Economics, Liberty

Hayek Was Not Dumb

In my previous post I tried to figure out how, across Hayek’s writings as a whole, he could simultaneously support institutions that we commonly think of as part of a “welfare state” and argue that “welfare states” lead to totalitarian outcomes, though less quickly and obviously than full-on socialism. Henry Farrell, over at Crooked Timber, was kind enough to respond. I’d like to address his concerns.*

Remember that I distinguished between two types of welfare states, the welfare state of law and the welfare state of administration. I admitted that these are ideal types, where the former redistributes in accord with clear, public, general rules and the latter redistributes in accord with bureaucratic tinkering. Hayek supported the former but thought the latter would lead to tyranny. I then claimed that Hayek was a little too worried about the latter, but not by much.

Farrell doesn’t address my distinction, probably because he thinks that I failed to read Hayek carefully enough. A careful examination of Hayek’s remarks in a future introduction to Road clearly demonstrates that Hayek thought even modest welfare states like post-war Britain would turn people into sheep and slowly deliver them into darkness. So Hayek made an obviously false claim.

Here’s the Hayek passage Henry thinks I ignore:

This means, among other things, that even a strong tradition of political liberty is no safeguard if the danger is precisely that new institutions and policies will gradually undermine and destroy that spirit.

The consequences can of course be averted if that spirit reasserts itself in time and the people not only throw out the party which has been leading them further and further in the dangerous direction but also recognize the nature of the danger and resolutely change their course. There is not yet much ground to believe that the latter has happened in England.

I suggested in my post that Hayek thought that cultural forces could stand in the way of this slouching towards Soviet Russia. But Farrell is having none of it:

Vallier can bring up the “Swedish welfare state is not all-overpowering because of citizens’ natural inclination to liberty argument” on his own behalf if he wants to. He cannot use it as a general defense of Hayek, for the simple reason that it flatly contradicts Hayek’s own arguments.

And again:

[Hayek] is flatly empirically wrong. For Hayek, the only way in which the spirit of the people can counteract the enervations of welfarism is by re-asserting itself, throwing out the socialists, and resolutely changing course, before it is all too late.

Read the quoted passage from Hayek and then read the quoted passage from Farrell. I’ve done it at least five times. Farrell thinks the passage from Hayek is not only clear but clearly supports his interpretation. From what I can tell, however, I simply echoed Hayek’s claim: people can resist the welfare state of administration’s road to serfdom via cultural resistance. It is just odd that Farrell thinks this passage obviously vindicates his interpretation. At best the passage is unclear, but to my mind the passage actually supports my view. After all, Hayek says the trend can be reversed.

Perhaps what is really at issue is how strong this resistance must be, that is, how hard a society must “re-assert” itself. I don’t know of anywhere where Hayek lays this out carefully. And so again, I can’t see that Farrell’s reply succeeds. Consequently, I continue to insist that his original claim – that Hayek claimed that Swedish-style welfare states as such lead inevitably to totalitarianism – is wrong.

Farrell ends his post with the following remark:

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

Hayek was wrong about many things, perhaps most clearly in his extreme critique of social justice, his peculiar account of group selection, his strange conception of coercion, and his opaque account of general rules. But Farrell’s reading still isn’t charitable. His supposed proof text – one self-commentary from Hayek’s introduction to his most popular and least scholarly work – fails to vindicate his interpretation. I mean, I’m trying to be fair, but it seems to me that Farrell didn’t even interpret his one data point correctly.

In the end, if you think a really smart and important social philosopher and economist said something pretty dumb about a topic on which he was an expert, you should doubt your own judgment first. Hayek was not dumb and one need not be a slavish Hayekian to think so.

For what it’s worth, my problem with Hayek’s slippery slope arguments throughout his work is that they subtly run together empirical and conceptual claims, which is why its never quite clear what Hayek is after. I’d prefer to reconstruct Hayek’s slippery slope arguments as praxeological claims, namely that, all else equal, the sorts of interventions required by the welfare state of administration must, on pain of irrationality, commit one to increasingly authoritarian controls. Nozick’s Wilt Chamberlain argument is probably the result of stripping empirical pretensions away from Hayek and Mises’s often empirical-sounding claims to this effect.

But I’m a philosopher, so of course I prefer this reconstruction!

* Even though Farrell was hard on me, I still feel honored by the response. I’ve been reading CT since I was an undergraduate and see it as kind of an “academic star blog” like Mankiw or Marginal Revolution or Krugman.

  • RickDiMare

    “Perhaps what is really at issue is how strong this resistance must be, that is, how hard a society must “re-assert” itself.”

    Yes, that’s the real issue. Also, it probably goes without saying that the resistance is happening now. (I just happen to think we’re putting too many eggs in the political basket. In addition to the political effort, we need to start suing every U.S.-incorporated bank in sight that blocks a depositor’s legal demand for Treasury-Direct-only bank accounts.)

  • 3cantuna

    Mises was not exactly right in Middle of the Road Policy Leads to Socialism.  The necessarily suboptimal and economically damaging results of government intervention may be consciously intended– and quite clearly carried on for a long time in parasitical fashion.  Hence politicians can know that standard rate wage laws keep unskilled (mostly black and minority) workers from experience, employment, and contributing optimally to society— but legislate it anyway.  They know what side their bread is buttered.  Even though this particular piece of law is totalitarian– it does not mean that all things are or will be.  Of course, wage laws require policing, invite massive corruption and can escalate. As long as there is no change in expectations– one might even consider the situation stable in its depravity.

  • CFV

    I do not understand this reconstruction of Hayek’s arguments as “praxeological claims” at all.
    There have been, for example, advocates of economic planning that supported praxeology as a methodological starting point in economics (Oskar Lange was the most famous among them).
    Thus, my counter-argument will be something as follows:

    1. Praxeology as a methodological standpoint in economics is neutral between economic planning and free markets.
    2. Economic planning leads to totalitarianism (Hayek’s claim).
    3. Therefore, you cannot avoid totalitarianism by resorting to praxeology.


    • 3cantuna

      Lange accepted some elements of praxeology as developed by Mises et al. but tried to infuse Marxism on top of it.  (Rothbard). 
      Epic fail.

      In considering praxeology by Misesian definition one must separate the logic of choice, how it is derived, its deductive certainty, etc., from its methodological applications.  Economic law and propositions have no opinion on economic planning v. free markets. Applied, yes, it can help one understand the empirical past and advise for the future. 

      Hayek was not condemning all planning. Every individual plans. A household operates as a centralized economy in many respects. It was politically centralized, mostly state, planning that Hayek warned about.  

      • CFV

        As far as I know, Rothbard’s statement is plainly false: 1. Marx never theorized about economic planning;  2. Lange was a neoclassical economist in many ways.

        Again, I do know Hayek’s dictum (I’ve read many of his books, including RTS), but I never fully grasped what his argument was.

        • 3cantuna

          Why turn this into a conversation about whether Marx said anything about planning?  Totally besides the point.  (Marx was for a central bank anyway, btw, which is  a major piece of central planning. If Marx did not anticipate the consequences– then it’s just another strike against Marx.)

          Lange, apparently, was into neo-classicals like Pareto, Walras, Barone, Taylor and the associated mathematical equilibrium constructs.  This rather highlights the problems with neo-classical equilibrium foundations v. Austrian School competitive process thought.  Equations cannot take the place of actual property exchanges; Central Planning Board equations empty “prices” of their human character. Plus, a big plus, there is no such thing as an attainable or knowable equilibrium. The world is always in flux. Equations would realistically have to be all variables and no constants. The future is very uncertain. 

          This is why the Mises’ Austrian adherents trump neoclassicals in a big way.

          It looks like Lange was not only a Marxist revisionist (so was/is most followers), but a technocrat that was smart enough to concede some praxeological points to Mises.  I wonder if Lange’s technocratic power motive led him to his Marxism variant as cover, or was it the other way around? 

          • CFV

             You bring Marx on here, quoting Rothbard.

          • 3cantuna

            Oh, ok.  My initial take is that Lange’s heretical Marxism has to do with his  incorporation of “bourgeois” neo-classical economics. It put him at odds with fellow Marxists, even though Lange claimed that his version was keeping in tune with basic Marxian dogma of  ‘determinism in the social relations of production’.

          • CFV

            That wasn’t your “initial take.” Your initial take was a Rothbard’s quote. You aren’t very precise, are you?

          • 3cantuna

            It wasn’t a quotation.  See any quotation marks, to be precise haha? 

            I was trying to help correct your rather maleficent use of “praxeological”, originally.  You brought up Lange to begin with. Don’t blame the messenger.

          • CFV

            “Maleficent use”??? You didn’t correct anything.

            If it wasn’t a quotation, you were wrong, not Rothbard.

  • BradP

    Is there a purpose to liberal/progressive blogs mentioning Hayek other than providing smug, ignorant-of-libertarianism liberals with an opportunity to get together and throw out smug, ignorant insults towards libertarians?

  • Greg Ransom

    By all indications, Farrell has read almost no Hayek, so we shouldn’t take too seriously whatever Farrell might fantasize about Hayek, when he’s constructive massive mountains out of mole hills of text which are completely incompatible with Hayek’s body of work.

    Farrell ain’t serious, his agenda is something else besides getting it right, scholarly understanding, or even scholarly competence.  He’s out to marginalize Hayek.  That’s the beginning and end of his game.

    But there are many interesting issues here, many of which you engaged in your last post.

    What you didn’t engage (much) was the interplay between individual character and regard for liberal principles, and the decline and destruction of these negatively rule governed patterns of practice and behavior within the unprincipled and arbitrary institutions of the redistributive administrative welfare state.

    All sorts of reforms have been attempted to address aspects of this issue.  Sweden initiated reforms. The U.S. initiated reforms.  And the topic is an enormous one.

    There is also a growing literature on societies which encourage parasitism on the part of elites, and ones that sustain rule of law institutions.  Why are some cities like Chicago and Detroit, why are some cities less corrupt and less pathological?

    And we might want to know more about the particulars about the decline of the rule of law and liberal institutions and the rise of serfdom / statism / tyranny in such places as Venezuela in our own time, or in Argentina in the 1950s.

    We cannot conduct these discussion in utter textual and historical / empirical vacuums as Farrell wish to “engage” these wide ranging sets of issues.

    I come back to — what is the point of this?  For Farrell, advancing our understanding, getting thing right, etc in not the point.  He’s motivation is marginalization.  And we have no evidence of any other interest on Farrell’s part — and ever increasing evidence that that is the beginning and the end of it for Farrell.

    • Damien S.

      “Why are some cities like Chicago and Detroit”

      That’s an odd pairing.  I guess both have reputations for corruption, but Chicago is a world-class city that rich people are moving back into, while Detroit is the poster child for collapse and deurbanization.

      • Greg Ransom

        Odd that you are unaware of Chicago’s famed corruption.

        Or it’s horrible public schools.


        • Damien S.

          I grew up in Chicago.  I know all about the corruption of the old machine; I referred to it in the comment you’re replying too.  I was also educated — fairly well, thank you — in Chicago public schools.  Some are bad, some are really good.  Chicago may be corrupt, but it’s not pathological, as the growing market preference for property in Chicago shows.

          • Greg Ransom

            I say it’s corrupt and you say it is corrupt , I say it has bad public schools and you say it has bad public schools.

            Looks like we are in agreement.

            So why be an ass?

          • Damien S.

            “There is also a growing literature on societies which encourage
            parasitism on the part of elites, and ones that sustain rule of law
            institutions.  Why are some cities like Chicago and Detroit, why are some cities less corrupt and less pathological?”

            You implied that Chicago and Detroit are substantially similar, in particular similarly pathological.  This is false.  Detroit is pathological, a massive failure — not necessarily for political reasons, compared to the perils of centered on a single large industry.  Chicago is a successful city, with rule of law, and has long been functional despite corruption.  Services got provided, even if aldermen skimmed off the top, and multiple high quality public schools exist.  It has its problems, but not obviously worse than any other large city in the US.  (Which large US city doesn’t have some corruption and some bad schools?)

          • Greg Ransom

            Chicago isn’t Detroit.

            We also agree on that.

  • Greg Ransom

    “My problem with Darwins’s slippery slope arguments throughout his work is that they subtly run together empirical and conceptual claims, which is why its never quite clear what Darwin is after.”
    A mechanism isn’t a “slippery slope”, and mechanism explanations contain both conceptual and empirical elements.

    Darwin didn’t provide us with a “slippery slope” to the origin of species, he provided a mechanism (actually, several, including sexual selection, individual selection, and group selection).  Hayek did the same.

    • Damien S.

      Darwin also provided us with lots of evidence that his proposed mechanisms were real.  Hayek…

  • X Pat Martigan

    You said “hard on.” 

  • billwald

    It is a problem of scale, not law. In the bad old days when people lived in small towns everyone knew the winos and the widows and could act accordingly. 

    Many families function very well under pure communism. Each of my 5 kids got what we thought they needed and all five turned out well. Different, but decent people and good neighbors to their neighbors.

    From WW2 to the EEC the Scandinavian countries did just fine under a socialistic system because they were small and one “kind” of people. No country of 300 million diverse people will operate peacefully and efficiently. 

    The “Libertarian” solution might be to repeal the Constitution and re-organize as 50 sovereign nations under one foreign policy and one Federal  Navy for mutual defense. 

    • Damien S.

      A country of 8 million people like Sweden is small relative to the US, but still huge on a human scale.  Germany is ten times bigger, Japan 15 times bigger, but both work fairly well too.

      The most obvious relevant diversity of the US is the presence of  a lot of people who believe government can’t or shouldn’t work, which becomes a self-fulfilling prophecy when they can get elected to make gov’t not work.  The other is that of race, where people don’t want to forced to help Those People.


     Greg writes: ” constructive massive mountains out of mole hills of text which are completely incompatible with Hayek’s body of work”

    So you think Hayek’s 1956 preface to RTS is to be ignored because it fits Farrellls reading of Hayek rather than yours?

    • Greg Ransom

       Hayek’s account of how “character” is formed and the conditions under which people begin to embody behavior according to principles is important stuff — and his parallel remarks on institutional structures which are destructive to liberal character and rule following is also significant. 

      I’d suggest Hayek was right to call attention to these things in his 1956 preface — and all sorts of other people have called attention to many of the same issues, among them those who have worked to reform welfare institutions in Sweden and the United States.

      The decline of behavior and character in Britain is a widely discusses phenomena.

      The decline of respect for free speech in Canada and Britain and in much of Europe is also widely discussed.

      There may be exaggeration in Hayek’s 1956 preface, and his conversational perception of how this or that might unfold might may have missed the mark, but many are blinded from seeing anything because are _happy_ with the move toward various elements of serfdom, statism, and various losses of liberal character, liberal institutions, and liberal frameworks of social organization — and they are simply unable or unconcerned to look at what has happened in many places around the world, and what reforms were required and are required to fix problems caused by the modern, massive, redistributive welfare state.

      Sweden, France, Britain and the U.S. etc. moved _toward_ Hayekian / Friedman reforms of the massive redistributive welfare state, due to the pathologies of the welfare state.  These countries found it advisable to do as Hayek suggested — stop, take a step back, move toward reform, making these institutions more compatible with a free society.

      The sustainability issue is still close to being resolved.

      We are at the end of the beginning of dealing with the fallout and pathologies of the massive redistributive welfare state, but that’s there is a long way to go, and pathology and unsustainability everywhere to be seen.

      A horse blindered and Pollyanna approach to the topic won’t do.

      Nor will a poverty of cases and time periods under examination — a wider net with a wider appreciation of what has taken place is required.

      Sweden has changed _much_ since the mid 1970s.

      There are other countries besides Britain, Sweden and America.

      Etc., etc.

      • Alan66Z

        Hayek was not dumb.

        ‘Professor’ Greg Ransom is dumb as a box of rocks though!

  • rob hollander

    “Slippery slope” understates the character of Hayek’s approach. He doesn’t object to a mere conceptual possibility opening a possible pathway, he argues that the slopes are necessarily slippery. At several points in the *Road to Serfdom* he provides compelling arguments that any least gesture towards government intervention in redistribution, for example, leads inevitably to totalitarianism. There is in his responses an element of defensive alarmism evident not only in his general concern but commensurately in the extremity of his argument.

    A defensive call  serves a useful purpose, even if it isn’t always a coherent program. That’s also consonant with his views on uncertainty, which undermine program. 

    • RickDiMare

      Rob, your point goes to my concern about government redistribution programs under our existing MMT or chartalist monetary system, the type of monetary system under which government has extraordinary, almost unlimited, discretionary power as to how and where to spend.

      In my view, it will take a great deal of effort and diligence for libertarians to put government back on a budget (and I’m not talking about a balanced budget amendment, which is also useless under a MMT system). We need to get back to a pre-New Deal era monetary system where government is truly dependent on taxes collected from the people for its support. 

  • Greg Ransom

     The sustainability issue is still NOT close to being resolved.

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  • Damien S.

    “the people not only throw out the party which has been leading them
    further and further in the dangerous direction but also recognize the
    nature of the danger and resolutely change their course. There is not
    yet much ground to believe that the latter has happened in England”

    “recognize the nature of the danger and resolutely change their course”

    To me the natural reading is the people not just rejecting the authoritarianism but also reverting from the socialism that (allegedly) naturally leads them to serfdom.  If it were just a matter of being strong enough to resist authoritarianism in a stable status quo, then there’d be no need to change course.  And since Britain was nowhere near ‘serfdom’ in fact, he can only be speaking of their failure to recognize the threat of serfdom.

  • “Hayek thought even modest welfare states like post-war Britain would
    turn people into sheep and slowly deliver them into darkness. So Hayek
    made an obviously false claim.”

    You should come and take a look!  I would not say that Hayek’s claim is obviously true; but it is arguably true, and surely not obviously false.

    • adrianratnapala

      Yep.  Britain is a vibrant and free country, but when I lived there I found that the people were a little sheep-like — at least compared to my expectations, if not in an absolute sense.   

      One example is CCTV – the Big Brother state is there because it is popular.  London buses have signs where yellow smiley faces tell you that you are being watched, people find this reassuring.  

      Another case is the NHS: Britons almost all love it — it’s nice not to have to pay the doctor.  But foreigners in the UK tend to think of it as a Kafkaesque nightmare where no telephone appointments can be made before 8:35 AM or after 8:30 PM (yes I got that the right way around.)

      In spite of all that, the land of Thatcher mostly gets along like a free-market democracy.  But if certain trends aren’t resisted, then there is reason for despair.

      • It is interesting to hear an outsider’s view. As I see it, the biggest problems are these.

        First, the welfare system: we have about four million people who don’t work but live comfortably on welfare benefits. Only about half of these are registered unemployed, the rest are on things like ‘incapacity benefit,’ so are supposedly unemployable. Some live very well. The main three political parties recognise the problem because most of the population does. But they can do little to change it because of vested interests (huge, entrenched, heavily unionised bureaucracies) and ideological opposition, e.g. most British journalists have been educated in university humanities departments (i.e., indoctrinated in Marxism) so they regard welfare reform as anathema. The government is trying to implement a proposal to cap benefits at the average (I think, median) wage. Even if they succeed in doing this, it will mean that there are still people on benefits who are better off than half the working population. But there is stiff opposition to the cap. For example senior clergymen denounce it as an attack on ‘the vulnerable.’ The people affected, remember are those getting more in benefits than half of the working population get in pay, and they are supposed to be the vulnerable!

        Second, most schools here are run by the state and they are recognised to be generally failing. A large proportion of kids leave school unable to read or write. Government after government has tried to address the problem; but they get nowhere because of the power of the teachers’ unions.

        Third, as you say, people generally love the IDEA of the National Health Service (NHS). They get care (when they get it) ‘free at the point of need.’ They don’t seem to realise that they are paying through the nose for it in taxes, and that if they got their taxes back they would be able to pay for better health care than they are currently getting. That is the second thing about the NHS: almost everyone complains about it. The service is often poor or worse, some treatments are not funded at all, and the treatments that are funded are rationed so, even if you qualify (if your ‘needs’ are deemed appropriate), you go on to a waiting list and, while you are waiting your condition may deteriorate or you may die. The rationing problem frequently leads to proposals (often from doctors’ unions) to refuse treatment to smokers and drinkers. These proposals have not been adopted as official policy, but since decisions about treatment are made by doctors on the basis of ‘clinical need,’ such proposals could be informing the decisions that are actually made. This is despite that fact that, because of high taxes on cigarettes and alcohol, drinkers and smokers actually pay more for the health service than others (n fact, the ADDITIONAL taxes they pay are substantially greater than the costs of treating drink and smoking related problems). Further, sporting injuries cost the NHS far more than treating smokers or drinkers, and yet sport is officially encouraged as part of a healthy lifestyle! People’s health care is at the mercy of political foibles.

        Fourth, our liberties are being persistently eroded. Various forms of speech are now outlawed, all sorts of ‘Kafaesque’ changes have been made to the legal system, denying citizens their traditional rights, and the various arms of government have increasing powers to snoop into the private lives of citizens.

        Perhaps I should stop there.

        • Damien S.

          “if they got their taxes back they would be able to pay for better health care than they are currently getting.”

          This belief seems hard to reconcile with the evidence that the British spend less on health care than almost any other comparably rich country (Japan or Finland would be the competition).  Around 8% of GDP in 2006, vs. 9-11% in most other European countries, or 15% in the USA, and less than half US spending in real currency.  Maybe a different system would help… or maybe raising the NHS budget by 25%, i.e. 2% of GDP, would help.

          “most schools here are run by the state and they are recognised to be generally failing”

          Of course, some of the best school systems in the world are also run by the state…

          • I don’t see any difficulty in reconciling my statement with the relatively low proportion of GDP spent on health here. Given the inefficiency and waste endemic to the NHS, if people got their taxes back they could buy better than what they are currently getting for the cash (this is, of course, subject to provisos about distribution). Further, if they got their taxes back they would be able to top up their health spending to get better services, which they generally cannot do under the current arrangement.

            You complain: “Of course, some of the best school systems in the world are also run by the state.”

            I don’t know whether that is true. But it is irrelevant. I am talking about the situation in the UK.

  • parse

    So when Hayek was writing, there wasn’t  “much ground to believe” 
    that people in England had recognize[d] the nature of the danger and resolutely change[d] their course. They apparently did so later, as England is not a totalitarian nation today. When did the people recognize the danger, and what were the events that demonstrate the resolute change of course?

  • Virginia Postrel

    I have always read Hayek’s warning that full economic planning requires prohibitions against the movement of people and goods as critical. If you have a competitive system of relatively free immigration and trade, both of which became freer after World War II in ways that Hayek did not foresee, then you will not wind up with the dystopian outcome. Add in capital mobility and you have a further check.

    • Greg Ransom

      After the war Britain had capital controls in place — money and capital were not free to move.

      • Guest

        What was the reason for these controls? When were they abolished?

  • Julie Thomas

    Perhaps if Hayek was writing today he would have a more accurate idea of human psychology and would have been able to base his predications on a better model than the conservative idea of human nature.

  • bernie

    I don’t usually frequent the site below, but Bruce Caldwell argues that RTS is only about command planning. Since when has partial planning and command planning been the same beast?
    Seriously, all should check out the link below: A Hayek 1945 piece reflecting on his message in RTS.

  • Greg Ransom

    Henry Farrell’s incompetent scholarship & shoddy work is shown again in his recently posted draft paper discussing Hayek.

    Hayek says directly the exact opposite of the view Farrell falsely attributes to Hayek — Hayek says in plain language and in several different ways that the interaction of folks with differing perspectives makes possible the advance of science and knowledge and the growth of reason.

    Farrell’s paper shows familiarity with a _single_ article by Hayek out of hundreds of published articles and handfuls of books, e.g. Hayek’s 1945 essay collected in Hayek’s 1948 collection of essays.

    This is embarrassing academic malpractice.

    And academia has zero check on this sort of thing.  The peer reviewed literature of chock full of false accounts of Hayek’s understanding of things, as I pointed out in a 1996 conference paper.

  • Hayekian

    Greg writes: ” The peer reviewed literature of chock full of false accounts of
    Hayek’s understanding of things, as I pointed out in a 1996 conference”

    Where can Ifind that paper? Please can you tell where it is published?

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