Allen Porter Mendenhall

Archive for the ‘Libertarianism’ Category

The Immunity Community

In America, American History, Arts & Letters, Britain, History, Humanities, Jurisprudence, Justice, Law, Libertarianism, Philosophy on September 10, 2014 at 8:45 am

Allen 2

This piece first appeared here as a Mises Emerging Scholar article for the Ludwig von Mises Institute Canada.

The doctrine of sovereign immunity derives from the English notion that “the king can do no wrong” and hence cannot be sued without his consent. The purpose of this doctrine was, in England, from at least the Middle Ages until eighteenth century, to bar certain lawsuits against the monarch and his or her ministers and servants. With the rise of the English Parliament after the death of Elizabeth I, government officers and politicians sought to gain the power of immunity that the monarch and his or her agents had enjoyed.

In practice, however, English subjects were not totally deprived of remedies against the monarch or the government. The doctrine of sovereign immunity was not an absolute prohibition on actions against the crown or against other branches of government;[1] subjects could avail themselves of petitions of right or writs of mandamus, for instance, and monarchs fearful of losing the support of the people would often consent to be sued.

It was not until the monarchy had been demonstrably weakened that the doctrine of sovereign immunity began to be espoused with added urgency and enforced with added zeal. In the late eighteenth century, Sir William Blackstone intoned in his Commentaries on the Laws of England that the king “is not only incapable of doing wrong, but ever of thinking wrong: he can never mean to do an improper thing: in him is no folly of weakness.” These lines convert sovereign immunity into sovereign infallibility, a more ominous yet more dubious pretension.

Once the monarchy had been abolished altogether, the idea that the sovereign had to consent to be sued no longer held credence. As Louis L. Jaffe explains, “Because the King had been abolished, the courts concluded that where in the past the procedure had been by petition of right there was now no one authorized to consent to suit! If there was any successor to the King qua sovereign it was the legislature,” which, having many members subject to differing constituencies, was not as accountable as the monarch had been to the parties seeking to sue.[2]

The principle of sovereign immunity carried over from England to the United States, where most states have enshrined in their constitution an absolute bar against suing the State or its agencies and officers whose actions fall within the scope of official duties. The Eleventh Amendment to the U.S. Constitution likewise states that “the Judicial power of the United States shall not be construed to extend to any suit in law or equity, commenced or prosecuted against one of the United States by Citizens of another State, or by Citizens or Subjects of any Foreign State.” This provision, which applies only in federal courts and which does not on its face prohibit a lawsuit against a state by a citizen of that same state, was adopted in response to the ruling in Chisholm v. Georgia (1793), a case that held sovereign immunity to have been abrogated and that vested in federal courts the authority to preside over disputes between private citizens and state governments.

Notwithstanding the complex issues of federalism at play in the Chisholm decision and in the Eleventh Amendment, the fact remains that the doctrine of sovereign immunity has been applied with widening scope and frequency since the states ratified the Eleventh Amendment in 1795. The U.S. Supreme Court has contributed to the doctrine’s flourishing. “The Supreme Court’s acceptance of sovereign immunity as constitutional principle,” explains one commentator, “depends on its determination of the intent of the Framers, which ignores a great deal of historical evidence from the time of the founding and relies primarily on a discredited account of the Eleventh Amendment first articulated in the 1890 case of Hans v. Louisiana.”[3]

State and federal courts have now built an impregnable wall of immunity around certain state and federal officers. The sovereign immunity that is enshrined in state constitutions is, in theory, not absolute because it is conferred only to certain agents and officers and does not prohibit lawsuits to enjoin such agents and officers from performing unconstitutional or other bad acts. In practice, however, the growth of qualified immunities, which is in keeping with the growth of government itself, has caused more and more agents of the State to cloak themselves in immunity.

Bus drivers, teachers, coroners, constables, high school coaches, doctors and nurses at university hospitals, security guards, justices of the peace, government attorneys, legislators, mayors, boards of education and health, university administrators, Indian reservations, prison guards and wardens, police officers and detectives, janitors in government facilities, licensing boards, tax assessors, librarians, railroad workers, government engineers, judges and justices, school superintendents and principals, towing companies, health inspectors, probation officers, game wardens, museum docents and curators, social workers, court clerks, dog catchers, contractors for public utilities, public notaries, tollbooth attendants, airport traffic controllers, park rangers, ambulance drivers, firefighters, telephone operators, bus drivers, subway workers, city council members, state auditors, agricultural commissioners—all have sought to establish for themselves, with mixed degrees of success, the legal invincibility that comes with being an arm of the state.

Yet the idea that “the king can do no wrong” makes no sense in a governmental system that has lacked a king from its inception. Its application as law has left ordinary citizens with limited recourse against governments (or against people claiming governmental status for the purpose of immunity) that have committed actual wrongs. When the government, even at the state level, consists of vast bureaucracies of the kind that exist today, the doctrine of sovereign immunity becomes absurd. If it is true that in nine states and in the District of Columbia the government employs more than 20% of all workers, imagine how many people are eligible to claim immunity from liability for their tortious conduct and bad acts committed on the job.

Local news reports are full of stories about government employees invoking the doctrine of sovereign immunity; few such stories find their way into the national media. Judge Wade McCree of Michigan, for instance, recently carried out an affair with a woman who was a party in a child-support case on his docket, having sexual intercourse with her in his chambers and “sexting” her even on the day she appeared as a witness in his courtroom. Although McCree was removed from office, he was immune from civil liability. An airport in Charleston, West Virginia, is invoking the doctrine of immunity to shield itself from claims that it contributed to a chemical spill that contaminated the water supply. Officer Darren Wilson may be entitled to immunity for the shooting of Michael Brown, depending on how the facts unfold in that investigation.

The U.S. Supreme Court once famously declared that the doctrine of sovereign immunity “has never been discussed or the reasons for it given, but it has always been treated as an established doctrine.”[4] A disestablishment is now in order. The size and scope of government is simply too massive on the state and national level to sustain this doctrine that undermines the widely held belief of the American Founders that State power must be limited and that the State itself must be held accountable for its wrongs. Friedrich Hayek pointed out that the ideal of the rule of law requires the government to “act under the same law” and to “be limited in the same manner as any private person.”[5] The doctrine of sovereign immunity stands in contradistinction to this ideal: it places an increasing number of individuals above the law.

If the law is to be meaningful and just, it must apply equally to all persons and must bind those who enforce it. It must not recognize and condone privileges bestowed upon those with government connections or incentivize bad behavior within government ranks. Sovereign immunity is a problem that will only worsen if it is not addressed soon. The king can do wrong, and so can modern governments. It’s time for these governments to be held accountable for the harms they produce and to stop hiding behind a fiction that was long ago discredited.

________

[1]See generally, Louis L. Jaffe, “Suits Against Governments and Officers: Sovereign Immunity,” 77 Harvard Law Review 1 (1963).

[2]Jaffe at 2.

[3]Susan Randall, “Sovereign Immunity and the Uses of History,” 81 Nebraska L. Rev. 1, 4 (2002-03).

[4]U.S. v. Lee, 106 U.S. 196, 207 (1882).

[5]F. A. Hayek, The Constitution of Liberty, Vol. 17 of The Collected Works of F.A. Hayek, ed. Ronald Hamowy(Routlege, 2011), p. 318.

Allen Mendenhall Interviews Edward W. Younkins

In American Literature, Arts & Letters, Austrian Economics, Book Reviews, Books, British Literature, Economics, Fiction, Humane Economy, Humanities, Imagination, Liberalism, Libertarianism, Literary Theory & Criticism, Literature, Novels, Philosophy, Politics on February 12, 2014 at 8:45 am
Edward W. Younkins

Edward W. Younkins

AM:       Thank you for taking the time to do this interview.  I’d like to start by asking why you chose to write Exploring Capitalist Fiction.  Was there a void you were seeking to fill?

EY:          The origins of this book go back to the Spring of 1992 when I began teaching a course called Business Through Literature in Wheeling Jesuit University’s MBA program.  Exploring Capitalist Fiction is heavily based on my lectures and notes on the novels, plays, and films used in this popular course over the years and on what I have learned from my students in class discussions and in their papers.

The idea to write this book originated a few years ago when one of Wheeling Jesuit University’s MBA graduates, who had taken and enjoyed the Business Through Literature course, proposed that I write a book based on the novels, plays, and films covered in that course.  I agreed as I concluded that the subject matter was important and bookworthy and that the book would be fun for me to write and for others to read.  I went on to select twenty-five works to include in the book out of the more than eighty different ones that had been used in my course over the years.  I have endeavored to select the ones that have been the most influential, are the most relevant, and are the most interesting.  In a few instances, I have chosen works that I believe to be undervalued treasures.

I was not intentionally trying to fill a void as there are a number of similar books by fine authors such as Joseph A. Badaracco, Robert A. Brawer, Robert Coles, Emily Stipes Watts, and Oliver F. Williams, among others.  Of course, I did see my evenhanded study of business and capitalism in literature as a nice complement and supplement to these works.

AM:       I assume that you’ll use this book to teach your own courses, and I suspect other teachers will also use the book in their courses.  Anyone who reads the book will quickly understand the reason you believe that imaginative literature and film have pedagogical value in business courses, but would you mind stating some of those reasons for the benefit of those who haven’t read the book yet?

EY:          The underpinning premise of this book and of my course is that fiction, including novels, plays, and films, can be a powerful force to educate students and employees in ways that lectures, textbooks, articles, case studies, and other traditional teaching approaches cannot.  Works of fiction can address a range of issues and topics, provide detailed real-life descriptions of the organizational contexts in which workers find themselves, and tell interesting, engaging, and memorable stories that are richer and more likely to stay with the reader or viewer longer than lectures and other teaching approaches.  Imaginative literature can enrich business teaching materials and provide an excellent supplement to the theories, concepts, and issues that students experience in their business courses.  Reading novels and plays and watching films are excellent ways to develop critical thinking, to learn about character, and to instill moral values.  It is likely that people who read business novels and plays and watch movies about business will continue to search for more of them as sources of entertainment, inspiration, and education.

AM:       Who are the intended audiences for your new book?

EY:          My target audiences include college students, business teachers, general readers, and people employed in the business world.  My summaries and analyses of twenty-five works are intended to create the feel of what it is like to work in business.  The premise of the book is that fiction can provide a powerful teaching tool to sensitize business students without business experiences and to educate and train managers in real businesses.  Studying fictions of business can provide insights to often inexperienced business students and new employees with respect to real-life situations.

In each of my 25 chapters I provide a sequential summary of the fictional work, interspersed with some commentary that highlights the managerial, economic, and philosophical implications of the ideas found in the work.  My emphasis is on the business applications of the lessons of particular novels, plays, and films.  This book highlights the lessons that an individual can take from each work and apply to his or her own life.  It is not literary analysis for its own sake.

I do not delve deeply into these novels, plays, and films in order to identify previously-covered and previously-uncovered themes in existing scholarship.  My book is essentially a study guide for people interested in becoming familiar with the major relevant themes in significant works of literature and film.  The book can also serve as a guide for professors who desire to expand their teaching approaches beyond the traditional ones employed in schools of business.

Of course, literary scholars can use my book as a starting point, catalyst, or reference work for their own in-depth scholarly studies of these and other works.  For example, I can envision a number of scholars, from a variety of viewpoints, contributing essays to book collections devoted to different literary works.  One possible collection that readily comes to mind would be devoted to David Mamet’s Glengarry Glen Ross.  Other candidates for potential collections might include Howell’s The Rise of Silas Lapham, Norris’s The Octopus, Dreiser’s The Financer, Cahan’s The Rise of David Levinsky, Lewis’s Babbitt, Miller’s Death of a Salesman, Hawley’s Executive Suite, Lodge’s Nice Work, Sterner’s Other People’s Money, among others.  It would be great if some of the contributing literary scholars to these volumes would come from pro-business, pro-capitalist thinkers such as Paul Cantor, Stephen Cox, Ryan McMaken, Sarah Skwire, Amy Willis, Michelle Vachris, and yourself.  As you know most literary critics are from the left.  Those mentioned above celebrate individualism and freedom in place of collectivism and determinism.

AM:       What can be learned from business fiction?

EY:          Fiction can be used to teach, explicate, and illustrate a wide range of business issues and concepts.  Many fictional works address human problems in business such as managing interpersonal conflict and office politics; using different styles of management; the potential loss of one’s individuality as a person tends to become an “organization man”; the stultifying effect of routine in business; the difficulty in balancing work life and home life; hiring and keeping virtuous employees; maintaining one’s personal integrity while satisfying the company’s demands for loyalty, conformity and adaptation to the firm’s culture; communication problems a business may experience; fundamental moral dilemmas; depersonalization and mechanization of human relationships; and so on.  Fictional works tend to describe human behavior and motivations more eloquently, powerfully, and engagingly than texts, articles, or cases typically do.  Literary authors and filmmakers are likely to develop and present ideas through individual characters.  They depict human insights and interests from the perspective of individuals within an organizational setting.  Reading imaginative literature and watching films are excellent ways to develop critical thinking and to learn about values and character.

Many novels, plays, and films are concerned with the actual operation of the business system.  Some deal directly with business problems such as government regulation, cost control, new product development, labor relations, environmental pollution, health and safety, plant openings and closings, tactics used and selection of takeover targets, structuring financial transactions, succession planning, strategic planning, the creation of mission statements, the company’s role in the community, social responsibility, etc.  Assessing fictional situations makes a person more thoughtful, better prepared for situations, and better able to predict the consequences of alternative actions.  Fiction can address both matters of morality and practical issues.  There are many fine selections in literature and film which prompt readers to wrestle with business situations.

Older novels, plays, and films can supply information on the history of a subject or topic.  They can act as historical references for actual past instances and can help students to understand the reasons for successes and failures of the past.  Older literature can provide a good history lesson and can help people to understand the development of our various businesses and industries.  These stories can be inspiring and motivational and can demonstrate how various organizations and managers were able to overcome obstacles, adapt, and survive.  Fictional works are cultural artifacts from different time periods that can be valuable when discussing the history of business.  Many fictional works present history in a form that is more interesting than when one just reads history books.

Imaginative literature reflects a variety of cultural, social, ethical, political, economic, and philosophical perspectives that have been found in American society.  Various images of businessmen have appeared in fictional works.  These include the businessman as Scrooge-like miser, confidence man, robber baron, hero, superman, technocrat, organization man, small businessman, buffoon, rugged individualist, corporate capitalist, financial capitalist, man of integrity, etc.

AM:       How will your teaching approach change in your Business Through Literature course now that you have published your own book on the subject?

EY:          In the past students in this course have read, analyzed, and discussed novels, plays, and films.  Each student prepared a minimum of 6 short papers (2000 words each) on the assigned works.  Grades were based on these papers and class discussions.

I am experimenting this semester using my book in the class for the first time.  I am requiring each student to take notes on each chapter of the book to help them in bringing up topics for class discussion and in participating in class discussions.  Each student is also required to prepare and turn in three essay questions on each chapter.  These are turned in before each relevant class.  Grades for the class are based on class participation and two essay tests.

AM:       Isn’t the reverse also true that literature students ought to study economics or at least gain an understanding of business from something besides imaginative literature and film, which tend not to portray capitalists in a favorable light?

EY:          It would definitely be beneficial for literature students to study classes in business areas such as management, marketing, accounting, and finance.  It would help them somewhat if they took a course or two in economics.  Unfortunately, almost all college-level economics courses are based on Keynesian economics.  I would encourage anyone who takes such courses to read and study Austrian economics in order to gain a more realistic perspective.

AM:       You’ve written a great deal about Ayn Rand, and the chapter on Atlas Shrugged is the longest one in your book.  Rand can be a divisive figure, even, perhaps especially, among what you might call “libertarians” or “free marketers” or “capitalists” and the like.  But even the people in those categories who reject Objectivism tend to praise Rand’s novels.  What do you make of that, and do you think there’s a lesson there about the novel as a medium for transmitting philosophy?

EY:          I suspect that there are a lot of people like me who value “novels of ideas.”  There have been many good philosophical novels but none have been as brilliantly integrated and unified as Atlas Shrugged.  Rand characterizes grand themes and presents an entire and integrated view of how a man should live his life.  Rand’s great power comes from her ability to unify everything in the novel to form an integrated whole.  The theme and the plot are inextricably integrated.  Rand is a superb practitioner of synthesis and unity whose literary style and subject are organically linked and fused to the content of her philosophy.  She unifies the many aspects of Atlas Shrugged according to the principles of reality.  People from the various schools of “free-market” thought are in accord in promoting an appropriate reality-based social system in which each person is free to strive for his personal flourishing and happiness.

AM:       I want to ask about Henry Hazlitt’s Time Will Run Back, the subject of chapter twelve of your book.  Why do you think this book has not received much attention?  It has been, I’d venture to say, all but forgotten or overlooked by even the most ardent fans of Hazlitt.  Is the book lacking something, or are there other factors at play here?

EY:          Hazlitt’s novel may not be “literary” enough for many people.  However, in my opinion, the author does skillfully use fiction to illustrate his teachings on economics.  I think that the book also has a good story line.  Economics professors tend to shy away from using it in their classes.  Some may be so quantitatively oriented that they cannot envision using a novel to teach economics.  Others may perceive the Austrian economics principles found in Time Will Run Back to not fit in with the Keynesian economics principles found in most textbooks (and of course they are right).

AM:       Thank you again for doing this interview.  All the best in 2014.

0739184261[1]

Edward W. Younkins. Exploring Capitalist Fiction:  Business Through Literature and Film. Lanham,

Maryland: Lexington Books, 2014.

 

The Invisible Hand in Popular Culture

In Academia, Arts & Letters, Austrian Economics, Book Reviews, Books, Economics, Fiction, Film, Humane Economy, Humanities, Liberalism, Libertarianism, Literary Theory & Criticism, Philosophy, Rhetoric & Communication, Screenwriting, Television, Television Writing on January 22, 2014 at 8:45 am

Allen 2

This review originally appeared here in The Independent Review.

“Television rots your brain.” That’s a refrain many of us grew up hearing, but it isn’t true. So suggests Paul Cantor in The Invisible Hand in Popular Culture, his second book about American film and television.

Cantor has become a celebrity within libertarian circles. He is Clifton Waller  Barrett Professor of English and Comparative Literature at the University of Virginia and recently became a visiting professor at his alma mater, Harvard University.  What’s remarkable about his appointment at Harvard is that it is in the Department of Government, not the Department of English. That doesn’t surprise those of us familiar with his breadth of knowledge and range of interests.

Recognized as an interdisciplinary scholar, Cantor attended Ludwig von Mises’s seminars in New York City before establishing himself as an expert on Shakespeare.  Besides publishing extensively on literature of various genres and periods, he has been a tireless advocate for Austrian economics, even though Marxist theories and their materialist offshoots dominate his field. In 1992, the Mises Institute awarded Cantor the Ludwig von Mises Prize for Scholarship in Austrian Economics, and his work at the intersection of economics and literature resulted in Literature and the Economics of Liberty (Auburn, Ala.: Ludwig von Mises Institute, 2010), which he edited with Stephen Cox (while contributing nearly half of the book’s contents).

Like that work, The Invisible Hand in Popular Culture owes much to the theories of Friedrich Hayek, in particular the concept of spontaneous order. It is a reflection of spontaneous order that the most beloved films and television shows did not spring perfectly from the mind of some genius working in complete isolation.  Rather, they emerged out of the complex interactions between producers and consumers and the collaborative efforts of scores of diligent workers. Viewer feedback facilitated modifications and improvements to films and television, which  advanced in meliorative stages.

Hayek discusses spontaneous order to refute the belief that government intervention and central planning ought to force order onto the marketplace. Cantor discusses it to refute the belief that artistic creation stands outside of commercial exchange. Examining depictions of freedom and coercion in a wide variety of films and television shows, he highlights the disparity between elitist and populist understandings of American culture, which he links to “top-down” and “bottom-up” models of order, respectively. His position is that the popularity and artistic appeal of film and television appear to be proliferating despite the objections and insults levied by the cultural elite, who, it should be added with not a little irony, nonetheless probably watch a great deal of television.

Against the cultural elite and their promotion of patrician—and mostly  European—standards for the arts, Cantor maintains that the marketplace enables  creative and experimental forms of expression that aren’t so different from earlier aesthetic media such as the serialized novel or popular plays. He reminds us that “nineteenth century critics tended to look down on the novel as a popular form, thinking it hardly a form of literature at all,” and adds that it “was not viewed as authentic art, but rather as an impure form, filled with aesthetically extraneous elements  whose only function is to please the public and sell copies” (p. 7). This once “vulgar” medium has lately been celebrated as one of the highest and most impressive categories of art. The form and content of great American novels—whether by Twain or Cooper or Salinger or Pynchon—should remind us that popular novels have been elevated as canonical even though they have rejected the standards and conventions that highbrow critics insisted were necessary for a work to constitute “literature.” Twain and Cooper recognized that highbrow presuppositions and expectations for novels derived from influential Europeans, so they set out to forge a uniquely  American literature free from Old World constraints.

Because film and television are commercial, they allow ordinary Americans  (as opposed to academics and the cultural elite, including and especially the neo-Marxists) to determine aesthetic standards and trends by indicating what does and does not interest them. Authors and television producers, in turn, become responsive and attuned to the demands of their consumers; they become, in short, entrepreneurs who must struggle against the status quo, defy the odds, and push the limits of artistic acceptability.

The elite disparage this process and advocate for aesthetic criteria divorced from the tastes and pleasures of the general public. As Cantor explains, “Elitists who profess to believe in democracy nevertheless have no faith in common people to make sound decisions on their own, even in a matter as simple as choosing the films and television shows they watch” (p. xiv). The elite would have film and television removed from the marketplace, but without the marketplace there would be no film or television.

Films and television shows might just become the masterpieces of the future; they might have already provided us with canonical “texts.” It is too early to say whether they have contributed substance to what Matthew Arnold called “the best that has been thought and said.” Greatness, after all, takes time to ascertain.

Orwell, Dr. Johnson, and Hume adhered to the “test of time” measure of  greatness by which a work of art or literature is evaluated according to its ability to compete and survive in the literary marketplace over the course of generations.  This measure requires the sustained consensus of consumers as opposed to the esoteric judgments of elite critics. A work’s ability to attract vast and diverse audiences and to do so long after its production is what makes the work great.

It might seem odd to think of Cantor’s subjects—South Park and The X-Files, for  instance—alongside important literary works of the Western canon. And yet the groundlings who paid a penny to enter into the pit of the Globe Theatre, where they would stand and watch performances of Shakespeare’s plays, probably didn’t think they were witnessing greatness, either. Harold Bloom once said, “Cultural  prophecy is always a mug’s game,” and Cantor is wise not to prophesy about the enduring merit of any films or television shows. Cantor’s point is not that the products of film and television will be considered masterpieces one day, only that they might be.

For the record, I consider it extremely unlikely that South Park or The X-Files will achieve classic status, but I would not extend that speculation to such films as Casablanca or the Star Wars trilogy. Cantor himself takes pains to distinguish first-rate works from run-of-the-mill entertainment by invoking “traditional criteria for artistic excellence” (p. xxii). We should not take him to mean that film and television are media superior to that which came before them; instead, he considers them as substantially similar to their artistic antecedents, except that their  features signal an evolution in artistic preferences. The allure of art comes not from its alienation from popular culture, but from its ability to incorporate popular culture in ways that do not impede its power to speak beyond its moment.

To be sure, American film and television have produced an overwhelming amount of trash, but so did novel serialization. Not all novelists who published their work in contiguous installments in magazines and periodicals held the stature of Charles Dickens or Henry James or Herman Melville. Cantor points out that we forget about the thousands of bad novels from the Victorian era and extol only around one hundred novels from that period, which supposedly represents a  zenith in culture. Among the thousands if not millions of films and television shows that have been produced over the past century, perhaps a few will rival the works of Dickens, James, and Melville.

If Cantor weren’t such a generous and careful scholar, he might have become the bête noire of sophisticates and lambasted in the pages of The New Criterion for his embrace of the purportedly lowbrow. His command of economics and literary history, however, has spared him from such condemnation and even gained him a devoted following. To do justice to his latest book would require a more comprehensive treatment of his arguments about the figure of the “maverick” in film and television or about the value of collaborative work and coauthorship in  generating exceptional products. Yet these arguments demand more attention than a review can give.

The incomparable Cantor has blessed the libertarian movement with a literary  voice. He has expanded the study of Austrian economics into the fields that need it most. He himself is a maverick, reading and writing industriously to break up the habits of thought and monopolies on ideology that mark literary scholarship.  Would that we had more Cantors to show us how literature flowers when freedom flourishes. There is hope in the idea that artists can turn to the market to cultivate their talents and supply us with the arts we demand. No English department or cultural guardian can rob us of the entertainment that we enjoy.

Transcendental Liberty

In America, American History, Arts & Letters, Creativity, Emerson, Essays, Ethics, History, Humane Economy, Humanities, Libertarianism, Literary Theory & Criticism, Literature, Nineteenth-Century America, Philosophy, Poetry, Politics, Property, Rhetoric, Western Philosophy, Writing on January 15, 2014 at 8:45 am

Allen 2

This essay originally appeared here in The Freeman.

“The less government we have, the better.” So declared Ralph Waldo Emerson, a  man not usually treated as a classical liberal. Yet this man—the Sage of  Concord—held views that cannot be described as anything but classical liberal or  libertarian.

None other than Cornel West, no friend of the free market, has said that  “Emerson is neither a liberal nor a conservative and certainly not a socialist  or even a civic republican. Rather he is a petit bourgeois libertarian, with at  times anarchist tendencies and limited yet genuine democratic sentiments.” An  abundance of evidence supports this view. Emerson was, after all, the man who  extolled the “infinitude of the private man.” One need only look at one of  Emerson’s most famous essays, “Self Reliance,” for evidence of his  libertarianism.

“Self-Reliance” is perhaps the most exhilarating expression of individualism  ever written, premised as it is on the idea that each of us possesses a degree  of genius that can be realized through confidence, intuition, and nonconformity.  “To believe your own thought, to believe that what is true for you in your  private heart is true for all men,” Emerson proclaims, “that is genius.”

Genius, then, is a belief in the awesome power of the human mind and in its  ability to divine truths that, although comprehended differently by each  individual, are common to everyone. Not all genius, on this view, is necessarily  or universally right, since genius is, by definition, a belief only, not a  definite reality. Yet it is a belief that leads individuals to “trust thyself”  and thereby to realize their fullest potential and to energize their most  creative faculties. Such self-realization has a spiritual component insofar as  “nothing is at last sacred but the integrity of your own mind” and “no law can  be sacred to me but that of my nature.”

According to Emerson, genius precedes society and the State, which corrupt  rather than clarify reasoning and which thwart rather than generate  productivity. History shows that great minds have challenged the conventions and  authority of society and the State and that “great works of art have no more  affecting lesson for us than this. They teach us to abide by our spontaneous  impression with good-humored inflexibility then most when the whole cry of  voices is on the other side.” Accordingly, we ought to refuse to “capitulate to  badges and names, to large societies and dead institutions.” We ought, that is,  to be deliberate, nonconformist pursuers of truth rather than of mere  apprehensions of truth prescribed for us by others. “Whoso would be a man,”  Emerson says, “must be a noncomformist.”

Self-Interest and Conviction

For Emerson, as for Ayn Rand, rational agents act morally by pursuing their  self-interests, including self-interests in the well-being of family, friends,  and neighbors, who are known and tangible companions rather than abstract  political concepts. In Emerson’s words, “The only right is what is after my  constitution, the only wrong what is against it.” Or: “Few and mean as my gifts  may be, I actually am, and do not need for my own assurance or the assurance of  my fellows any secondary testimony.”

It is not that self-assurance equates with rightness, or that stubbornness  is a virtue; it is that confidence in what one knows and believes is a condition  precedent to achieving one’s goals. Failures are inevitable, as are setbacks;  only by exerting one’s will may one overcome the failures and setbacks that are  needed to achieve success.

If, as Emerson suggests, a “man is to carry himself in the presence of all  opposition, as if everything were titular and ephemeral but he,” how should he  treat the poor?  Emerson supplies this answer:

Do not tell me, as a good man did to-day, of my  obligation to put all poor men in good situations. Are they my poor? I tell  thee, thou foolish philanthropist, that I grudge the dollar, the dime, the cent,  I give to such men as do not belong to me and to whom I do not belong. There is  a class of persons to whom by all spiritual affinity I am bought and sold; for  them I will go to prison, if need be; but your miscellaneous popular charities;  the education at college of fools; the building of meeting-houses to the vain  end to which many now stand; alms to sots; and the thousandfold Relief  Societies;—though I confess with shame I sometimes succumb and give the dollar,  it is a wicked dollar which by and by I shall have the manhood to withhold.

These lines require qualification. Emerson is not damning philanthropy or  charity categorically or unconditionally; after all, he will, he says, go to  prison for certain individuals with whom he shares a special relationship. He  is, instead, pointing out, with much exhibition, that one does not act morally  simply by giving away money without conviction or to subsidize irresponsible,  unsustainable, or exploitative business activities. It is not moral to give away  a little money that you do not care to part with, or to fund an abstract cause  when you lack knowledge of, and have no stake in, its outcome. Only when you  give money to people or causes with which you are familiar, and with whom or  which you have something at stake, is your gift meaningful; and it is never  moral to give for show or merely to please society. To give morally, you must  mean to give morally—and have something to lose.

Dissent

Emerson famously remarks that a “foolish consistency is the hobgoblin of  little minds, adored by little statesmen and philosophers and divines.” Much ink  has been spilled to explain (or explain away) these lines. I take them to mean,  in context, that although servile flattery and showy sycophancy may gain a  person recognition and popularity, they will not make that person moral or great  but, instead, weak and dependent. There is no goodness or greatness in a  consistency imposed from the outside and against one’s better judgment; many  ideas and practices have been consistently bad and made worse by their very  consistency. “With consistency,” therefore, as Emerson warns, “a great soul has  simply nothing to do.”

Ludwig von Mises seems to have adopted the animating, affirming  individualism of Emerson, and even, perhaps, Emerson’s dictum of nonconformity.  Troping Emerson, Mises remarks that “literature is not conformism, but dissent.”  “Those authors,” he adds, “who merely repeat what everybody approves and wants  to hear are of no importance. What counts alone is the innovator, the dissenter,  the harbinger of things unheard of, the man who rejects the traditional  standards and aims at substituting new values and ideas for old ones.” This man  does not mindlessly stand for society and the State and their compulsive  institutions; he is “by necessity anti-authoritarian and anti-governmental,  irreconcilably opposed to the immense majority of his contemporaries. He is  precisely the author whose books the greater part of the public does not buy.”  He is, in short, an Emersonian, as Mises himself was.

The Marketplace of Ideas

To be truly Emersonian, you may not accept the endorsements and propositions  in this article as unconditional truth, but must, instead, read Emerson and  Mises and Rand for yourself to see whether their individualism is alike in its  affirmation of human agency resulting from inspirational nonconformity. If you  do so with an inquiring seriousness, while trusting the integrity of your own  impressions, you will, I suspect, arrive at the same conclusion I have  reached.

There is an understandable and powerful tendency among libertarians to  consider themselves part of a unit, a movement, a party, or a coalition, and of  course it is fine and necessary to celebrate the ways in which economic freedom  facilitates cooperation and harmony among groups or communities; nevertheless,  there is also a danger in shutting down debate and in eliminating competition  among different ideas, which is to say, a danger in groupthink or compromise, in  treating the market as an undifferentiated mass divorced from the innumerable  transactions of voluntarily acting agents. There is, too, the tendency to become  what Emerson called a “retained attorney” who is able to recite talking points  and to argue predictable “airs of opinion” without engaging the opposition in a  meaningful debate.

Emerson teaches not only to follow your convictions but to engage and  interact with others, lest your convictions be kept to yourself and deprived of  any utility. It is the free play of competing ideas that filters the good from  the bad; your ideas aren’t worth a lick until you’ve submitted them to the test  of the marketplace.

“It is easy in the world,” Emerson reminds us, “to live after the world’s  opinion; it is easy in solitude to live after our own; but the great man is he  who in the midst of the crowd keeps with perfect sweetness the independence of  solitude.” Let us stand together by standing alone.

Literature and Liberty: Essays in Libertarian Literary Criticism

In Arts & Letters, Austrian Economics, Books, Economics, Emerson, Fiction, History, Humane Economy, Humanities, Imagination, Justice, Law-and-Literature, Liberalism, Libertarianism, Literary Theory & Criticism, Literature, News and Current Events, News Release, Novels, Philosophy, Politics, Property, Rhetoric, Shakespeare, The Novel, Transnational Law, Western Civilization, Western Philosophy, Writing on November 15, 2013 at 8:46 am

Allen 2

My forthcoming book, Literature and Liberty: Essays in Libertarian Literary Criticism, is now available for pre-order here at Amazon.com or here at Rowman & Littlefield’s website.  From the cover:

The economic theories of Karl Marx and his disciples continue to be anthologized in books of literary theory and criticism and taught in humanities classrooms to the exclusion of other, competing economic paradigms. Marxism is collectivist, predictable, monolithic, impersonal, linear, reductive — in short, wholly inadequate as an instrument for good in an era when we know better than to reduce the variety of human experience to simplistic formulae. A person’s creative and intellectual energies are never completely the products of culture or class. People are rational agents who choose between different courses of action based on their reason, knowledge, and experience. A person’s choices affect lives, circumstances, and communities. Even literary scholars who reject pure Marxism are still motivated by it, because nearly all economic literary theory derives from Marxism or advocates for vast economic interventionism as a solution to social problems.

Such interventionism, however, has a track-record of mass murder, war, taxation, colonization, pollution, imprisonment, espionage, and enslavement — things most scholars of imaginative literature deplore. Yet most scholars of imaginative literature remain interventionists. Literature and Liberty offers these scholars an alternative economic paradigm, one that over the course of human history has eliminated more generic bads than any other system. It argues that free market or libertarian literary theory is more humane than any variety of Marxism or interventionism. Just as Marxist historiography can be identified in the use of structuralism and materialist literary theory, so should free-market libertarianism be identifiable in all sorts of literary theory. Literature and Liberty disrupts the near monopolistic control of economic ideas in literary studies and offers a new mode of thinking for those who believe that arts and literature should play a role in discussions about law, politics, government, and economics. Drawing from authors as wide-ranging as Emerson, Shakespeare, E.M. Forster, Geoffrey of Monmouth, Henry Hazlitt, and Mark Twain, Literature and Liberty is a significant contribution to libertarianism and literary studies.

Thoughts on ‘The Road to Serfdom’: Chapter 7, “Economic Controls and Totalitarianism”

In Arts & Letters, Austrian Economics, Book Reviews, Books, Conservatism, Economics, Epistemology, Essays, History, Humane Economy, Humanities, Justice, Law, Libertarianism, Literature, Philosophy, Western Civilization, Western Philosophy on October 2, 2013 at 8:45 am

Slade Mendenhall

Slade Mendenhall is an M.Sc. candidate in Comparative Politics at the London School of Economics, with specializations in conflict and Middle Eastern affairs. He holds degrees in Economics and Mass Media Arts from the University of Georgia and writes for The Objective Standard and themendenhall.com, where he is also editor.

The following is part of a series of chapter-by-chapter analyses of Friedrich Hayek’s The Road to Serfdom, conducted as part of The Mendenhall’s expanding Capitalist Reader’s Guide project. Previous entries can be found here: Introduction, Chapter 1, 2, 3, 4, 5, and 6.

In “Economic Control and Totalitarianism”, the subject of Hayek’s seventh chapter, we find him at his best, with a clarity and reason that we have not seen since chapter two, “The Great Utopia.” In chapter seven, Hayek expounds upon numerous themes within the titular subject: the inextricability of dictatorial control and economic planning, the fallacy of believing that economic controls can be separated from broader political controls, the inevitability in a planned economy of controls extending to individuals’ choice of profession, and the interrelation of economic and political freedom. What aspects of the chapter we might find to criticize arise either from a desire for him to take his line of thinking a step further than he does or already established mistakes carried over from previous chapters. Despite a few minor missteps, however, Hayek’s chapter is, overall, an exceedingly positive contribution.

He begins by stating what is, to many self-deceiving advocates of socialism, a jarring observation: that planned economies, following their natural course, ultimately always require dictatorial rule. “Most planners who have seriously considered the practical aspects of their task,” Hayek writes, “have little doubt that a directed economy must be run on more or less dictatorial lines” (66). Without fully restating the argument here, Hayek implicitly rests upon the description of this tendency that he spelled out in chapter 5, “Planning and Democracy”: power in a planned system gradually consolidates into a central committee or single dictator as a matter of organizational efficiency, with a decisive central leadership winning out over the gridlock and inefficiencies of a democratic body. The point is as valid and well made here as it was then.

Where Hayek expounds upon this is in refuting one of the false promises often made by planners as they reach for the reins of a country’s economy: “the consolation… that this authoritarian direction will apply ‘only’ to economic matters” (66). Contrary to the suggestion that controls will be limited to economic affairs, Hayek asserts that economic controls in the absence of broader political controls are not simply unlikely, but impossible. Rather than simply detailing in a typical way the interrelationship of economic and other activities, Hayek acknowledges the inseparability of the two, writing, “It is largely a consequence of the erroneous belief that there are purely economic ends separate from the other ends of life” (66). He later elaborates:

“The authority directing all economic activity would control not merely the part of our lives which is concerned with inferior things; it would control the allocation of the limited means for all our ends. And whoever controls all economic activity controls the means for all our ends, and must therefore decide which are to be satisfied and which not. This is really the crux of the matter. Economic control is not merely control of a sector of human life which can be separated from the rest; it is the control of the means for all our ends” (68).

Hayek’s point is, in the context of modern economic education, a largely underappreciated and mishandled one. Economics instructors have, with time, lost the important skill of contextualizing economic interests within the broader scope of other human pursuits, instead treating them either as abstract ideas toyed with in a vacuum without real-world ramifications or preaching the ‘economics is everything’ doctrine to the exclusion of other analytical tools and frameworks.

Hayek, whether by virtue of writing at a time less bound by such false dichotomization of the field or simply due to his exceptional qualities as an economic thinker, successfully avoids both traps. “Strictly speaking,” he writes,

“there is no ‘economic motive’ but only economic factors conditioning our striving for other ends. What in ordinary language is misleadingly called the ‘economic motive’ means merely the desire for general opportunity, the desire for power to achieve unspecified ends. If we strive for money it is because it offers us the widest choice in enjoying the fruits of our efforts” (67).

Hayek rightly acknowledges money as a profoundly empowering economic good, calling it “one of the greatest instruments of freedom ever invented by man” that “opens an astounding range of choice to the poor man, a range greater than that which not many generations ago was open to the wealthy” (67).

Chapter seven goes on to briefly characterize the pervasiveness of central planning, and its propensity to spread to all areas of a society. Hayek recognizes that the much-eluded question of socialism-versus-capitalism is not simply one of which decisions individuals are to make for their lives, but whether the decision is to be theirs at all:

“The question raised by economic planning is, therefore, not merely whether we shall be able to satisfy what we regard as our more or less important needs in the way we prefer. It is whether it shall be we who decide what is more, and what is less, important for us, or whether this is to be decided by the planner” (68).

Those on both sides of the aisle in the United States today, who fail in so many matters to appreciate the distinction between individuals choosing the right thing for their lives and a government official imposing their choice (be it right or wrong) upon them, would do well to heed Hayek’s warning. Modern American political thinking, caught between an increasingly authoritarian left (taken directly from Marx and Rousseau, or updated via modern incarnations like Krugman, Sunstein, and Stiglitz) and a right that has yet to extend its limited government spirit to all areas of economics—much less censorship and social issues—has a great deal to learn from an Austrian economist’s words written some seventy years ago.

One element of central planning that utopian-minded young socialist idealists evade is that labor, being an input, must, in a controlled economy be as controlled as any other good—if not more so. This does not mean simply the control of wages or the maintenance of union. Ultimately, it means government control over the quantity of individuals in a given profession, conducted in the interest of keeping wages in a given field high and ensuring that there is an adequate supply of expertise to meet all of the economy’s needs. This means at some point dictating who can and cannot enter a given field of work.

Hayek writes,

“Most planners, it is true, promise that in the new planned world free choice of occupation will be scrupulously preserved or even increased. But there they promise more than they can possibly fulfill. If they want to plan they must control the entry into the different trades and occupations, or the terms of remuneration, or both” (71).

How many young socialists on college campuses across the country would not object to being torn from their chosen course of study and compelled to study for degrees in which they had no interest, to spend their lives in careers they did not love? That is the fate that they ask for, whether they recognize it as such or not. Would they accept it willingly? Would they “become a mere means, to be used by the authority in the service of such abstractions as the ‘social welfare’ or the ‘good of the community’” (72), bowing their heads subserviently to spend a life on a path that was chosen for them, for the good of society? Perhaps some. And perhaps others would recognize the nature of what they profess to believe in and renounce it. Either way, it is a reality that should be presented to them in those terms by those who see socialism for what it is.

Towards the end of the chapter, Hayek makes several key observations that would prove all the more true in the decades after his writing.  He notes the decline of references by advocates of socialism to the functional superiority of socialism. Gradually witnessing their system being discredited, but doubling-down on their dogma, the socialists of the mid-20th century came to look less and less like those of the early 20th century, who believed in the system as a technically superior model for society. Instead, their arguments turned egalitarian in nature,  “advocat[ing] planning no longer because of its superior productivity but because it will enable us to secure a more just and equitable distribution of wealth” (74). Little did Hayek know how far that trend would go with the rise of the New Left and its legacies, stretching up to the present and the current American administration.

Finally, in another point that has proven all the more true since the time of his writing, Hayek recognizes that the extent of planning proposed by socialism, empowered by modern modes of control, is that much greater than the control and subjugation that occurred under the days of monarchy and feudalism. In reading it, one is brought to wonder how much greater that mechanism of control is today, with NSA surveillance, a growing regulatory state, and ever more executive agencies maintaining armed units to impose their rules, than at Hayek’s writing in 1943.

Hayek’s seventh chapter is a valuable and, for the same reasons, saddening one for the way that it makes us reflect upon the applicability of his words and ideas to our current political environment. Though our current condition is far from totalitarian in nature, the same principles apply, to a lesser extent, in all areas where government intrudes to control markets, alter incentives, or provide special advantages to some at the expense of others.

Human beings are rational animals. We respond to the incentives around us. In the presence of a government that seems increasingly, explicitly willing to toy with those incentives to alter our behavior to suit models and ideals for our lives that are not our own, how much do we lose that we never knew we had? In what ways are our options limited? Need it be by a government edict that tells a young man who would study to be a doctor that doctors are no longer needed, and he should apply to be an engineer instead? No. It may be as subtle as inflating the price of his education through government loan programs, regulating the field he seeks to enter, and subjecting him to entitlement programs that tell him that his life’s work is not his own; that he works and exists in the service of society as a whole. And at that point, the difference between our condition and the ill fate that Hayek describes becomes one not of kind, but of degree.

Thoughts on ‘The Road to Serfdom': Chapter 6, “Planning and the Rule of Law”

In Arts & Letters, Austrian Economics, Book Reviews, Books, Economics, History, Humane Economy, Humanities, Jurisprudence, Law, Liberalism, Libertarianism, Philosophy, Politics, Western Civilization, Western Philosophy on September 25, 2013 at 7:45 am

Slade Mendenhall

Slade Mendenhall is an M.Sc. candidate in Comparative Politics at the London School of Economics, with specializations in conflict and Middle Eastern affairs. He holds degrees in Economics and Mass Media Arts from the University of Georgia and writes for The Objective Standard and themendenhall.com, where he is also editor.

The following is the seventh installment in a series of chapter-by-chapter analyses of Friedrich Hayek’s The Road to Serfdom. Previous entries are available here: Introduction, Chapter 1, 2, 3, 4, and 5.

Hayek’s sixth chapter, “Planning and the Rule of Law” sets out to establish two fundamentally different legal frameworks. The first, characteristic of a free society, is what Hayek refers to as a ‘Rule of Law’ approach. The term itself is inadequate, but not incidental; it arises from Hayek’s more fundamental philosophy, and this analysis will address why the lack of a better term is inevitable for Hayek based on his earlier premises. The second type of law described by Hayek is the sort of arbitrary system of decrees inherent to a planned economy.

In the course of contrasting the two and explaining the superiority of the former, Hayek hits many valid points and makes some worthwhile analyses—he even surprises us with the first mention of rights in the whole book! True: in the process, he again falls victim to the sorts of improper philosophical analyses, badly defined concepts, flawed defenses of freedom, and errant policy endorsements we have come to expect. Nonetheless, the essence and guiding message of Chapter VI introduces a valuable subject for thought and further discussion—even if that thought consists of dispelling Hayek’s arguments in favor of stronger, more objective ones.

Hayek’s characterization of each of the two systems—the ‘Rule of Law’ and what he calls ‘substantive rules’—is valid in a limited sense. He writes,

“The Rule of Law thus implies limits to the scope of legislation: it restricts it to the kind of general rules known as formal law, and excludes legislation either directly aimed at particular people, or at enabling anybody to use the coercive power of the state for the purpose of such discrimination. It means, not that everything is regulated by law, but, on the contrary, that the coercive power of the state can be used only in cases defined in advance by the law and in such a way that it can be foreseen how it will be used” (62).

In this description, Hayek hits many necessary points well: it limits legislation, establishes formal and general rules, and limits the use of coercive power to purposes defined in advance by the law. Likewise, with respect to ‘substantive rules’, his description is accurate: “It cannot tie itself down in advance to general and formal rules which prevent arbitrariness. It must provide for the actual needs of people as they arise and then choose deliberately between them” (55).

With similar acuity, he describes such a system’s coercive restructuring of the plans and long-range thinking of individuals,

“[W]here the precise effects of government policy on particular people are known, where the government aims directly at such particular effects, it cannot help knowing these effects, and therefore it cannot be impartial. It must, of necessity, take sides, impose its valuations upon people and, instead of assisting them in the advancement of their own ends, choose the ends for them” (57).

And, finally, its privileging of some parties over others: “There can be no doubt that planning necessarily involves deliberate discrimination between particular needs of different people, and allowing one man to do what another must be prevented from doing” (58-59).

His characterizations of both systems—‘Rule of Law’ and ‘substantive rules’—are correct on the above points. Where these descriptions lack is not in their truth, but in their completeness. Hayek’s description of both the ‘Rule of Law’ and ‘substantive rule’ approaches neglect the fundamental difference between liberal and statist law: whether the state is vested with the privilege of initiating force against the individual. This point cannot be left obfuscated or marginalized; it is nothing less than the definitive difference between the two systems and must be highlighted as such. Generality, non-discrimination, and established pre-requisites for legal action are important features within this framework, but they are ultimately supporting or consequential features of this more fundamental point.

This definition by essentials—of liberal law as that which forbids the violation of individual rights by government force, and of statist law as that which has no such prohibitions—points to the fundamental crux of liberal law: objectivity.

As Harry Binswanger describes it,

“An objectively derived law is one stemming not from the whim of legislators or bureaucrats but from a rational application of the principle of individual rights. Rights tie law to reality, because they are a recognition of a basic, unalterable fact [--the requirements of man’s life]… As the law must be objective in its source, so it must be objective in its form: objective laws are clearly defined, consistent, unambiguous, stable, and as straightforward and simple as possible… The ideal is to make the laws of man like the laws of nature: firm, stable impersonal absolutes.”

Thus, what Hayek describes as the ‘Rule of Law’ is better conceptualized as objective law—law that is based on a clearly defined, rationally derived standard. Conversely, the ‘substantive rule’ approach can be thought of as simply non-objective law.* That Hayek has not properly defined the two is consistent with his argument thus far, which in previous analyses has been shown to be largely based on a subjectivist-skepticist epistemology. This does not make his endorsement of the ‘Rule of Law’ any less genuine, but it does explain his admitted discomfort with his own descriptions in this chapter and why he was unable to correct them.

(For a fuller description of objective law, see Binswanger’s full article on the subject here.)

Hayek impressively illustrates the dangers of ‘substantive rules’ (we shall continue to use his term for accuracy, despite its inadequacy) with a discussion of policies that use the force of government to achieve egalitarian ends. He decries the increasing frequency under socialism of legal discussions as to what is ‘fair’ or ‘reasonable’, with ultimate discretion in such matters left to the subjective whim of a judge or regulator.

“Formal equality before the law [Hayek writes] is in conflict, and in fact incompatible, with any activity of the government deliberately aiming at material or substantive equality of different people, and that any policy directly aiming at a substantive ideal of distributive justice must lead to the destruction of the Rule of Law.” (59)

Tangential to this discussion of the displacement of justice in the law by distorted notions of ‘fairness’ and ‘reasonability’ is a short but powerful challenge to the concept of ‘privilege’ that Hayek observes to be animating such cases. ‘Privilege’, he writes, is a valid description of those instances in which “landed property [was] reserved to members of the nobility” and property was understood to be held not by right but at the discretion of the monarch and its state (60). It is likewise privilege where “the right to produce or sell particular things is reserved to particular people designated by authority.” It is an inaccurate and unjust characterization, however, that treats the possession of property by right as ‘privilege.’ To do so “depriv[es] the word privilege of its meaning” (60).

In a landmark moment, Hayek even mentions the concept of rights for the first time. “[R]ecognised limitations of the powers of legislation,” he writes, “imply the recognition of the inalienable right of the individual, inviolable rights of man.” He goes on to write “How a formal recognition of individual rights, or of the equal rights of minorities, loses all significance in a state [sic] which embarks on a complete control of economic life, has been amply demonstrated by the experience of the various Central European countries” (64). Both instances are valid discussions of the concept. Whether this signals the introduction of a more enduring concept throughout the remainder of the work, or whether it is simply a passing mention not to be invoked again, time and further chapters will reveal.

Amidst these positive points, however, the chapter is not without severely detrimental flaws, beginning with Hayek’s further elaborations upon the ‘Rule of Law.’ Hayek unduly and inexplicably concedes ground to capitalism’s detractors, writing, “It cannot be denied that the Rule of Law produces economic inequality—all that can be claimed for it is that this inequality is not designed to affect particular people in a particular way” (59). That such a grave error should be committed on the very topic—economics—in which he has thus far been relatively solid and which is, in fact, his stock-in-trade is exasperating.

The ‘Rule of Law’, even in Hayek’s loose and non-essential definition of it, does not produce inequality—neither in means nor in outcomes. He has devoted much of the chapter to explaining its superiority to ‘substantive rules’, largely on the grounds that it does not privilege one party over another. Thus, he cannot be thought to be saying it produces an inequality of means. He can only be understood as saying that it produces an inequality of outcomes. This, however, is patently false.

Inequality in a laissez-faire society is simply a reflection of the differing achievements of individual men. It arises from man’s nature—the fact that he is rational and capable of immeasurable creativity, but that his consciousness is volitional. In such a society, man is left free—restricted only by the limits of his own faculties.

A limited government honoring individual rights, refusing to intervene in an economy or in any way initiate force against its citizens, does not produce anything except a system of justice and a circumstance in which force is prohibited from human relationships. Where inequality of achievement results between different men—whether competing in the same field or pursuing unrelated economic ventures—it is neither produced by the law nor prevented by it. It is a fact of nature.

Hayek makes similarly baffling assertions as to what the ultimate aim of law should be, and it is here that we come to see the difference between Hayek’s ‘Rule of Law’ and objective law as we defined it above. Where objective law references a particular standard—the requirements of man’s life—as the ultimate value to be gained and kept, Hayek’s looser ‘Rule of Law’ seeks to preserve not a concrete value, but a state of randomness.

“[T]hat we do not know their concrete effect, that we do not know what particular ends these rules will further, or which particular people they will assist, that they are merely given the form most likely on the whole to benefit all the people affected by them, is the most important criterion of formal rules in the sense in which we here use the term” (56). [Emphasis mine.]

Thus, the unpredictability of outcomes is treated as an intrinsic value. True: Hayek is correct that an objective legal system in no way predicts or influences which parties in a society will be successful and which might fail. However, lest one remain adamant that Hayek is simply describing what will happen in such a system, rather than arguing why such a system should be instituted, a subsequent passage leaves no room for doubt:

“[I]t may appear paradoxical to claim as a virtue that under one system we shall know less about the particular effect of the measures the state takes than would be true under most other systems and that a method of social control should be deemed superior because of our ignorance of its precise results. Yet this consideration is in fact the rationale of the great liberal principle of the Rule of Law” (56). [Emphasis mine.]

Should this passage not suffice to bring back memories of Hayek’s abhorrent defense of liberty in Chapter IV, Hayek further abuses the concept and paves the road for anarchist libertarians to come by suggesting that law itself is a violation of liberty. He writes that, “While every law restricts individual freedom to some extent by altering the means [sic] which people may use in the pursuit of their aims, under the Rule of Law the government is prevented from stultifying individual efforts by ad hoc action” (54).

To suggest that every law—even objectively derived and defined laws that prohibit the initiation of force between individuals—constitutes a restriction of individual freedom is to suggest, conversely, that there exists a freedom to initiate force—that is: a freedom to restrict freedoms. Implicit in it is the suggestion that freedoms clash, and that the pursuit of ever-greater freedoms requires a conflict of interest between men. For a succinct refutation of this idea, an entry from Ayn Rand’s column, “Textbook of Americanism” puts it best:

“Do not be misled . . . by an old collectivist trick which goes like this: there is no absolute freedom anyway, since you are not free to murder; society limits your freedom when it does not permit you to kill; therefore, society holds the right to limit your freedom in any manner it sees fit; therefore, drop the delusion of freedom—freedom is whatever society decides it is. It is not society, nor any social right, that forbids you to kill—but the inalienable individual right of another man to live. This is not a “compromise” between two rights—but a line of division that preserves both rights untouched. The division is not derived from an edict of society—but from your own inalienable individual right. The definition of this limit is not set arbitrarily by society—but is implicit in the definition of your own right. Within the sphere of your own rights, your freedom is absolute.”**

Other passing errors punctuate the chapter—a collectivist invocation of “society as a whole” as the good to be considered, an acceptance of there being no negligible difference between an explicit and codified Bill of Rights versus a tradition-based common law, and a parting endorsement of “factory laws” (the destructive effects of which have been thoroughly argued by historian Robert Hessen).

There are again passages that sound hauntingly familiar in today’s world. His description of the bureaucratization of government—“[b]y giving the government unlimited powers the most arbitrary rule can be made legal: and in this way a democracy may set up the most complete despotism imaginable”—sounds much like a description of today’s regulatory state. A description of The Economist as a half-hearted defender of capitalism with an inflated liberal reputation completes the picture and demonstrates that many things have not changed since Hayek’s time.

The subject of Chapter VI, the abuses perpetrated by socialism on the legal system and the ways in which law is transformed by it from a shield into a weapon, is an important one for capitalism’s defenders to understand. Certainly the ongoing antitrust abuses being carried out at the time of this writing make its continued relevance vividly clear. But the fact that the subject demands greater understanding does not mean that Hayek’s argument against it can or should be incorporated as part of that understanding—and certainly not as part of capitalism’s defense. It—and we—deserve better.

* I specifically use the term “non-objective” here, as opposed to the more conventional “subjective”, as in this context it includes law based both in subjectivism and intrinsicism.

** “Textbook of Americanism”, The Ayn Rand Column, pg. 85

Thoughts on ‘The Road to Serfdom': Chapter 5, “Planning and Democracy”

In Arts & Letters, Austrian Economics, Book Reviews, Books, Economics, History, Humane Economy, Humanities, Liberalism, Libertarianism, Philosophy, Politics, Pragmatism, Western Civilization, Western Philosophy on September 20, 2013 at 7:45 am

Slade Mendenhall

Slade Mendenhall is an M.Sc. candidate in Comparative Politics at the London School of Economics, with specializations in conflict and Middle Eastern affairs. He holds degrees in Economics and Mass Media Arts from the University of Georgia and writes for The Objective Standard and themendenhall.com, where he is also editor.

This article is the sixth entry in a chapter-by-chapter analysis of Friedrich Hayek’s The Road to Serfdom. Previous chapter analyses can be found here: Introduction, Chapter 1, 2, 3, and 4.

The fifth chapter in Hayek’s The Road to Serfdom looks at the reciprocal relationship between economic planning and democracy, detailing the institutional and ideological interaction of the two, the ways in which democratic socialism leads to the further centralization of power in committees and dictators, and the ways in which even partial attempts at planning necessitate further and further interventions until, unless opposed, a totalitarian system arises. In the process, Hayek makes many worthwhile points about these institutional trends, describing and explaining their trajectory. He again offers the sort of brief and destructive detour into moral philosophy that we have learned to expect from the book thus far, but in this sense the author shows us nothing new. Finally, he addresses the subject of democracy itself and the misconceptions surrounding it, with observations that sound conspicuously familiar to today’s political and academic culture.

Hayek’s argument against planning is again an inadequate one that relies upon a functional, pragmatic approach. His case, however, still affords us some valuable insights—most notably regarding what can be referred to as the ‘knowledge problem’ of central planning. “It would be impossible,” he writes,

“for any mind to comprehend the infinite variety of different needs of different people which compete for the availability of resources and to attach a definite weight to each… it is impossible for any man to survey more than a limited field, to be aware of the urgency of more than a limited number of needs” (44).

Thus, he writes, efforts by central planners to coordinate the economic activity of a whole society are fundamentally flawed and doomed from the start. The limitations of planners’ knowledge and their inability to reconcile conflicting wants among different groups within society leads both to plans based on insufficient (and, furthermore, unattainable) knowledge of individuals’ and groups’ values and a system that necessitates the sacrifice of some parties to others. To this extent, Hayek notes the problem well.

In support of this, however, he offers an argument that both fails to challenge the collectivists’ ethical premise and reaffirms the skepticist moral approach observed in his earlier chapters. In reference to the collectivist moral premise, Hayek writes,

“The ‘social goal’ or ‘common purpose’ for which society is to be organised, is usually vaguely described as the ‘common good’, or the ‘general welfare’, or the ‘general interest’. It does not need much reflection to see that these terms have no sufficiently definite meaning to determine a particular course of action” (42).

Hayek is correct in acknowledging that the terms are non-objective. What he fails to do is to challenge their validity as ethical concepts, repudiating the very notion of a “common good” or of the “general interest.” An objective, rational defense of individualism is not made by simply proclaiming the functional superiority of individualism over collectivism, as that superiority has been made clear throughout history, and avowed collectivists have long-since proven themselves disinterested in actual consequences and results. The ultimate defense of individualism must challenge the very existence of any alleged collective good that is apart from and contrary to the good of the individuals who constitute it.

Hayek’s only moral challenge to collectivism, rather than refuting the notion of the “common good”, is to challenge the possibility of any complete system of values. To be clear: Hayek does not challenge the imposition by force of a complete system of values; he challenges instead that one can even exist:

“The conception of a complete ethical code is unfamiliar and it requires some effort of imagination to see what it involves. We are not in the habit of thinking of moral codes as more or less complete. The fact that we are constantly choosing between different values without a social code prescribing how we ought to choose, does not surprise us, and does not suggest to us that our moral code is incomplete… The essential point for us is that no such complete ethical code exists. The attempt to direct all economic activity according to a single plan would raise innumerable questions to which the answer could be provided only by a moral rule, but to which existing morals have no answer and where there exists no agreed view on what ought to be done” (43).

Thus, for Hayek, the problem with central planning is a problem of moral absolutism. Failing to condemn the collectivists’ reliance upon force to achieve their ends or their violations of individual rights (a concept he has yet to mention for five chapters and counting), he instead asserts that the fallacy of their schemes arises from the assumption that all people share the same hierarchy of values and a “complete ethical code in which all the different human values are allotted their due place” (43).

Hayek’s words can be taken either of two ways. In the first, he could be suggesting that collectivists are wrong for assuming unanimity in values throughout a society, that all individuals share the same ethics. Alternatively, he could mean that collectivist beliefs are misguided for normatively believing in a set hierarchy of values and ethical code that should be applied throughout a society. His meaning is unclear. What is clear, however, is that whichever way Hayek intends these words, they are a flawed explanation for the evils of collectivism.

As to the first meaning: one would be hard-pressed to find any collectivist, modern or historic, who asserts that all individuals in society share the same values and ethical code. For the amount of effort totalitarian regimes devote to suppressing resistance and dissent, it is impossible to believe otherwise. Collectivism does not rest on the assumption that all parties in a society share the same values, but that the individual minds that hold such values are inconsequential fodder in their grand design. It is not evil for assuming that a set of values is unanimously held throughout society, but rather for its utter disregard and disdain for the rights and freedoms of individuals to choose their own values.

The second interpretation of Hayek’s statement—that collectivism is wrong for maintaining a set hierarchy of beliefs that should be applied throughout society—goes beyond the historiographical error of the first interpretation. It suggests that the error of collectivism arises from its attempt to uphold a universal code incorporating and prioritizing man’s values. This interpretation is more in keeping with Hayek’s skeptical, subjectivist moral views (as well as those of other libertarians) explored in earlier chapters. It implies that the belief in an absolute morality leads directly to the forcible imposition of that morality on society in general and, conversely, that peace and freedom rest on a subjectivist morality of self-doubt and proclaiming the impossibility of acquiring absolute moral truth. In essence, it suggests that the natural consequence of upholding a set system of values is to forcibly impose it, and that the only means by which we restrain ourselves from such forcible imposition is through the belief that there are no certain moral truths.

That such a morally subjectivist view should precede a faulty defense of individualism is to be expected. The fact that, as Hayek wrote earlier, “it is impossible for any man to survey more than a limited field, to be aware of the urgency of more than a limited number of needs” establishes, according him,

the fundamental fact on which the whole philosophy of individualism is based. It does not assume, as is often asserted, that man is egoistic or selfish, or ought to be. It merely starts from the indisputable fact that the limits of our powers of imagination make it impossible to include in our scale of values more than a sector of the needs of the whole society, and that, since, strictly speaking, scales of value can exist only in individual minds, nothing but partial scales of value exist, scales which are inevitably different and often inconsistent with each other. From this the individualist concludes that the individuals should be allowed, within defined limits, to follow their own values and preferences rather than somebody else’s, that within these spheres the individual’s system of ends should be supreme and not subject to any dictation by others” (44) [Emphasis mine.]

Having established in the last chapter his flawed view that the basis for freedom arises from the need to leave room for unexpected growth, Hayek now states his defense for individualism as based on man’s non-omniscience. That is: individuals are the primary unit of political consideration not because they have any natural rights, but because the attempt suppress and control them is forever limited by the knowledge problem of their would-be masters.

Conversely, one can assume that if such masters were able to attain perfect knowledge, he would have no arguments with which to oppose their collectivist system. The battle between individualism and collectivism is thus, for Hayek, reduced to a pragmatic debate between those who doubt the efficacy of totalitarian systems and those who claim that, despite the history of failure in socialist systems, this time they have the right answers.

Certainly, parting words by Hayek to the effect that “[i]t is this recognition of the individual as the ultimate judge of his ends, the belief that as far as possible his own views ought to govern his actions, that forms the essence of the individualist position” (44) sound promising, and invite us to support and be inspired by his argument. However, when placed in the context of what he says elsewhere, such language is revealed to mean less than we would have hoped. Hayek is not defending individualism based on the right of man to judge his own values and ends, but rather on the basis that incomplete information as to individuals’ values and the inability of planners to reconcile conflicting values between individuals leads to a conflicted, inefficient system. Yet again, Hayek is passing off a pragmatic, unprincipled defense of freedom in bold, triumphant language.

Hayek is thus unable to offer us a sufficient defense against oppression. He might, however, provide us some valuable descriptive insights into how the process of establishing socialist systems is conducted and how socialist democracies drift toward dictatorship. “[P]lanning,” he writes, “leads to dictatorship because dictatorship is the most effective instrument of coercion and the enforcement of ideals” (52). The trend, as Hayek describes it, arises from the fact that once socialist policymakers presume to control a society, the profundity of that task is highlighted and exacerbated by democratic inefficiency. This spurs a drive toward consolidation of power into committees and, ultimately, into a single dictator capable of taking decisive action. He writes,

“The inability of democratic assemblies to carry out what seems to be a clear mandate of the people will inevitably cause dissatisfaction with democratic institutions. Parliaments come to be regarded as ineffective ‘talking shops’, unable or incompetent to carry out the tasks for which they have been chosen. The conviction grows that if efficient planning is to be done, the direction must be  ‘taken out of politics’ and placed in the hands of experts, permanent officials or independent autonomous bodies” (46).

Many democratic socialists would, no doubt, challenge the determinism of this trend by touting the goodwill of legislators and their commitment to enacting solutions. But “[t]he fault,” Hayek observes, “is neither with the individual representatives nor with parliamentary institutions as such, but with the contradictions inherent in the task with which they are charged” (47). The immensity of the task and its contradiction of man’s nature and means of acquiring and applying knowledge forbid such a system from ever successfully matching the successes of a capitalist system.

Certainly a belief to the contrary is not unique to Hayek’s time, but pervades modern political thought. When Hayek writes, “The belief is becoming more and more widespread that, if things are to get done, the responsible authorities must be freed from the fetters of democratic procedure” (50), any observer of modern American regulatory culture and the expansion of executive branch power will undoubtedly note some parallels.

Another parallel to be observed between Hayek’s portrayal of his time and today’s political environment is in his depiction of the cultural preoccupation with the idea of “democracy” and the popular tendency to attribute to it an intrinsicist admiration, as if the institution of democratic systems and procedures was, in and of itself, a guarantee or safeguard of freedom. Hayek is not susceptible to such illogical leaps, however.

“Democracy is essentially a means, a utilitarian device for safeguarding internal peace and individual freedom. As such it is by no means infallible or certain… and it is at least conceivable that under the government of a very homogeneous and doctrinaire majority democratic government might be as oppressive as the worst dictatorship” (52).

Hayek is not without his own misconceptions as to the true nature of democracy, though, nor the relationship between democracy and capitalism: “If ‘capitalism’ means here a competitive system based on free disposal over private property, it is far more important to realise that only within this system is democracy possible. When it becomes dominated by a collectivist creed, democracy will inevitably destroy itself” (52).

To say that democracy is possible only within “a competitive system based on free disposal over private property” ignores the fundamental nature of democracy. Despite the typical usage of the term today, democracy in its pure sense entails no protection or recognition of rights whatsoever. As it was designed, democracy is a system of unlimited majority rule.

Capitalism does rely upon certain legal and political necessities such as individual rights and objective law. What is perceived as the hallmark of democracy—the ability to vote—is not, however, sufficient to secure democracy and may, in the absence of the other two features, destroy it. True, there exist milder democracies throughout the world today that do recognize rights, but their regard for rights does not derive from their nature as democracies. The recognition of rights is only an adjunct to—and, furthermore, a limitation on—the democratic system. The more that alleged “democracies” alter their nature to accommodate individual rights, objective law, and the principles of capitalism, the more they shed their democratic nature and acquire the qualities of a representative system suited to capitalism: a republic.

Though he fails to properly define and conceive of democracy, Hayek does acknowledge the rampant, dangerous popular preoccupation with it and the propensity for those consumed with the idea to invite a tyranny of the majority clothed in democratic language and ideas.

 “It may well be true that our generation talks and thinks too much of democracy and too little of the values which it serves… The fashionable concentration on democracy as the main value threatened is not without danger. It is largely responsible for the misleading and unfounded belief that so long as the ultimate source of power is the will of the majority, the power cannot be arbitrary. The false assurance which many people derive from this belief is an important cause of the general unawareness of the dangers which we face” (52).

Hayek’s “Planning and Democracy” is thus an average of what we have seen thus far from him: poor ethics and incomplete defenses of liberty mixed with some valuable insights as to changing political processes and the reciprocal relationship between a socialist state and society as the state seeks to deliberately mold the activities of its population, but finds itself transformed in the process. As much can be expected in our next analysis as Hayek addresses the subject of “Planning and the Rule of Law” in Chapter VI.

Thoughts on ‘The Road to Serfdom': Chapter 4, “The ‘Inevitability’ of Planning”

In Arts & Letters, Austrian Economics, Book Reviews, Books, Britain, Economics, History, Humane Economy, Humanities, Liberalism, Libertarianism, Philosophy, Politics, Western Civilization, Western Philosophy on September 18, 2013 at 7:45 am

Slade Mendenhall

Slade Mendenhall is an M.Sc. candidate in Comparative Politics at the London School of Economics, with specializations in conflict and Middle Eastern affairs. He holds degrees in Economics and Mass Media Arts from the University of Georgia and writes for The Objective Standard and themendenhall.com, where he is also editor.

The following is part of a series of chapter-by-chapter analyses of Friedrich Hayek’s The Road to Serfdom. Other installments in the series can be found here: Introduction, Chapter 1, Chapter 2, Chapter 3.

In Chapter IV of The Road to Serfdom, entitled “The ‘Inevitability’ of Planning”, Hayek sets out to dispel the claim by advocates of socialist planning that controls are a necessary part of an advanced, modern economy and that without them the economy would cease to function. He recognizes that socialist claims as to the inevitability of planning can be broadly categorized into three types of argument, then proceeds to refute each. He does so thoroughly and effectively. In the course of reading his arguments, however, we unfortunately find more of the same sorts of errors that have punctuated previous chapters. Though these errors are not as numerous as those we have already seen from Hayek, they are fatal to the cause of liberty. Hayek’s flaws here confirm our earlier assertion that his view of the argument for freedom is so firmly rooted in an economic, cost/benefit framework as to make him unsuited to presenting the comprehensive defense that capitalism as a system of individual rights needs and deserves.

Hayek begins by accurately describing a circumstance quite familiar to us today: politicians who advocate central planning doing so on the claim that circumstances somehow demand controls, and that it is not a choice but a necessity that the government intervene if we are to retain a functioning economy. The familiarity one finds in reading his characterization of this mode of thinking reveals how constant and unchanging such arguments are across generations and throughout the Western world. The arguments he describes, though drawn from England in the 1940s, are replayed in the halls of the US Congress week after week, year after year to the detriment of the rights and success of private businesses, their vendors, customers, employees, investors, and all who share in the economy with them.

Distinguishing the various arguments used to support this insistence upon the need for planning, Hayek finds three purported bases for their claims: technological advancement, societal complexity, and the need for coercive monopoly.

Argument I: Technological Advancement

As to the first, he writes, “Of the various argument employed to demonstrate the inevitability of planning, the one most frequently heard is that technological changes have made competition impossible in a constantly increasing number of fields, and that the only choice left to us is between control of production by private monopolies and direction by the government” (32). The preeminence of this argument above the others may not hold the number one position that it did in Hayek’s day, as other arguments for market regulation have debatably become more prevalent, but it certainly remains one of the leading lines of thought in antitrust.

Hayek characterizes such arguments as resting largely on deterministic conceptions of economic progress, ones that in the early 20th century viewed Germany, with its coincidence of economic planning, a strong industrial sector, and large companies operating in collusion with the national government as the vanguard of human progress. He points to the roots of this thinking in Germans’ misconceptions of their own system: “It is largely due to the influence of German socialist theoreticians, particularly Sombart, generalising from the experience of their country, that the inevitable development of the competitive system into ‘monopoly capitalism’ became widely accepted” (34), Hayek offers several valid economic and historical arguments against this, refuting the suggestion by many that a free economy naturally, inevitably congeals into small number of sprawling monopolies.

Hayek points out that monopolies arising purely from efficiency and natural market forces are rare and very difficult to sustain, thus making competitive arguments the norm in a free economy. He acknowledges that most monopolies arise from government favors and protection—constituting what can best be termed coercive monopolies. “Not only the instrument of protection, but direct inducements and ultimately compulsion, were used by the governments to further the creation of monopolies for the regulation of prices and sales” (34).

He makes clear that the progress of the German economy was not such that monopolies resulted naturally and were subsequently checked by government controls, but rather that the companies in question attained their monopoly status through that very culture of political collusion. He points to the same mechanism of political influence and pull-peddling in the establishment of protectionist policies and the formation of inefficient, monopolized industries in the United States and Great Britain as well.

“That [in Germany] the suppression of competition was a matter of deliberate policy, that it was undertaken in the service of the ideal which we now call planning, there can be no doubt. In the progressive advance towards a completely planned society the Germans, and all the people who are imitating their example, are merely following the course which nineteenth-century thinkers, particularly Germans, have mapped out for them. The intellectual history of the last sixty or eighty years is indeed a perfect illustration of the truth that in social evolution nothing is inevitable but thinking makes it so” (35).

Making this and other points as to the origins of large monopolies, Hayek establishes a strong historical case against the belief that unchecked market forces lead naturally to the creation of monopolized industries. What he does not do, however, is take a stand in defense of naturally occurring, non-coercive monopolies when and where they do occur. This is to be expected. Influenced by ideas dominant in the field of economics both then and now, Hayek has already established briefly in previous chapters his support for employing antitrust policies to facilitate competition.

What Hayek and others of this persuasion fail to note, however, is the two-fold case for free market monopolies: the profound economic value they offer and the protection of individual rights. As rare as these monopolies are, they do occur. When they arise, they do so because a company has achieved such a profound degree of efficiency that no other company is able to compete in the same market and must exit the market place.

Such monopolies have not attained their status through force or the rule of law, but through so consistently providing the best product for the money that their appeal in a market overwhelms all potential competitors. It may not conform to the idealized, Platonic notion of ‘competitive markets’ to which modern economics has become so hidebound, but that is a paltry explanation to offer people as an apology for why the company they patronize had to be divested of its assets for offering them too much value, and for why they are now better off having to pay higher prices for the same goods and services. To the contrary: the achievement of the kind of superlative efficiency that defines free market monopolies, from which the customers and general population gain as surely as the company itself, should not be condemned but praised.

More than this, the proper defense of free market monopolies is based in the property rights of the owners of the company—be they the operators themselves, or shareholders of a publicly traded company. No matter the extent to which their operations do or do not conform to economists’ notions of which market forms are to be favored, neither they nor policymakers nor the general public have the right to take from them that which is rightfully theirs in the name of creating a more efficient allocation of resources.

In today’s debates, a derivative line of thinking from the technology argument usually takes the form, ‘If one company gains such a technological advantage as to offer its goods and services at a price and quality with which no other company can compete, shouldn’t the government intervene?’ Faced with such a question, any defender of liberalism—that is, anyone who value’s man’s life and individual rights above subservience to some ill-defined collective ‘good’—should offer a resounding “Absolutely not!” As in his earlier chapters, though, Hayek makes no mention of rights here and is thus unable to offer this kind of principled defense—or, for that matter, any defense.

Argument II: Societal Complexity

The second argument for the inevitability of planning addressed by Hayek is loosely related to the first, with an added macroeconomic dimension. He writes,

“The assertion that modern technological progress makes planning inevitable can also be interpreted in a different manner. It may mean that the complexity of our modern industrial civilisation creates new problems with which we cannot hope to deal effectively except by central planning” (35) [Emphasis mine].

This argument should be strikingly familiar to those in modern America, ringing from both right and left as both sides of the political spectrum apologize for our massive regulatory system with vague, arbitrary claims to the effect that there exists some unnamed, undefined essential quality to today’s economy that so fundamentally differentiates it from that of earlier periods as to require the forcible regulation of trade. What is this fundamental difference? How and at what point did it emerge? What about the complexity of the economy negates the organizational virtues of the price system? Blank out. The apologists have no causal explanation, only inherited and unchallenged bromides.

“What they generally suggest is that the increasing difficulty of obtaining a coherent picture of the complete economic process makes it indispensable that things should be coordinated by some central agency if social life is not to dissolve in chaos” (36).

Such unsubstantiated conjectures and baseless arguments never require much to be toppled, but fortunately Hayek provides a more than adequate shove, making the case that greater complexity in an economy is not an argument in favor of central planning, but rather an argument against it. The more complex an economic system, the more valuable it becomes that each party, knowing their own costs and values, conducts their own planning, achieving order through the natural coordination of prices, each communicating information as to the supply and demand of resources in an open economy.

Argument III: The Need for Coercive Monopoly

The last argument in favor of planning somewhat reverses the trend of the first two, justifying planning as a means of imposing monopolies rather than preventing them, and revealing the crux of the statists’ argument to be not the protection of competition throughout the economy, but the socialist planner’s ability to pick and choose when and in what sectors competition will prevail.

“There is yet another theory which connects the growth of monopolies with technological progress, and which uses arguments almost opposite to those we have just considered; though not often clearly stated, it has also exercised considerable influence. It contends, not that modern technique destroys competition, but that, on the contrary, it will be impossible to make use of many of the new technological possibilities unless protection against competition is granted, i.e., a monopoly is conferred” (37).

This particular argument for government planning is less common, as its applications are less frequent throughout economies. The most notable circumstance in which this argument is presented is with respect to so-called ‘natural monopolies’ (a term used by economists that ambiguates other kinds of natural monopolies produced in a free market, as we described earlier) in the utilities sectors of modern economies. Large-scale enterprises such as electric companies that require heavy, permanent or semi-permanent installations of infrastructure such as power grids are described by those who teach this model of the ‘natural monopoly’ as incapable of making such investments without a guarantee from the local government that all competition will be prohibited within the municipality.

The history of the electric power industry in the Unites States, however, shows a different story—one in which the major driver of the ‘natural monopoly’ model was not the inefficiency of competitive markets, but rather the political collusion between state legislatures and early power industry executives who were, in many cases, given no choice but to keep legislators happy with rewards and employment or face losing the investments they had already made.

Intriguingly, however, Hayek makes only a passing mention of this obvious and most frequent application of the ‘natural monopoly’ argument. He opts instead to dismiss most instances of its application (rightfully) as “a form of special pleading by interested parties” (37), then to proceed into a bizarre hypothetical about England allowing only one make of automobile if it meant lower prices on all automobiles. He presents this as a potentially valid application of the idea, arguing only that such cases are “certainly not instances where it could be legitimately claimed that technological progress makes central direction inevitable. They would merely make it necessary to choose between gaining a particular advantage by compulsion and not obtaining it—or, in most instances, obtaining it a little later, when further technical advance has overcome the particular difficulties” (38).

Hayek the economist seems to consider such an interventionist policy at least plausible, if debatably desirable. But what of Hayek the liberal political theorist? Under what conditions would he find such a policy acceptable? Would the strict prohibition of initiating force, so frequently invoked among libertarians, be the standard? Not quite. “[I]t must be admitted,” Hayek writes, “that it is possible that by compulsory standardisation or the prohibition of variety beyond a certain degree, abundance might be increased in some fields more than sufficiently to compensate for the restriction of the choice of the consumer” (38) [Emphasis mine.].

Let us ask: what level of abundance would you require to surrender your right to choose how you wish to dispose of your income? What is the exchange rate between degrees of efficiency and the right to trade freely? And for producers: how compensated will you feel at the knowledge your automobile is less expensive when your business is being shut down by the government for offering customers too much diversity in the marketplace? Many who read this in today’s mixed economy will likely have similarly mixed feelings and mixed premises in their responses to these questions. Thus, let us reframe the issue to put it in stark relief.

Imagine that you live in a society that enacts such a policy of homogenizing the nation’s automobiles. The government is left to decide who will remain in the automobile business in the ways it usually decides such matters. The last businessmen to grovel will be the first to go. There is no more choice in make or model. Competition in quality and unique features is gone. You, however, are left with a less expensive automobile, your neighbors are left with less expensive automobiles, and the supply of them to the general public skyrockets. (This is a fantasy, remember, so you’ll forgive me if I pretend a government program is successful even if only in the short term.)

Now imagine that instead of automobiles, the product is healthcare.

How much are you willing to trade of your rights for greater efficiency? What is your price? And how strong a defender of economic freedom is Mr. Hayek? The answer is clear and tragic.

Hayek establishes here firmly and conclusively that he is not, in fact, much of a political theorist. He is ultimately a dryly calculating economist plotting your rights on a utility curve.  Though many of Hayek’s admirers will no doubt reject this assessment, it is difficult to argue with his own words as he lays out his fundamental basis for liberalism as such. “[T]he argument for freedom,” according to Hayek, “is precisely that we ought to leave room for the unforeseeable free growth” (38).

To anyone who values man’s fundamental rights; who believes that those rights are derived from his nature and not subject to popular will; who thinks that freedom is rightfully his; who rejects force as a necessary or proper ingredient in human social relationships; who recognizes that the history of human innovation and progress has rested on the freedom of man’s mind to study and master the world around him; who claims the prerogative to pursue his own self-interest; who retains his self-esteem; who holds his own happiness as the purpose of his life: the only proper answer, the only moral answer is “Absolutely not!”

The argument for freedom, Mr. Hayek, is the assertion of man’s right to his own life, a life that is its own justification. Nothing else is required and nothing else will do.

Hayek’s fourth chapter, “The ‘Inevitability’ of Planning”, thus leaves us back at the low-point of Chapter I. It is impossible, based on the philosophical framework established in the introduction and first four chapters, that Hayek could at this point offer a proper defense of liberalism. Though I hesitated to make the comparison earlier, hoping he might redeem himself, it is fair to say now that Hayek is scarcely better than many of the pragmatist politicians today who argue for capitalism as a practical benefit, make no mention of its moral values, and ultimately treat principles as loosely-held guiding ideas with little more substance than campaign slogans. He may be much farther toward the liberal end of the spectrum than many of them; it would be inaccurate to say otherwise. Ultimately, though, half-hearted, half-formed defenses of freedom by advocates who lack the tenacity to defend their professed values only facilitate their destruction.

The real Road to Serfdom is paved with incomplete defenses of liberty, and once one has allowed them to serve as the foundation for the defense of a free society, matters of degree are only matters of time.

Thoughts on ‘The Road to Serfdom': Chapter 3, “Individualism and Collectivism”

In Arts & Letters, Austrian Economics, Book Reviews, Books, Economics, History, Humane Economy, Humanities, Liberalism, Libertarianism, Philosophy, Politics, Western Civilization, Western Philosophy on September 16, 2013 at 7:45 am

Slade Mendenhall

Slade Mendenhall is an M.Sc. candidate in Comparative Politics at the London School of Economics, with specializations in conflict and Middle Eastern affairs. He holds degrees in Economics and Mass Media Arts from the University of Georgia and writes for The Objective Standard and themendenhall.com, where he is also editor.

This analysis is the fourth installment in a series of chapter analyses of Friedrich Hayek’s The Road to Serfdom. The previous analysis of Hayek’s introduction, Chapter I, and Chapter II can be found here, here, and here, respectively.

Hayek’s third chapter, “Individualism and Collectivism,” proves to be what our earlier analyses had anticipated: good on recognizing the economic benefits of liberalism, skilled at pointing out the flawed concepts and illogical thinking that facilitate and perpetuate socialism, and effective in arguing for certain basic fundamentals such as the necessity of an effective legal system, but slightly inadequate in its offering of better concepts, lacking in its defense of capitalism, and guilty of a borderline intrinsicist endorsement of ‘competition’, without treating that endorsement as premised upon the benefit rendered to man as an individual or, for that matter, any other more fundamental value.

The chapter begins with a valuable point as to the extent to which socialism has succeeded by distorting and disguising its own nature, with each socialist faction clinging to its chosen group or alleged beneficiary—a race, party, or class—and proclaiming that by virtue of its superficial differences in approach it is somehow different from all other varieties of statism. It thus exaggerates concrete matters of application, treating them as differences in fundamentals. Hayek repudiates this approach, pointing out that, regardless of the group they claim to represent, “the methods which [the socialists] shall have to employ are the same as those which could ensure an equalitarian distribution” (25). He goes on to acknowledge that “nearly all the points which are disputed between socialists and liberals concern the methods common to all forms of collectivism and not the particular ends for which socialists want to use them” (24), establishing that the basic objection of liberals to socialist policies apply to all socialist policies, not those of a certain type, as the conflict is fundamentally between individualism and collectivism.

Hayek’s shift of focus from political ideologies to the more fundamental dichotomy in all political theory is valid and much-needed in a world that so rarely thinks in terms of fundamentals anymore—both at the time of writing and today. What is lacking in this effort, however, is an explicit definition of ‘individualism’ and ‘collectivism.’ He implies, though does not expound upon, the idea that the collectivism is best thought of as a set of “methods which can be used for a great variety of ends,” seeing socialism “as a species of that genus” (25). While he is correct in viewing socialism as a subtype within a broader category of collectivist politics, collectivism itself is not fundamentally definable as a set of methods, but as an ideological framework.

The question that divides the two political philosophies of individualism and collectivism is one of standards of value. It asks, ‘Which is the primary unit for consideration in judging what is politically ‘good’?” Hayek’s failure to define the two concepts and their difference misses the opportunity to dispel the socialist misrepresentation of that dichotomy. Socialists, rather than seeing the question as one of standards of value and units for consideration, mischaracterize human affairs as a perpetual conflict between the individual and collective, accepting conflict as a necessary ingredient in social relationships, and, therefore, self-interest as fundamentally anti-social. They therefore view the question of individualism and collectivism as one of loyalty: “Individuals or the collective: whose side are you on?” Many defenders of socialism, having accepted this false notion of man’s life as perpetually in conflict, thus accept the morality of altruism that preaches that someone’s sacrifice is necessary and good for society to function, and accordingly defer to socialism for fear of being an enemy of an alleged ‘greater good.’

Other flaws punctuate Hayek’s challenge of socialism. The first is his failure to challenge socialists’ ends as goods to strive for. He describes their ends as a desire for “social justice, greater equality, and security” (24), but then sets upon his argument as to the impossibility of separating socialists’ means from the system itself, implicitly suggesting by his omission that their ends are indeed desirable. He writes, “There are many people who call themselves socialists although they care only about [the ideals of social justice, greater equality, and security], who fervently believe in those ultimate aims of socialism but neither care nor understand how they can be achieved, and who are merely certain that they must be achieved, whatever the cost” (24). The error in their reasoning that Hayek seems to imply lies in socialists’ disregard for the means by which they hope to achieve their ends. He does not, however, challenge the ends as such.

Hayek fails to challenge the concepts offered by socialists or to insist that they properly define their terms—what they mean by the bromides they use: social justice—by what standard of justice? equality—of rights or of results? security—from force, or from the facts of reality? Hayek leaves these questions unasked, thus leaving the socialists’ values uncontested and the socialists themselves with more apparent justification than they could ever deserve.

In tandem with this omission, he describes it as “unfair to use the term socialism to describe its methods rather than its aims, to use for a particular method a term which for many people stands for an ultimate ideal” (25). Though he does not elaborate upon this, it can easily be interpreted as a suggestion that some more peaceable socialists’ ends are well-intended—at least “for many people,” but that it is their means which are flawed. Despite his earlier insistence upon the essential connection between different apparent varieties of socialist, he apparently further accommodates the socialists’ ultimate values without challenge.

Hayek’s approach to the subject of planning offers some valuable insights that go to the heart of modern mainstream misunderstandings of liberal thought. “’Planning’”, he writes,

“owes its popularity largely to the fact that everybody desires, of course, that we should handle our common problems as rationally as possible, and that in so doing we should use as much foresight as we can command. In this sense everybody who is not a complete fatalist is a planner, every political act is (or ought to be) an act of planning, and there can be differences only between good and bad, between wise and foresighted and foolish and short-sighted planning” (26).

This distinction—that liberal policies advising against intervention are no less a deliberate form of planning than interventionism and no less based in a conscientious logic—is an important one in today’s world, as libertarian and capitalist ideas are moving more into the mainstream, being discussed more frequently in publications throughout the Western world, but still remain largely misunderstood by those who see liberals’ insistence upon letting the market work as some mysticist assumption ungrounded in empirical observation. Hayek highlights that they are indeed based in a strategic logic, but one that maintains a belief in the ability of markets to provide man’s needs.

From there, however, Hayek proceeds down a shakier path, again criticizing those who advocate laissez-faire capitalism and defining liberalism along strictly economic lines, making no reference to the fundamental values of liberals and showing his own liberalism as based primarily on a pragmatic approach. He writes,

“It is important not to confuse opposition against this kind of planning with a dogmatic laissez-faire attitude. The liberal argument is in favor of making the best possible use of the forces of competition as a means of co-ordinating human efforts, not an argument for leaving things just as they are. It is based on the conviction that where effective competition can be created, it is a better way of guiding individual efforts than any other” (27).

He further argues that “where it is impossible to create the conditions necessary to make competition effective, we must resort to other methods of guiding economic activity” (27), supporting our understanding of his earlier defense of antitrust regulations.  His warning of the dangers of a mixed economy and the destructive effects of trying to combine liberalism and socialism is valid. However, he doesn’t clearly or adequately address the fact that the destructiveness of a mixed economy stems from its statist, coercive elements, and that while the leaders of private industry may use the coercive power of government to enrich themselves in such an economy, it is ultimately the force of government and the political principles it follows that allow the system to exist, enabling such injustices.

Instead, he poorly allocates the ultimate responsibility for a mixed economy, writing that

“the universal struggle against competition promises to produce in the first instance something in many respects even worse, a state of affairs which can satisfy neither planners nor liberals: a sort of syndicalist or ‘corporative’ organisation of industry, in which competition is more or less suppressed but planning is left in the hands of the independent monopolies of the separate industries… By destroying competition in industry after industry, this policy puts the consumer at the mercy of the joint monopolist action of capitalists and workers in the best organized industries” (30).

True though this description may be in some respects, its emphasis on private businessmen as the primary drivers of the process evades the fact of which side makes the whole collusion possible. Private businessmen of a certain kind—the kind that thrives not on productivity but on political pull—can and do act as the accelerants and perpetuators of a mixed economy. They cannot, however, bring it into being. The responsibility for that lies with a country’s political officials, whether in the legislative, executive, or judicial branch. It is through an abandonment of the legal principles of capitalism that businessmen and legislators have either the occasion or the cause to collude.

Hayek goes on to make several statements that will likely surprise strict adherents of liberalism, writing “Nor is the preservation of competition incompatible with an extensive system of social services—so long as the organisation of these services is not designed in such a way as to make competition ineffective over wide fields” (28), and endorsing the idea of naturally occurring market failures. “The functioning of competition,” he writes, “not only requires adequate organisation of certain institutions like money, markets, and channels of information—some of which can never be adequately provided by private enterprise“ (28), suggesting that such instances must be met by governments practicing “the very necessary planning which is required to make competition as effective and beneficial as possible” (31).

Ironically in the context of later debates between classical liberals and mainstream political culture, Hayek argues that roads offer an example of a good that cannot be provided by market forces. Thus, every liberal who has endorsed the potential for market provision of transportation services only to hear political moderates suddenly become crusaders for the transportation sector, passionately demanding “What about the roads?!” has Hayek to credit for endorsing this line of thinking.

Hayek goes on to even endorse broader regulations, with the sole cited criterion for judgment being whether the regulation distorts the market by treating producers differently, or whether it equally infringes upon all:

“Any attempt to control prices or quantities of particular commodities deprives competition of its power of bringing about an effective coordination of individual efforts, because price changes then cease to register all the relevant changes in circumstances and no longer provide a reliable guide for the individual’s actions. This is not necessarily true, however, of measures merely restricting the allowed methods of production, so long as these restrictions affect all potential producers equally and are not used as an indirect way of controlling prices and quantities” (27).

True, policies that apply equally across the board at least have the benefit of not being narrowly discriminatory in their oppression, but they also have the distinction of violating the rights of all producers. If an intrinsicist notion of “competition” and not rights, however, is the standard to be maintained, it is not surprising that Hayek lands at this conclusion.

If it can then be said, following the logic of Hayek, that some regulations are necessary, what is the standard for determining the conditions under which it is proper? He gives us an indication:

“Economic liberalism is opposed, however, to competition being supplanted by inferior methods of co-ordinating individual efforts. And it regards competition as superior not only because it is in most circumstances the most efficient method known, but even more because it is the only method by which our activities can be adjusted to each other without coercive or arbitrary intervention of authority” (27) [emphasis mine].

In this passage, Hayek reveals his defense of competition (and, thus, of economic freedom) as based on a belief in its superior abilities in coordination, its efficiency, and, almost tautologically, the fact that it does not involve coercive action. The last condition is an act of circular reasoning, as Hayek states, to word it differently, that a system not guided by coercive action is superior because it is not guided by coercive action, without referencing any particular standard of the good that would make such an argument functional. His other expressed standards, however, tell us something of his political values.

Elsewhere, he writes of the need for regulations “[t]o prohibit the use of certain poisonous substances, or to require special precautions in their use, to limit working hours or to require certain sanitary arrangements,” arguing that such use of preventive law “is fully compatible with the preservation of competition.”  One is then brought to wonder: if a regulation or any other use of preventive law can be said to promote competition, is there some other standard that it must meet, some other moral test it must pass to merit enforcement? Hayek would tell us there is not, writing that “The only question here is whether in the particular instance the advantages gained are greater than the social costs which they impose” (28) [emphasis mine].

We can thus see Hayek’s defense of liberalism as a largely pragmatic, utilitarian one and not one based soundly or primarily in a moral argument. In line with this, he pursues what can be interpreted as an intrinsicist approach to valuing “competition” and policies that promote it. Certainly, competition is a value agreed upon by all who value freedom in economics, but the failure to tie it back to what competition offers individuals and to root the defense of it in the political freedom and material well being it provides gives us only half a defense.

Competition is, after all, not a value in and of itself, but a process by which men can pursue their own self-interest, hindered only by their own limitations. In the words of Ayn Rand, “Competition is a by-product of productive work, not its goal.” Elsewhere, she elaborates

“The concept of free competition enforced by law is a grotesque contradiction in terms. It means: forcing people to be free at the point of a gun. It means: protecting people’s freedom by the arbitrary rule of unanswerable bureaucratic edicts… There is no way to legislate competition; there are no standards by which one could define who should compete with whom, how many competitors should exist in any given field, what should be their relative strength or their so-called “relevant markets,” what prices they should charge, what methods of competition are “fair” or “unfair.” None of these can be answered, because these precisely are the questions that can be answered only by the mechanism of a free market.”

Alan Greenspan, writing in his early years, makes a similar observation on the subject that may point out from where Hayek is deriving this emphasis on “competition”:

“Competition” is an active, not a passive, noun. It applies to the entire sphere of economic activity, not merely to production, but also to trade; it implies the necessity of taking action to affect the conditions of the market in one’s own favor.

“The error of the nineteenth-century observers was that they restricted a wide abstraction—competition—to a narrow set of particulars, to the “passive” competition projected by their own interpretation of classical economics. As a result, they concluded that the alleged “failure” of this fictitious “passive competition” negated the entire theoretical structure of classical economics, including the demonstration of the fact that laissez-faire is the most efficient and productive of all possible economic systems. They concluded that a free market, by its nature, leads to its own destruction—and they came to the grotesque contradiction of attempting to preserve the freedom of the market by government controls, i.e., to preserve the benefits of laissez-faire by abrogating it.” (“Antitrust”)

Whether this is in fact the context of Hayek’s focus on “competition” as the ultimate goal to be pursued is uncertain, but it reveals both a misplaced focus and, yet again, the propensity to look at matters of political ideology through the lens of economic reasoning, failing to adopt the necessary concepts to make an effective, complete defense of capitalism.

Along those same lines, even in those instances where Hayek seems to be on the right track, there is a conspicuous absence of concepts that one would expect from a defender of liberalism. For instance, he offers a valid argument on the need for legal structure in functioning capitalist systems, writing that competition “depends above all on the existence of an appropriate legal system, a legal system designed both to preserve competition and to make it operate as beneficially as possible” (28).  As true as this is, what is striking is that his assertion of the need for appropriate laws rests entirely upon the question of competition and effective operation, and not on any more fundamental principles or political values of a higher order.

Such navigating around the task of making principled arguments appears to be a recurring theme in The Road to Serfdom thus far. It is intriguing and disappointing that after an introduction and three chapters of Hayek, dealing with questions and issues as fundamental as the intervention of government in economics, individualism versus collectivism, and the dangers of socialism to a society, we have not once read the word “rights” in any of Hayek’s arguments. It is difficult to fathom how one could effectively address subjects that deal with such fundamental questions without even mentioning what are and are not man’s rights.

That Hayek has not even mentioned rights once suggests that the notion is so far outside of his intellectual framework as to not have occurred to him (doubtful), or that he has some aversion to a rights-based argument to freedom, or does not have a certain view himself as to what man’s rights are. Indeed, were he to be consistent as a skeptic, Hayek would be unable to maintain a consistent and objective notion of man’s rights, and would thus have to either advocate rights as floating abstractions not grounded in man’s nature, or resort to arguing that rights are debatable and subjective.

Hayek’s third chapter proves to be roughly what we expected: stronger and less contradictory than chapter one, but not as successful as chapter two. He occasionally makes valid points that we can translate into the present day. “The dispute about socialism,” he writes, in a passage that could be applied as truly to the statist elements of both parties in the United States in 2013 as to England in the 1940s, “has thus become largely a dispute about means and not about ends” (24). However, the pragmatic, utilitarian approach Hayek takes to counter it sounds much more like the moderate defenders of capitalism in the US today, Republicans who argue for “free markets” because they “work” without the slightest mention of their ethical superiority, than like the paragon of liberal intellectual thought that Hayek is portrayed to be. Whatever Hayek’s abilities as an economist supporting liberal economic policies—and they are remarkable—his force as a political theorist and defender of liberalism is lacking. In tandem with the author’s reputation as an economist, this deficiency threatens to encourage those who seek to defend liberty to invest too heavily in the wrong kind of argument, potentially crowding out more worthwhile ones. Just as in monetary economics “the bad money chases out the good”, so in political philosophy a chiseled, fool’s gold defense of freedom stands the risk of jeopardizing that which it seeks to uphold.

Follow

Get every new post delivered to your Inbox.

Join 6,385 other followers

%d bloggers like this: