TGIF: The Worst Are Already on Top

After Homeland Security Secretary Kristi Noem made a fool of herself by defining habeas corpus as "a constitutional right that the president has to be able to remove people from this country," Justin Amash, the libertarian former congressman, posted an apt quotation on X:

Since it is the supreme leader who alone determines the ends, his instruments [staff] must have no moral convictions of their own. They must, above all, be unreservedly committed to the person of the leader; but next to this the most important thing is that they should be completely unprincipled and literally capable of everything. They must have no ideals of their own which they want to realise, no ideas about right or wrong which might interfere with the intentions of the leader.

The quote comes from Nobel laureate F. A. Hayek, one of the most important social scientists of the 20th century. You can find the quote in Chapter 10 of Hayek's invaluable 1943 classic, The Road to Serfdom. Hayek called that chapter “Why the Worst Get on Top.”

That chapter is worth paying close attention to. Let's start by acknowledging the purpose of Hayek's book. During World War II, Hayek, who lived and taught in England, sought to counter an argument made by prominent intellectuals, namely, that if central planning works well in war, it ought to work well in peacetime. Postwar economic planning seemed inevitable.

Hayek dissented. For him, the economic case for socialism had already been demolished by Ludwig von Mises's 1922 book, Socialism: An Economic and Sociological Analysis. That book had expanded on Mises's stunning 1920 paper, "Economic Calculation in the Socialist Commonwealth," which showed that since socialist planners would not have access to market prices—markets after all were to be abolished—they could not rationally plan a great industrial economy that would efficiently serve consumers.

Why couldn't the planners have access to prices? Because information-rich prices can emerge only through market exchanges. Markets must exist not only for consumer goods, but for the means of production, which for socialists was a no-no: that is, labor, land, raw materials, tools, equipment, machines, and buildings. But trade presupposes private property in the means of production, another no-no for the socialists. You cannot trade what you do not own.

In short: no private property = no trade. No trade = no prices. No prices = no rational planning. Market prices (a redundancy) reflect supply and demand; they also permit disparate things to be expressed in a common unit of account, for example, the dollar. This makes cost comparisons possible. If the planners could not engage in economic calculation through money prices, they could not devise the most efficient production strategies for the countless goods that consumers want.

Why does that matter? It matters because resources and labor are scarce. At any time, our large and varied demand exceeds supply. Many methods could be chosen to produce any particular good, but waste is contrary to our interests. We want the most efficient methods used because the fewer the inputs employed, the more outputs for consumers. Without prices, there would be no way to determine which method is most efficient and least wasteful. The planners would be like blind pilots flying in the dark with no instruments. As Mises said, socialism is impossible.

Before pointing to the late Soviet Union, China, Cuba, Venezuela, or North Korea as proof that Mises was wrong, remember that these systems existed in a world of semi-free-market prices. Worldwide socialism would be a nightmare.

In The Road to Serfdom, Hayek's critique of central planning went beyond the calculation problem. He demonstrated that if politicians took central social planning seriously, the people would have to be turned into serfs. Contrary to popular misunderstanding, he did not argue that if a society takes the first step toward the welfare state, serfdom would inevitably follow. As objectionable as it is, the welfare state is not socialism. It does not abolish private property, markets, and money.

One of Hayek's points—these were not predictions because he observed them in the Soviet Union, Nazi Germany, and fascist Italy—was that central planning required the concentration of all power in a few hands, perhaps one set of hands. It cannot be imagined otherwise. (We're not talking about syndicalism, which has its own problems.)

For example, imagine a society that embarks sincerely on democratic socialism. (Bernie Sanders and Alexandria Ocasio-Cortez take heed.) Hayek pointed out that the people and their legislature might agree 100 percent that the economy should be planned. It does not follow, however, that they will agree 100 percent on the contents of the plan. How much steel should be produced next year? How much plastic? How many refrigerators? How many cars? How many smartphones? How many dolls? Etc., etc., etc. Socialism could not repeal scarcity. Making more of X requires making less of Y. Making more producer goods requires making fewer consumer goods now. You have a problem with that? Sue God.

The chance of substantial agreement over the details of The Plan is near zero. Because of the disagreement, the legislature would be locked in endless debate with no prospect of finalizing The Plan. An unfinished plan cannot be implemented. The deadlock would be fertile ground for the emergence of a strongman. That would appeal to the people who favored action over talk. "Give us a plan!" Democratic socialism would be exposed as a chimera.

In our context, see what Donald Trump said when the U.S. Court of International Trade said that only Congress can impose tariffs: "The horrific decision stated I would have to get the approval of Congress for these Tariffs. In other words, hundreds of politicians would sit around D.C. for weeks, and even months, trying to come to a conclusion as to what to charge other Countries that are treating us unfairly.” (Emphasis added.)

Hayek would not be surprised:

We must here return for a moment to the position which precedes the suppression of democratic institutions and the creation of a totalitarian regime. In this stage it is the general demand for quick and determined government action that is the dominating element in the situation, dissatisfaction with the slow and cumbersome course of democratic procedure which makes action for action's sake the goal. It is then the man or the party who seems strong and resolute enough "to get things done" who exercises the greatest appeal.

Hayek noted that the strongman would need loyal, unquestioning lieutenants to faithfully carry out his decrees.

The chance of imposing a totalitarian regime on a whole people depends on the leader first collecting round him a group which is prepared voluntarily to submit to that totalitarian discipline which they are to impose by force upon the rest.

[The preempted socialist legislators] had, without knowing it, set themselves a task which only the ruthless, ready to disregard the barriers of accepted morals, can execute.... [Emphasis added.]

[A] numerous and strong group with fairly homogeneous views is not likely to be
formed by the best but rather by the worst elements of any society. [Emphasis added.]

The man and party best suited to impose the collectivist project will not be friendly to individual liberty or the free, spontaneous social process that liberalism calls for. Indeed, the "old" values would block their path and would have to be eliminated. In other words, a brutal program will be carried out by a brutal leader and brutal officers of the state, cheered on by worshipful followers.

As I've noted, Hayek's subject was totalitarian central planning. But I (among others) submit that similar dangers loom with any big-government interventionist system. The current U.S. regime claims the autocratic authority to do all sorts of things that violate individual liberty. It does not seek congressional authorization, and it damns the courts for obstruction.

The potential for such concentrated power has existed in the U.S. political system for a long time. Congress has repeatedly and illegally delegated broad "emergency" powers to the executive. What makes the current regime different from its predecessors is that it invokes those powers flagrantly, arbitrarily, and often. While it does not seek to impose a comprehensive plan (yet), it nevertheless has substantial plans on a variety of matters, such as international trade, domestic industry, and labor (immigration). That makes Hayek's analysis relevant.

Hayek opened the chapter with Lord Acton's famous aphorism: "All power corrupts, absolute power corrupts absolutely." But Hayek went beyond Acton to suggest that power attracts the corrupt or corruptible.

A key Hayekian point is that to the extent the regime carries out its plan, which will need public support, its attitude toward common-sense morality will be lax, to say the least, if not outright disdainful.

The principle that the end justifies the means is in individualist ethics regarded as the denial of all morals. In collectivist ethics it becomes necessarily the supreme rule; there is literally nothing which the consistent collectivist must not be prepared to do if it serves "the good of the whole", because the "good of the whole" is to him the only criterion of what ought to be done. The raison d'etat, in which collectivist ethics has found its most explicit formulation, knows no other limit than that set by expediency—the suitability of the particular act for the end in view. And what the raison d'etat affirms with respect to the relations between different countries applies equally to the relations between different individuals within the collectivist state. There can be no limit to what its citizen must not be prepared to do, no act which his conscience must prevent him from committing, if it is necessary for an end which the community has set itself or which his superiors order him to achieve.

Who would relish the chance to round up masses of peaceful "illegal" border-crossers without due process and force them onto planes bound for prisons in El Salvador, South Sudan, or Djibouti? The current U.S. regime will reward people who would enjoy that sort of work.

There is thus in the positions of power little to attract those who hold moral beliefs of the kind which in the past have guided the European peoples.... The only tastes which are satisfied are the taste for power as such, the pleasure of being obeyed and of being part of a well-functioning and immensely powerful machine to which everything else must give way.

Yet while there is little that is likely to induce men who are good by our standards to aspire to leading positions in the totalitarian machine, and much to deter them, there will be special opportunities for the ruthless and unscrupulous.... [T]he readiness to do bad things becomes a path to promotion and power. The positions in a totalitarian society in which it is necessary to practice cruelty and intimidation, deliberate deception and spying, are numerous. Neither the Gestapo nor the administration of a concentration camp, neither the Ministry of Propaganda nor the SA or SS (or their Italian or Russian counterparts) are suitable places for the exercise of humanitarian feelings. Yet it is through positions like these that the road to the highest positions in the totalitarian state leads.

It's too late to worry that the worst will get on top. He and they are already there.

 

Washington, We Have Problem

Centralized power has a problem: the individual. Every person is a potential disrupter of The Plan, and disruption must be forbidden. Otherwise, why have a central plan? This applies regardless of whether the planning is economy-wide or for particular sectors, such as medical services. (See F. A. Hayek's The Road to Serfdom.)

TGIF: The Knowledge that Only Free Markets Disclose

As a follow-up to my recent article about F. A. Hayek's classic article "The Use of Knowledge in Society" (1945), I thought it worth extending Hayek's exploration of this area of social theory. In 1968 the Nobel laureate-economist delivered a lecture in German known in English as "Competition as a Discovery Procedure." It's an alluring title, and anyone concerned with what makes for a good and prosperous society should be familiar with Hayek's basic point.

Hayek gets right to it. He notes that standard macroeconomists are guilty of having "investigated competition primarily under assumptions which, if they were actually true, would make competition completely useless and uninteresting." By that, he meant, "If anyone actually knew everything that economic theory designated as 'data,' competition would indeed be a highly wasteful method of securing adjustment to these facts."

In other words, if all the "data" were actually accessible data, solving society's scarcity problem would be a piece of cake, at least if the government's computer was powerful enough. (I'm led to understand that, fortunately, many economists have advanced since he gave this lecture, probably in part because of his challenge.)

"Hence," Hayek went on,

it is also not surprising that some authors have concluded that we can either completely renounce the market, or that its outcomes are to be considered at most a first step toward creating a social product that we can then manipulate, correct, or redistribute in any way we please.

Unfortunately, lots of such people are still around today.

Hayek (like his teacher Ludwig von Mises) knew that he needed to show that Adam Smith's "system of natural liberty" performed a critical service to mankind that could not be otherwise performed: the production of knowledge that is needed in a changing world of scarcity in which each individual must make plans but also be ready to adjust his or her plans in light of what other free individuals are doing. And that's what Hayek did, building on Mises and others. Hayek made contributions to the economic, or "practical," case for freedom that have been woefully unappreciated. The Austrian school of economics that Hayek was part of needs to be discussed more than ever.

Just as any sort of contest would be pointless if we infallibly knew the outcome in advance, Hayek wrote, so would marketplace competition. He considered "competition systematically as a procedure for discovering facts which, if the procedure did not exist, would remain unknown or at least would not be used." (Emphasis added.)

(Although, Hayek's German title, Der Wettbewerb als Entdeckungsverfahrenh, has been translated as "competition as a discovery procedure." I regard the word process as more appropriate because, unlike procedure, it suggests improvisation, spontaneity, and serendipity. Hayek's work overflows with an understanding of what he called spontaneous, or unplanned, order.)

Hayek reiterated his theme from "The Use of Knowledge in Society" even as he extended it. He wanted to know how can we even identify goods apart from what the market discloses over time through free producer and consumer action.

Which goods are scarce, however, or which things are goods, or how scarce or valuable they are, is precisely one of the conditions that competition should discover: in each case it is the preliminary outcomes of the market process that inform individuals where it is worthwhile to search. Utilizing the widely diffused knowledge in a society with an advanced division of labor cannot be based on the condition that individuals know all the concrete uses that can be made of the objects in their environment. Their attention will be directed by the prices the market offers for various goods and services.

Bottom line: government administrators may be able to give orders, but they cannot benefit the population. The Soviet Union no doubt used up resources making things that few people wanted. Hayek went on:

This means, among other things, that each individual’s particular combination of skills and abilities—which in many regards is always unique—will not only (and not even primarily) be skills that the person in question can recite in detail or report to a government agency. Rather, the knowledge of which I am speaking consists to a great extent of the ability to detect certain conditions—an ability that individuals can use effectively only when the market tells them what kinds of goods and services are demanded, and how urgently.

It's not magic that produces the knowledge that makes abundance possible for everyone. It's freedom of action, contract, and private property in a legal-political environment in which people peacefully and cooperatively pursue their happiness. The discoveries Hayek was talking about can take place only when people can 1) freely produce and offer products and services to others and 2) freely buy or not buy according to their own judgment. This includes labor services. Without that freedom, which is limited if not precluded by central planning and less-comprehensive regulation, an economy cannot be expected to benefit a large population.

The full case for a free society obviously has a rights-based, or justice-based, component, We are reasoning social beings who seek happiness. And the also has an important epistemic component, which Mises, Hayek, and others have laid out. We want justice for all individuals, and we want them to flourish. In a world of scarcity and dispersed and tacit knowledge, the free market is required. The moral is also practical.

TGIF: Ducking Hayek

May 8 marked the 124th anniversary of the birth of F. A. Hayek, the 1974 Nobel-winning economist of the Austrian school. (He died in 1992.) That makes it a good time to acknowledge one of his many contributions, his epistemic case for the free and competitive market order. It's well-suited to the information age.

One of Hayek's best-known articles was published in 1945 in the American Economic Review: "The Use of Knowledge in Society" (reprinted in Individualism and Economic Order). He got right to the point:

What is the problem we wish to solve when we try to construct a rational economic order? On certain familiar assumptions the answer is simple enough. If we possess all the relevant information, if we can start out from a given system of preferences, and if we command complete knowledge of available means, the problem which remains is purely one of logic. That is, the answer to the question of what is the best use of the available means is implicit in our assumptions....

This, however, is emphatically not the economic problem which society faces.... The reason for this is that the “data” from which the economic calculus starts are never for the whole society “given” to a single mind ... and can never be so given.

The peculiar character of the problem of a rational economic order is determined precisely by the fact that the knowledge of the circumstances of which we must make use never exists in concentrated or integrated form but solely as the dispersed bits of incomplete and frequently contradictory knowledge which all the separate individuals possess. The economic problem of society is ... a problem of how to secure the best use of resources known to any of the members of society, for ends whose relative importance only these individuals know.

This is an important matter of course. In a world of scarcity and incomplete knowledge, where much vital information is not "data" at all but unarticulated "knowing how," we don't want resources and labor services used in just any old way. Rather, we want them put to the best use in the eyes of diverse and fickle consumers -- and at the lowest cost possible so can we have more goods and more choices. We also want inevitable errors in production to be readily discovered and corrected. Finally, in a division of labor we want coordination to be as easy as possible.

Can we have all that? Fortunately a solution is available.

Thus Hayek wrote:

Fundamentally, in a system in which the knowledge of the relevant facts is dispersed among many people, prices can act to coördinate the separate actions of different people in the same way as subjective values help the individual to coördinate the parts of his plan....

We must look at the price system as such a mechanism for communicating information if we want to understand its real function....  The most significant fact about this system is the economy of knowledge with which it operates, or how little the individual participants need to know in order to be able to take the right action.... It is more than a metaphor to describe the price system as a kind of machinery for registering change, or a system of telecommunications which enables individual producers to watch merely the movement of a few pointers, as an engineer might watch the hands of a few dials, in order to adjust their activities to changes of which they may never know more than is reflected in the price movement.

He illustrated the point by describing how consumers and producers tend to economize on a material (he used tin) when the price goes up, even though only a few people know why the price has gone up. The price rise will encourage people to use less and or to use known substitutes and even discover substitutes. Others will be induced to search for new supplies of that material using new technology. Innovation will result. An economy run by politicians cannot approach this process.

What the price system accomplishes when left free is no mean feat. It makes longer and more prosperous lives possible for everyone. In a world of eight billion people, the unsexy price system is literally a lifesaver on a mass scale. Keep that in mind when politicians and activists call for interference with production and commerce.

We can't acknowledge Hayek's contribution without also paying tribute to his teacher Ludwig von Mises, which Hayek indeed did in other articles. For example, "Professor Mises' [1920s critique of socialism] represents the starting point from which all the discussions of the economic problems of socialism, whether constructive or critical, which aspire to be taken seriously, must necessarily proceed." Hayek, who had favored socialism before he met Mises, also wrote that Mises's "central thesis could not be refuted." (Hayek, "Socialist Calculation I: The Nature and History of the Problem," in Individualism and Economic Order.)

Hayek was referring to Mises's 1920 pathbreaking paper, "Economic Calculation in the Socialist Commonwealth," and his 1922 book, Socialism: An Economic and Sociological Analysis. Mises's fundamental point, which logically precedes Hayek's later addition, was that without real, honest market prices for all inputs, the economic calculation required for rational and efficient mass production would be impossible. And, he went on, you can't have honest market prices without private ownership and markets in resources and producer goods. (The Marxists sought the abolition of private property.) Flourishing and even life itself thus depend on prices and their prerequisites -- prices that cannot be ascertained or even generated except in the market, where producers and consumers act according to their personal and often improvised preferences, make unpredictable discoveries about what circumstances they prefer, and choose among real, not hypothetical alternatives. Bureaucrats and economists cannot simulate this process, no matter how powerful their supercomputers are.

This critique was devasting to all forms of socialism (including fascism), and history has proved Mises and Hayek correct. Remember, socialism was supposed to be the all-around better way to deliver prosperity to all.

Many people who should know better pretend that Mises and Hayek never found these flaws in socialism. Shame on them. As for others who say they favor socialism, what's concerning is not that they've heard Mises's and Hayek's critiques and answered them, but that they have never heard them at all! Enter the libertarians.

TGIF: Where the Socialists Go Wrong

Since socialism is "in" today -- even though many people who say they favor it have no idea what it is -- F. A. Hayek's last book, The Fatal Conceit: The Errors of Socialism (1988), is worth checking out. Hayek, the late great Nobel-laureate economist of the Austrian school, begins this way:

This book argues that our civilisation depends, not only for its origin but also for its preservation, on what can be precisely described only as the extended order of human cooperation, an order more commonly, if somewhat misleadingly, known as capitalism. To understand our civilisation, one must appreciate that the extended order resulted not from human design or intention but spontaneously: it arose from unintentionally conforming to certain traditional and largely moral practices, many of which men tend to dislike, whose significance they usually fail to understand, whose validity they cannot prove, and which have nonetheless fairly rapidly spread by means of an evolutionary selection -- the comparative increase of population and wealth -- of those groups that happened to follow them. The unwitting, reluctant, even painful adoption of these practices kept these groups together, increased their access to valuable information of all sorts, and enabled them to be 'fruitful, and multiply...' This process is perhaps the least appreciated facet of human evolution.

Socialists take a different view of these matters.

Well, that last sentence is quite an understatement. By socialism Hayek didn't mean the welfare state or continuing government efforts to manipulate market outcomes according to some notion of equity. That would be interventionism or the mixed economy. No, socialism is the abolition of the market order and its necessary condition, private property: the replacement of free private enterprise with centralized bureaucracy. Let's cut to the chase:

The main point of my argument is, then, that the conflict between, on one hand, advocates of the spontaneous extended human order created by a competitive market, and on the other hand those who demand a deliberate arrangement of human interaction by central authority based on collective command over available resources is due to a factual error by the latter about how knowledge of these resources is and can be generated and utilised. As a question of fact, this conflict must be settled by scientific study. Such study shows that, by following the spontaneously generated moral traditions underlying the competitive market order (traditions which do not satisfy the canons or norms of rationality embraced by most socialists), we generate and garner greater knowledge and wealth than could ever be obtained or utilised in a centrally-directed economy whose adherents claim to proceed strictly in accordance with 'reason'. Thus socialist aims and programmes are factually impossible to achieve or execute; and they also happen, into the bargain as it were, to be logically impossible.

Hayek is saying that once we understand how information about resources is produced and transmitted, we realize that central planners can't deliver the goods. Socialism can't keep its (earlier) promises of plenty. (Nor of justice, but that's for another time.)

Here Hayek extended Ludwig von Mises's fatal critique of socialism; namely, that

1. without tradeable private property in the means of production, markets for resources and producers' goods don't exist;
2. without such markets, true prices can't exist; and
3. without prices, rational economic calculation is impossible;
4. therefore, socialism is impossible; it's "planned chaos."

By impossible Mises meant that without genuine money prices resulting from free exchanges, the millions of disparate resources and goods could not be accorded a common unit of account, and therefore rational decision-making about what ought to be produced, how much should be produced, and the best methods of production is foreclosed. In a world of scarcity with a growing population, that is bad news indeed.

When the socialists responded to Mises that planners could simulate market prices with computers and bureaucratic trial and error, Hayek said, No, they can't because what makes true and informative prices happen -- producer and consumer free choice in an environment with widely dispersed and ever-changing local and often tacit knowledge about resources and preferences -- is beyond any central planner's reach. In what Hayek called "the great society" -- which is marked by extended cooperation with countless strangers rather than the earlier, primitive face-to-face tribal relations -- spontaneous coordination via the price system is the name of the game, literally a matter of life and death.

Thus Mises identified the "calculation problem," and Hayek the complementary "knowledge problem." The Mises-Hayek tag team was triumphant. When the Soviet Union dismantled itself, the American socialist economist Robert Heilbroner declared, "Mises was right."

As a result, newer generations of socialists gave up their goal of outproducing the market in favor of the "era of limits." In effect they said: "It's good that socialism can't outproduce the market. Affluence is bad for the planet, so the last thing we should want is for the people of the developing world to achieve our sinfully high living standards. Better that we should produce far less according to the instructions of trusted, saintly, and omniscient bureaucrats, who will distribute the output more caringly than profit-driven impersonal and spontaneous market forces could ever do."

And would you like to buy a bridge cheap? Back to Hayek.

The demands of socialism are not moral conclusions derived from the traditions that formed the extended order that made civilisation possible. Rather, they endeavour to overthrow these traditions by a rationally designed moral system whose appeal depends on the instinctual appeal of its promised consequences. They assume that, since people had been able to generate some system of rules coordinating their efforts, they must also be able to design an even better and more gratifying system. But if humankind owes its very existence to one particular rule-guided form of conduct of proven effectiveness, it simply does not have the option of choosing another merely for the sake of the apparent pleasantness of its immediately visible effects. The dispute between the market order and socialism is no less than a matter of survival. To follow socialist morality would destroy much of present humankind and impoverish much of the rest.

Many people with whom I share a deep loathing of war and surveillance apparently get a warm cozy feeling from the word socialism. I suspect it's because they've never encountered Hayek's point, much less examined it. That's a shame. They have nothing to lose but their self-forged chains.

TGIF: True Liberals Are Not Conservatives

The relevance of F. A. Hayek's essay "Why I Am Not a Conservative," the postscript to his important 1960 book, The Constitution of Liberty, is demonstrated at once by the opening quote from Lord Acton:

At all times sincere friends of freedom have been rare, and its triumphs have been due to minorities, that have prevailed by associating themselves with auxiliaries whose objects often differed from their own; and this association, which is always dangerous, has sometimes been disastrous, by giving to opponents just grounds of opposition. [Emphasis added.]

Who among true liberal advocates of individual liberty and free social evolution -- aka libertarians -- would deny the truth of that observation?

Hayek had European conservatism in mind when he wrote his essay, and for years, American conservatives, who still had affection for true liberalism, hastened to point this out. As Hayek wrote:

Conservatism proper is a legitimate, probably necessary, and certainly widespread attitude of opposition to drastic change. It has, since the French Revolution, for a century and a half played an important role in European politics. Until the rise of socialism its opposite was liberalism. There is nothing corresponding to this conflict in the history of the United States, because what in Europe was called "liberalism" was here the common tradition on which the American polity had been built: thus the defender of the American tradition was a liberal in the European sense.

Later in his essay, he elaborated that "in the United States it is still possible to defend individual liberty by defending long-established institutions. To the liberal they are valuable not mainly because they are long established or because they are American but because they correspond to the ideals which he cherishes."

But he noted that "This already existing confusion [over labels] was made worse by the recent attempt to transplant to America the European type of conservatism, which, being alien to the American tradition, has acquired a somewhat odd character." The confusion was compounded, Hayek wrote, when socialists began to call themselves liberals.

Many still suffer from this confusion today. But change has been afoot because the illiberals of the left and right increasingly want no part of true liberalism or the label -- and in a way, that's good. Those on the left who call themselves progressives or socialists don't like the label liberal (or neo-liberal) because they associate it with the current permanent bipartisan prowar regime beholden to special corporate interests (so we liberals still have work to do), and virtually all conservatives eschew the label because they don't want to be mistaken for libertarians. That's also good.

So Hayek's essay has new relevance for America. Would Hayek have been surprised? He would have distinguished national conservatism from neoconservatism because of the latter's cosmopolitanism. But how could he embrace as bonafide allies people who view imperialist war as a way to create "national greatness" and social solidarity, as the neocons do? Hayek would have agreed with Abraham Bishop who said in 1800 that "a nation which makes greatness its polestar can never be free; beneath national greatness sink individual greatness, honor, wealth and freedom."

So let's look at Hayek's problem with conservatism. For him, the "decisive objection" is that "by its nature," conservatism can do no more than slow down the change that progressives have initiated. That's not good enough: "What the liberal must ask, first of all, is not how fast or how far we should move, but where we should move." He acknowledged that although the liberal's differences with the "collectivist radical" are greater than his differences with the conservative, the latter "generally holds merely a mild and moderate version of the prejudices of his time." Thus "the liberal today must more positively oppose some of the basic conceptions which most conservatives share with the socialists."

Explicitly illiberal American conservatives would take issue with Hayek here, but I think Hayek was right. To the extent that conservatives want to use the state to impose their values -- through censorship, immigration and trade restrictions, vice prohibitions, antitrust law, cultural protectionism, and the like -- they indeed share conceptions with their enemies on the left. The ends may differ, but the means bear an uneasy resemblance. (The late Leonard Liggio used to say that the original socialism arose as a middle way that promised to use conservative means, that is, the state, to achieve liberal ends, that is, industrial progress and widespread wealth. Later a "new left" turned against industrial progress and disparaged the goal of material abundance for all.)

"The main point about liberalism," Hayek wrote, "is that it wants to go elsewhere, not to stand still." My sense is that in the last few years, elements of the right have come to appreciate Hayek's point. They became fed up with mere holding actions and have resolved to push a "positive" program. Unfortunately, it's a state-saturated program that ought to make genuine liberals sick.

The exception appears to be foreign policy. Right-wing nonintervention seems to have two justifications: first, that the U.S. government is wrong to think it can design the cultures of other nation-states, and second, that the trillions of dollars the government spends on the military and foreign populations could be better used for domestic matters, including "border security." So even in foreign policy the liberal and conservative bedfellows ought to be uncomfortable.

The liberal's wish not to stand still is the crux of the matter.

There has never been a time when liberal ideals were fully realized and when liberalism did not look forward to further improvement of institutions. Liberalism is not averse to evolution and change; and where spontaneous change has been smothered by government control, it wants a great deal of change of policy. So far as much of current governmental action is concerned, there is in the present world very little reason for the liberal to wish to preserve things as they are. It would seem to the liberal, indeed, that what is most urgently needed in most parts of the world is a thorough sweeping away of the obstacles to free growth. [Emphasis added.]

Hayek's embrace of a social order that guarantees change may seem to conflict with other things Hayek wrote that seem more conservative. But I think that may be mistaken. I take him to say that although the new is not necessarily the good, people must be free to try new ways to flourish. It is one thing to personally default to tried and true until something new proves itself worthy (because a tradition's value may not be immediately apparent), but quite another to empower the state to impede innovation and entrepreneurship, which is disruptive insofar as it is constructive. (Hence I would change Schumpeter's creative destruction to creative disruption.)

Hayek proceeded to enumerate several differences between liberal and conservative attitudes. The first, as already suggested, is that "one of the fundamental traits of the conservative attitude is a fear of change, a timid distrust of the new as such, while the liberal position is based on courage and confidence, on a preparedness to let change run its course even if we cannot predict where it will lead." This for Hayek explained the liberal enthusiasm for the free market's generation of spontaneous if unpredictable order, and the conservative lack of enthusiasm for such.

Relatedly, unlike liberalism, conservatism displays "its fondness for authority and its lack of understanding of economic forces. Since it distrusts both abstract theories and general principles, it neither understands those spontaneous forces on which a policy of freedom relies nor possesses a basis for formulating principles of policy." For Hayek, the conservative's "complacency ... toward ... established authority ... is difficult to reconcile with the preservation of liberty."

Hayek could have been describing Sen. Josh Hawley and the thinkers behind national conservatism when he wrote: "In general, it can probably be said that the conservative does not object to coercion or arbitrary power so long as it is used for what he regards as the right purposes. He believes that if government is in the hands of decent men, it ought not to be too much restricted by rigid rules."

Hayek faulted the conservative for lacking -- indeed, for disparaging -- abstract political principles, which are the key to peaceful coexistence among people within a society who have different moral visions:

What I mean is that he has no political principles which enable him to work with people whose moral values differ from his own for a political order in which both can obey their convictions. It is the recognition of such principles that permits the coexistence of different sets of values that makes it possible to build a peaceful society with a minimum of force.

And this point of Hayek's is especially pertinent:

Connected with the conservative distrust of the new and the strange is its hostility to internationalism and its proneness to a strident nationalism. Here is another source of its weakness in the struggle of ideas. It cannot alter the fact that the ideas which are changing our civilization respect no boundaries.... It is no real argument to say that an idea is un-American, or un-German, nor is a mistaken or vicious ideal better for having been conceived by one of our compatriots.

Hayek continued that "it is this nationalistic bias which frequently provides the bridge from conservatism to collectivism: to think in terms of 'our' industry or resource is only a short step away from demanding that these national assets be directed in the national interest...."

As he closed his essay Hayek confessed that since the word liberal had been corrupted, thanks to the French Revolution and other forces, by "overrationalis[m], nationalis[m]" and socialis[m]," it had ceased to a good label for his political outlook, which he shared with Tocqueville and Acton: "What I should want is a word which describes the party of life, the party that favors free growth and spontaneous evolution. But I have racked my brain unsuccessfully to find a descriptive term which commends itself." (He found libertarian "singularly unattractive" and "manufactured.")

I could go on quoting Hayek's essay -- which is not to say I agree with all of it -- but I fear that would unduly impose on the reader. So I recommend that the entire essay by the self-described "unrepentant Old Whig" be devoured forthwith.

Ten Favorite Books

Keith Knight, host of the Don't Tread on Anyone podcast, interviewed me about ten of my favorite books. 

Reason Has Limits, But What Doesn't?

It is not a criticism of reason to acknowledge that no reasoning person or group can have a synoptic view of the world or of society that would enable him or it to rationally plan everything. The faculty of reason is packaged within individual human beings, and no mountaintop exists from which one could see and know all that it would take to plan a society or an economy in the interest of all its participants. The result of attempting to do so would inevitably be what Ludwig von Mises called "planned chaos." This is what F. A. Hayek, Mises's student, also worked so hard to explain.

But when individuals operate and cooperate in a free society and marketplace, their small portion of knowledge, articulated and tacit, becomes accessible to all, mostly through the price system. Mises and Hayek showed this in the great socialist-calculation debate of the '20s and '30s.

Reason is powerfully efficacious in that it enables us to perceive and understand the world that exists independently of us. It's a time-consuming, effortful, and piecemeal pursuit that is subject to never-ending rebuttal, refutation, and revision. Does reason have limits? Of course. Everything has limits. A is A means that A is not non-A. But that is hardly a criticism of reason. It's an invitation to understanding and a notice to avoid what Hayek called the "abuse of reason." (See his The Counter-Revolution of Science: Studies on the Abuse of Reason.) 

Why Do Climate Alarmists Dislike Climate Realist-Optimists So Much?

F. A. Hayek, the Nobel-Prize-winning economist of the Austrian tradition, provided a possible answer to the question posed in the title. Although Hayek (1899-1992) to my knowledge had nothing to say about the climate controversy, his views on macroeconomics met with a similarly critical attitude from those who practiced economics at a level far, far removed from individual action. He too was in essence called a science denier, in this case the science was economics. Here's what he said when contrasting the method of the natural sciences of "simple phenomena" with the methods of social and other sciences of "complex phenomena" (transcribed from an interview at 33:00):

All the things I have stressed--the complexity of phenomena in general, the unknown character of the data, and so on--really much more points out limits to our possible knowledge than our contributions which makes specific predictions possible. This incidentally [is] another reason why my views have become unpopular. Conception of scientific method became prevalent during that period [the 1930s, when he worked on his "pure theory of capital"] which valued all scientific theories from the nature of specific predictions at which it would lead. Now somebody who pointed out that specific predictions which it could make were very limited and that at most it could achieve what I sometimes call "pattern predictions," or predictions of the principle, seemed to the people who were used to the simplicity of physics or chemistry very disappointing and almost not science. The aim of science in that view was specific prediction, preferably mathematically testable, and somebody who pointed out that when you applied this principle to complex phenomena, you couldn't achieve this seemed to the people almost to deny [!] that science was possible.

Of course my real aim was that the possible aims must be much more limited once we've passed from the science of simple phenomena to the science of complex phenomena. And there people bitterly resented that I would call physics a science of simple phenomena, which is partly a misunderstanding because the theory of physics [runs?] in terms of very simple equations. But that the active phenomena to which you have to apply it may be extremely complex is a different matter.... [On the other hand, in "intermediate fields" such as biology and the social sciences] their complexity becomes, I believe, an absolute barrier to the specificity of the predictions that we can arrive at. Until people learn themselves that they cannot achieve these ends, they will insist [on] trying and think somebody [who] believes it can't be done is just old-fashioned and doesn't understand modern science. 

The relevance to the climate debate ought to be clear. Climate realist-optimists often point out that climates are too complex--with too many interacting and moving parts--to be spoken of and "projected" in the simplistic way that the alarmists routinely try to do. So alarmists naturally dislike when credentialed scientists come along and point this out. This is why alarmists outrageously call the realist-optimists "deniers" and worse. 

Why Politics Is So Acrimonious

If we wish to understand what's wrong with today's politics, we ought to consider something F. A. Hayek pointed out long ago. It should have been obvious, but it escapes many people: namely, the more power government officials have over our lives, the more people will fear its falling into the "wrong" hands, that is, the hands of those who disagree with them. In response to a growing fear, they will be willing to undertake ever-more-extreme measures to wrest power from those hands or retain it for the "right" hands.

Who can deny this? Government is force. It is imposition -- not merely on people who really abuse others, but also on perfectly innocent people who mind their own business. Since that is so and since few people like having things jammed down their throats, as government officials control more and more aspects of life, including and perhaps especially cultural matters (through schooling, for example), people realize they have two only choices: be a victim or be an aggressor. Many people will choose the latter and be willing to go to great lengths, even street violence, to protect themselves and their families. (Note well: This is not an excuse for violence.)

If you wonder why zero-sum politics has become so acrimonious, therein lies a clue. (Other factors may explain the timing, etc.) You want less acrimonious politics? Strive for less politics. And that means replacing government with freedom, consent, and markets. We really have no other choice.

Hayek on Rules, Tradition, and Freedom

There is advantage in obedience to such [moral and other social] rules not being coerced, not only because coercion as such is bad, but because it is, in fact, often desirable that rules would be observed only in most instances and that the individual should be able to transgress them when it seems to him worthwhile to incur the odium which this will cause. It is also important that the strength of the social pressure and of the force of habit which insures their observance is variable. It is this flexibility of voluntary rules which in the field of morals makes gradual evolution and spontaneous growth possible, which allows further experience to lead to modifications and improvements. Such an evolution is possible only with rules which are neither coercive nor deliberately imposed -- rules which, though observing them is regarded as merit and though they will be observed by the majority, can be broken by individuals who feel that they have strong enough reasons to brave the censure of their fellows. Unlike any deliberately imposed coercive rules, which can be change only discontinuously and for all at the same time, rules of this kind allow for gradual and experimental change. The existence of individuals and groups simultaneously observing partially different rules provides the opportunity for the selection of the more effective ones. 

F. A. Hayek, The Constitution of Liberty (1960: 62-63) 

TGIF: Trump's Creators

The Donald Trump phenomenon is indeed the creature of the Republican establishment, but there's more to it than that.

TGIF: From 1944 to Nineteen Eighty-Four

Friday's TGIF was a reprise of one of my favorites: "From 1944 to Nineteen Eighty-Four." Enjoy!

TGIF: Fearing Hayek

I’m sensing some panic in the air. Certain people seem mighty concerned that other people are . . . discovering Hayek. As a W. S. Gilbert character might say, Oh horror!

Read the full TGIF here.

Happy Birthday, F. A. Hayek

F. A. Hayek, Austrian economist, social philosopher, and champion of liberty, was born on this day in 1899. Read Mario Rizzo's appreciation.

TGIF: From 1944 to Nineteen Eighty-Four

I’m inclined to think of George Orwell and F. A. Hayek at the same time. Both showed great courage in writing the truth, undaunted by the consequences awaiting them. Both valued freedom, though they understood it differently.

The rest of TGIF is here.

Must-Read on Health Care

I exaggerate only slightly -- and I mean slightly -- when I say that all you really need to read on the healthcare debate is Steve Horwitz's Freeman article "Profit: Not Just a Motive."

No one who is ignorant of these arguments can be counted as a serious participant in the debate.

Inflation as Income Distribution

The Federal Reserve has been pumping hundreds of billions of newly created dollars into “the economy.” Much of that money has been sent to Wall Street to bailout large, struggling firms. But that’s just the beginning. President-elect Obama says that since he needs to “stimulate the economy” we can look forward to trillion-dollar budget deficits for years to come. Even before the financial turmoil began, the deficit had approached $500 billion. (Not to worry, though–Obama says deficit spending will impose “fiscal discipline” in the future.) Of course, when the federal government spends more than it taxes, it has to get the extra money somewhere. Therein lies the treachery.

The rest of this week's TGIF, "Inflation as Income Distribution," is at the Foundation for Economic Education website.