they assume force and depth, achieving a revelatory clarity and profundity….

The intrinsic links between moral and economic life as well as the intractability of moral conflict, the incommensurability of our moral views, were the kernels of insight that animated Hayek’s most far-reaching writing against socialism. The socialist presumes an agreement on ultimate ends: the putatively shared understanding of principles such as justice or equality is supposed to make it possible for state planners to conceive of their task as technical, as the neutral application of an agreed upon rule. But no such agreement exists, Hayek insisted, and if it is presumed to exist, nothing will reveal its non-existence more quickly than the attempt to implement it in practice, in the distribution of finite resources toward whatever end has been agreed upon.

Hayek translated moral and political problems into an economic idiom. What we need now, I would argue, is a way to uninstall or reverse that translation.


In the rest of the piece, I briefly (very briefly) sketch out, with the help of Polanyi, what that might mean. This is something I hope to be developing further in an article I’m writing with Alex Gourevitch on socialist freedom. But in the meantime, here’s the Boston Review piece in full.

Marshall Steinbaum and Alice Evans also have excellent responses.

{ 12 comments }

1

Kevin J Harris 03.04.19 at 6:55 pm

Hayek sounds a bit like Singer.

2

Doug K 03.04.19 at 11:37 pm

thank you – I had never even attempted Hayek, based on the fervent right-wingers who love him. However I find I agree with him at least on this,
“Hayek was unique, however, in arguing that the political point was best addressed, indeed could only be addressed, in the realm of the economic.”

My personal hobby-horse is ‘political economy’. It was a sad day for humanity when the economists decided they wanted to be a science of economics, and discarded the ‘political’ qualifier. It seems to me very difficult to find any politics that is not also about economics, and vice versa.

3

Mike Furlan 03.05.19 at 12:38 am

Alexandria Ocasio-Cortez’s beliefs are closer to Hayek’s than say, Mitt Romney’s.

“There is no reason why, in a society which has reached the general level of wealth ours has, the first kind of security should not be guaranteed to all without endangering general freedom; that is: some minimum of food, shelter and clothing, sufficient to preserve health. Nor is there any reason why the state should not help to organize a comprehensive system of social insurance in providing for those common hazards of life against which few can make adequate provision.”

He sounds like a leftist to me. And I’m sure there are book length discussions of this fact.

On the right there is a constant problem of, “You keep using that word. I do not think it means what you think it means.”

The misuse of Adam Smith would be another long essay.

4

ra23 03.05.19 at 1:27 am

Something every economist should read after they’ve spent 1/100’th the amount of time a Physicist spends in the lab or in front of a computer by the time they get to do any “real research”:

http://calteches.library.caltech.edu/51/2/CargoCult.pdf

5

wpjames 03.05.19 at 2:14 am

In this connection you might be interested in an essay published in the Journal of Economic Perspectives titled ‘Friedrich Hayek and the Market Algorithm’ by Samuel Bowles, Alan Kirman and Rajiv Sethi (vol 33, no. 3, 2017, pp. 215-230). This piece basically lays out how the progressive left can make use of Hayek’s economic vision, particularly his thesis on the functioning of prices in a market economy, as a basis for policies quite different from his own.

6

ccc 03.05.19 at 12:23 pm

Compare these two sections:

[1] “The socialist presumes an agreement on ultimate ends: the putatively shared understanding of principles such as justice or equality is supposed to make it possible for state planners to conceive of their task as technical, as the neutral application of an agreed upon rule.”

[2] “One part of the assembly, representing the interests of the collective, will want to make an investment in a long-term good; healthcare was the example Polanyi chose. Another part of the assembly, representing the workers who would have to make the specific sacrifices for that good, resists that decision. What to do? Argue it out, says Polanyi.”

Here is one take on the contrast.

1 is an indirect/representative approach to specifying the values that are inputs to the technical-instrumental economic work that, given some inputs, output an efficient policy set, that is policies that bring about best outcomes. People vote for political parties based on the values they say they will implement, elected parties task chosen experts to further specify. Repeat and adjust at next election.

2 is a direct democratic approach to the value specification tasks. Some larger set of people are more often and regularly assembled to value deliberate (set up the way Polanyi sketched or some other way like https://www.ssc.wisc.edu/~wright/Published%20writing/Alternatives%20to%20Capitalism.pdf ). Whatever the setup the assembly will in the end apply some procedure (majoritarian voting?) to yield a specification that, again, will serve as input into technical-instrumental economic work that, given the input, outputs an efficient policy set. Repeat and adjust at next assembly.

On this take it is an open empirical question if 1 or 2 will yield policy outputs that best
(a) over time retain popular support
(b) results in outcomes that best reflect the specified value inputs
(c) results in outcomes that are better in terms of happiness, life satisfaction, health, and several other metrics

With both 1 and 2 there will be elements of indirectness/representation and elements of technical/neutral economic application.

Apart from this one might argue that the polanyian assembly has some extra, non-instrumental value. That might be part of what is hinted at with “socialist freedom”. If yes then then one would need to argue why that should be considered a non-instrumental value and how important it is compared to other values. That is what is the exchange rate between more/less of that socialist freedom value and more/less of (a)(b)(c)?

7

nastywoman 03.05.19 at 12:28 pm

– as the meaning and especially ”practicing” of ”socialism” has changed quite a bit – and America is just waking up to the reality of what IT could mean –
(”all the ”social goodies” Modern Northern European Democracies offer their people – from Universal Payable Health Care to Free Education and short working weeks and long vacation for their happy workers) –
the belief in Life with AOC becomes far more important than the believe in the ideas of an outdated Austrian dude.

8

Anarcissie 03.05.19 at 3:04 pm

Did Hayek assert that socialism equals state planning? It is obviously true that some configurations of alleged socialism using state planning might be unnecessarily coercive, but that is also true of many other arrangements of ownership and control of the means of production. It also seems obvious that there are configurations of socialism — the ownership and control of the means of production by the workers or the (local) community — which would involve little or no state planning and offer a considerable variety of selections and translations of values into economic facts. If Hayek failed to deal with the whole spectrum of socialist possibility, it seems that he must have been either ignorant or dishonest and thus not worth much attention except as a con man. Maybe I’m missing something?

9

Anarcho 03.05.19 at 3:34 pm

“Hayek recognized that the argument for capitalism had to be won on moral and political grounds through the political arts of persuasion.”

Hmmh, well, I doubt that Pinochet won on “moral and political grounds.” Nor did Thatcher defeat the British labour movement by those means. Rather state violence was used, liberally used (excuse the pun) — that, and completely mismanaging the economy and causing a massive recession by means of Friedman’s Monetarism…

We should not forget the use of the State in the rise of neo-liberalism — nor should we forget von Mises and his support for fascism (and his role as advisor to Austrian fascism) any more than we should forget that von Hayek abandoned economics due to be completely defeated by the Saffra and Kaldor in the 1930s (Kaldor also being right as regards Friedman four decades latter).

10

Z 03.05.19 at 4:13 pm

Interesting piece (and so is the initiative it is a response to).

I would like to make two related points about Hayek’s translation of “moral and political problems into an economic idiom”, which seems to me to be indeed the defining trait of the neoliberal political and social thought process.

First, that independently of the evaluation (moral, practical or otherwise) one might have of this move, the consistent translation of political and social problems into economic problems (which concretely takes the form of the imposition of criteria of financial return on investments and/or the creation of artificial constructs mimicking competitive markets to decide upon or evaluate health care, education, research, labor and safety regulations…) faces an internal probe: it is incapable of re-creating the social conditions of its own existence; a statement that should appear obvious in the age of Trump but which is also susceptible of a theoretical justification (quite simply, because the goals of the actual actors of a given field are necessarily at odds with what the economic translation of their situation indicates, they will either game the system, or the field will slowly deteriorate until there is nothing to evaluate anymore). Because of that reason, not only do I believe in life after Hayek (in the sense of the post), I believe there is no alternative.

Second, that whatever Hayek himself wanted to achieve (even though I suspect he was rather perceptive in that particular case), the practical implementations of neoliberal thought appears to me to be first and foremost a power-play. The tell-tale sign, in that respect, is that those who advocate evaluation by markets and the harsh reality of utility computation or financial soundness and responsibility always do so for others, and never for themselves. They are the computer, not the computed, so to speak. It’s always “yes closing this plant will wreck 1000 families but it is necessary for the financial health of the company” and never “yes seizing an redistributing all the assets of the owner of the company will wreck his family but all in all, it is better for the 1000 families” (this reached abhorrent level of anti-humanism when American liberal centrists were defending the 2004 Iraq war by utilitarian evaluations of the putative costs and benefits of invading Iraq). One intellectual reflex while facing such arguments should always be to ask “who counts?” (with both meaning of counting implied).

A consequence of these two points is that the suggestion that “what has made neoliberalism so attractive and commanding as a politics is the borrowed authority of economics” – which is implicit in Naidu, Rodrik, and Zucman as you remark – seems wrong to me: what has made neoliberalism so attractive to the educated and economical elites and commanding as a politics over the rest of the population is, well precisely the power it grants to the educated elites over the rest of the population, by shifting the locus of power away from public scrutiny: being powerful under a neoliberal regime does not mean exercising direct authority, it means getting to decide who is evaluated by “the market” and how (so lawmakers don’t need to appropriate the production of the low orders, that’s way too Ancien régime, they just need to stipulate the regulatory apparatus of student loans, for instance, then become advisers for a loan financing firm after their mandate). The soundness of the underlying economical or social science arguments is consequently quite beyond the point. In 1979 or 1989, or even 1999, that was maybe still debatable. In 2019, that seems blindingly obvious to me (and dozens of Gilets Jaunes can give first hand testimony of the literally blinding aspect).

11

Person_XYZ 03.05.19 at 10:04 pm

I hate the expression ‘virtue signalling’ but when people are happy to declare how public spirited they are, you need to ask what costs (in the broadest sense) they would be willing to suffer to bring forth their stated preferences. The answer is often ‘not much’. Kevin Drum has recently reflected on the sheer lack of desire liberals have for enacting effective environmental policy because they just don’t like the trade-offs. The same goes for those who state that they hate Trumpian immigration policy, but are abject NIMBYs when it comes to their local community. Talk is cheap, in other words. The concrete costs one is willing to impose on oneself reveals true moral beliefs.

12

Curt Kastens 03.06.19 at 6:03 pm

Person XYZ,
There is truth to what you say. I think that there is an additional consideration though.
I could stop flying anywhere when I take a vacation. But the chances that my decision will influence anyone else to stop flying are very very remote. And if I did influence someone else to stop flying while on vacation there would be a corresponding drop in airlline ticket prices which encourage someone else to fly for a vacation instead.
I will stop flying for vacation when flying for vacation is outlawed or is at least rationed.
There is the old old saying the spirit is willing but the flesh is weak. That is why it takes political decisions to address global warming. It will not happen by appealing to people’s good will. The tourism will be one industry that would take a serious hit if humanity wanted to really address global warming. But the problems that would effect workers in this industry, and every other industry, COULD be (could have been?) dealt with by using the power of the state to reallocate resources to maintain social stability.
I put, could have been in parentices because I now seriously wonder if it is now to late to prevent mega famines, or even human extinction, due to climate change.

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