This Week’s Applied Hayek: Update Edition

A good friend and frequent collaborator wrote in a few days ago to suggest that my Hayek post a couple of weeks back on the difference between formal socialism and social welfare-statism was a pedantic distinction without a difference—that it’s just the same-old, same-old Left in action, motivated ultimately by radical egalitarianism. This is true as to ends, but I take Hayek to be saying that the choice of means by the Left is all-important in terms of the challenge it presents to defenders of liberty, and that it represents a different kind of challenge than formal socialism.  “Did I miss something?”, he asked.  I thought my reply might be worth posting here as a sequel:

You didn’t miss anything.  You are quite right that both formal socialism and the welfare/regulatory state stem from the same leftist impulse, which Hayek called “the fatal conceit,” or what I modify as “the illusion of mastery,” i.e., in its most broad terms the idea that the real world is susceptible of complete political control. . .   But the real answer to your question is—you have to read the rest of Hayek’s book, where he patiently deconstructs the welfare state, and its harmful second-order effects, distortions of the rule of law, etc, in one area after another—essentially a series of case studies from which he derives general rules that apply perfectly today (since there is nothing new under the leftist sun).

To restate: What Hayek is saying is that the welfare state form of the fatal conceit is substantially different than collectivist socialism, and because it involves more subtleties is harder to critique.  While formal socialism is vulnerable to a straight-up economic critique, the welfare/regulatory state requires an epistemological critique.  This became the main focus of almost all of Hayek’s later work.  Hence you can divide Hayek’s entire intellectual career into two distinct phases.  By 1945 he had moved on from his technical economic work on the Austrian credit-trade cycle theory and related questions on which he’d made his academic reputation in the 1920s and 1930s, and starting with his famous 1945 American Economic Review article “The Use of Knowledge in Society” moved wholly into what I call epistemology (though this isn’t exactly the right term), and its application to the much more protean welfare state model of leftism.  Maybe a more mundane example will serve my purpose better.  If you ask people in a poll if they support socialism, the answer will be a resounding No by a large majority.  Ask them if they support Social Security and Medicare, the answer will be a very large Yes.  That’s our problem.

This is why, by the way, The Constitution of Liberty is a much superior book to the more famous Road to Serfdom, several parts of which Hayek implicitly repudiates in his later work.  He even explicitly repudiated a few aspects of it if you read closely.  (Did you know, by the way, that Road to Serfdom inspired Churchill’s infamous “Gestapo” speech in the June 1945 election campaign—a speech with ranks next to Goldwater’s “extremism in defense of liberty” line as a model of imprudent political rhetoric.  Hayek himself was later critical of Churchill’s clumsy handling of his theme.)  This is one reason why I think it is unfortunate that so many of the popular free market programs on college campuses assign Road to Serfdom rather than Constitution of Liberty (or his even later trilogy Law, Legislation and Liberty) and why I also think many doctrinaire libertoids badly abuse today some aspects of Road to Serfdom that were deeply context-bound (especially Hayek’s chapter on “Why The Worst Always Get on Top”).

While I’m at it, two further extraneous notes.  It is amazing how widely Hayek pursued his central theme after 1945, including his astonishing 1952 book The Counter-Revolution of Science: Studies in the Abuse of Reason.  If Constitution of Liberty can be read as a commentary on Obama’s political philosophy, then Counter-Revolution makes for a very interesting critique in the age of politicized global warming science.

But Hayek took it a bit too far in his very late work.  I think his semi-finished last book The Fatal Conceit is actually quite bad in some important ways.  A number of his old Chicago friends thought so too.  But that’s a story for the advanced seminar perhaps.

Stay tuned: My next installment will be on Hayek and Obamacare.


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