July 09, 2003

More on Hayek...

The thoughtful and highly knowledgeable Greg Ransom protests that I have misread Friedrich Hayek:

PrestoPundit.com: Brad De Long is reading Hayek -- but none too closely. Hayek distinguishes between liberal democracy bounded by the rule of law -- and unlimited democracy bounded by nothing. De Long completely ignores a distinction which is fairly easy to understand...

I agree that Hayek approves of democracy bounded by the "rule of law" and disapproves of "unlimited democracy." But be careful: Hayek's ideas of what a democracy "bounded by the rule of law" are very different from my ideas. Gentle Reader beware: for Hayek, Britain in the mid-1950s had a government that was not bound by the rule of law. From the Road to Serfdom:

1956 Preface: ...Of course, six years of socialist government in England have not produced anything resembling a totalitarian state. But those who argue that this has disproved the thesis of The Road to Serfdom have really missed one of its main points: that "the most important change which extensive government control produces is a psychological change, an alteration in the character of the people." This is necessarily a slow affair... attitude[s] toward authority are as much the effect as the cause of... political institutions under which it lives.... [T]he change undergone... not merely under its Labour government but in the course of the much longer period during which it has been enjoying the blessings of a paternalistic welfare state, can hardly be mistaken.... Certainly German Social Democrats... never approached as closely to totalitarian planning as the British Labour government has done.... The most serious development is the growth of a measure of arbitrary administrative coercion and the progressive destruction of the cherished foundation of British liberty, the Rule of Law... [E]conomic planning under the Labour government [has] carried it to a point which makes it doubtful whether it can be said that the Rule of Law still prevails in Britain...

It is reasonably clear to me that in Hayek's view an oligarchically-controlled rechtstaat--an authoritarian government that respects the rule of law--is to be preferred to unlimited democracy that does not respect the rule of law. What I find disturbing is that Hayek thinks--or, at least, at one moment in the mid 1950s thought--that the British government as of the mid-1950s was such an "unlimited democracy." For all of the industrial democracies today--including the United States--have governments that are roughly as large or larger with regulatory powers that are in at least the same ballpark as the British government in the mid-1950s.

Posted by DeLong at July 9, 2003 05:18 PM | TrackBack

Comments

and you find this disturbing because....?

It sounds like you're saying, "Hayek thinks that the British public sector was big in the 1950's, but by today's standards it was not overly big. So Hayek is clearly unreasonable."

But perhaps a reasonable person today could argue that the public sector in the U.S. is too big (and a fortiori it is too big in most European countries). Hayek is not around to speak for himself, but Milton Friedman thinks that the government ought to be able to get by on 10 percent of GDP. Perhaps he would argue that the difference between what we have and 10 percent reflects "democracy out of control."

Posted by: Arnold Kling on July 9, 2003 05:29 PM

I find it disturbing because it is hard to avoid thinking that Hayek would approve of the right kind of coup...

Posted by: Brad DeLong on July 9, 2003 05:32 PM

In that case, it's disturbing.

Posted by: Arnold Kling on July 9, 2003 05:35 PM

Had Friedman ever observed a modern first-world democracy that got by on 10% of GDP? Alternatively, did he ever publish a set of proposed government accounts that represented 10% of some modern first-world democracy's GDP? Otherwise, the proposal seems little more than a wish for government that is 25%-30% the size of the one with which he was most familiar, without really knowing what that would mean.

Posted by: K Harris on July 9, 2003 05:45 PM

>Had Friedman ever observed a modern first-world democracy that got by on 10% of GDP?

What was pre-1997 Hong Kong's govt%/GDP?

Posted by: George Zachar on July 9, 2003 05:58 PM

" I find it disturbing because it is hard to avoid thinking that Hayek would approve of the right kind of coup..."

Like the kind that deposed King George of his American colonies?

Posted by: Patrick R. Sullivan on July 9, 2003 07:23 PM

Brad claims that Hayek thought "an oligarchically-controlled rechtstaat--an authoritarian government that respects the rule of law--is to be preferred to unlimited democracy that does not respect the rule of law. What I find disturbing is that Hayek thinks--or, at least, at one moment in the mid 1950s thought--that the British government as of the mid-1950s was such an 'unlimited democracy.'"

Some claim that Hayek supported the Pinochet regime; others dispute this. But what evidence is there that Hayek was *critical* of the Pinochet regime, critical enough to surpass his criticism of mid-1950s Britain?

Arnold Kling wrote, "Milton Friedman thinks that the government ought to be able to get by on 10 percent of GDP." Big deal. Friedman also sees nothing wrong with bloated military budgets. It's the typical libertarian line: government spending they happen to favor (like greenbacks washing down the military rathole) is "legitimate" and not a drain on the economy; while government spending they oppose...

Posted by: Stephen J Fromm on July 9, 2003 07:41 PM

Hayek, like Friedman, was an ally of the economists Pinochet brought in, in desperation, to fix the economy several months after the coup. He probably did approve of Pinochet's bringing those people in. I don't believe I am putting words in his mouth in saying that he considered liberty and rule of law to be higher values than democracy. I don't doubt that Hayek considered Allende one of those "democrats without rule of law". However, I seriously doubt that Hayek approved of Pinochet's methods. So far as I've found, no one can cite him either way on that point. I would say that there are things - many things, like denial of liberty, infringement of property rights, socialism, nationalization, which Hayek would say that no government, democratic or no, should do, and it wouldn't shock me if he believed in his heart that such governments, even if democratically elected, should be opposed, with force if necessary. That does not mean he supported rounding up the communists and shooting them, all that means is he may have supported driving them out of office, and setting the system up so they can never come to power again, no matter how popular they are.

When the government comes to steal or kill without justice, does it matter whether they represent the will of the people or not? I say no, it doesn't.

Posted by: rvman on July 9, 2003 08:45 PM

rvman wrote, "However, I seriously doubt that Hayek approved of Pinochet's methods. So far as I've found, no one can cite him either way on that point."

But this is precisely my point:
(1) Brad has Hayek _on record_ as condemning 1950s Britain.
(2) Hayek *was* in Chile.
(3) I've heard people defend Hayek as not having supported Chile, but I see no evidence that he criticized it. I don't know the details of what he did there, but AFAIK his relationship towards the regime was cooperative, at the very least. For him not to condemn it seems morally questionable (at the least).

rvman also wrote, "I don't doubt that Hayek considered Allende one of those 'democrats without rule of law'. However, I seriously doubt that Hayek approved of Pinochet's methods." OK, is he on record condemning Allende? Is he on record condemning Pinochet?

"I would say that there are things - many things, like denial of liberty, infringement of property rights, socialism, nationalization, which Hayek would say that no government, democratic or no, should do, and it wouldn't shock me if he believed in his heart that such governments, even if democratically elected, should be opposed, with force if necessary." Right, another point---many libertarians appear to me to hold these things as more important than democracy. Which isn't obviously wrong---some of these things are important, and following nominal democratic norms doesn't necessarily lead to just governance. *However*, libertarians (most of them, anyway) seem to hold right of ownership of property and the inviolability of contract in such high esteem as to be contrary to liberal political theory. And I've never understood why anyone, least of all libertarians, think anyone has a "right" to own land (I'm making these remarks along the lines of the thought of Henry George).

Posted by: Stephen J Fromm on July 9, 2003 08:58 PM

Okay... I'm rather ignorant of British constitutional law, but my impression was the Britain, until a few years ago when it signed some E.U. human rights treaties, *was* an unlimited democracy, technically speaking. Granted, as a rule, the British government has abused the basic human freedoms less than most other governments, even ones with more limited democracies, but that seeemed to me more a matter of traditions and institutions than actual restraints on what British democracy could or couldn't do (at least, from my American perspective of "limited democracy" as meaning specific constitutional proscriptions on certain types of laws, which are impossible, or require much more than simple majorities, to overrule). Am I wrong here?

Posted by: Julian Elson on July 9, 2003 09:54 PM

Julian,

Okay... I'm rather ignorant of British constitutional law

You are in good company, if recent events in Britain's government are any indication.

Britain...*was* an unlimited democracy, technically speaking.

Technically speaking, Britain is a monarchy. The parliament can do whatever it wants to the subjects but the Queen has power to veto new laws. That power to veto has not been used for over 100 years.

British government has abused the basic human freedoms less than most other governments, even ones with more limited democracies, but that seeemed to me more a matter of traditions and institutions than actual restraints on what British democracy could or couldn't do

The United States government is really no different. The limits on government action placed in the Contitution and the Bill Of Rights are routinely abrogated when the majority wants them to be, without any official amendment being made. If necessary, the courts will write a Wickard v. Filburn or the like to justify whatever we want the state to do.

The official statement of rights serves as nonbinding advice from the past but there can be no guarantee of rights made of ink on paper; only blood spilled on Earth will do that. The Brits are simply more honest about it.

Posted by: Brian on July 9, 2003 10:26 PM

>> I don't doubt that Hayek considered Allende one of those "democrats without rule of law". However, I seriously doubt that Hayek approved of Pinochet's methods... <<

Well, since Hayek considered Attlee (and also the Tory governments of the 1950s?) as "democrats without rule of law", it's pretty clear what Hayek thought of Allende...

Posted by: Brad DeLong on July 9, 2003 10:30 PM

Yes, I personally think Hayek _should_ be soundly criticised for what you criticise him for in _this_ post. He was a little too apocalyptic and paranoid for me. Of course, he lived in a different age from me, but still.

And I do also think he was largely wrong about his Road to Serfdom thesis -- though that work contains some important insights. (Largely, because some of what he says, I believe, did apply more to countries like India than they perhaps did to Britain.)

But we should also not lose sight of the fact that Hayek's intention in writing Road to Serfdom and the preface you just quoted was not to get an authoritarian government in place in Britain.

And you should re-read what you wrote in the last post. It reflected no understanding of what Hayek actually wrote -- including what he wrote about tradition and privilege. It is tantamount to illegitimate demonising.

Let's not indulge in that sneering, ignorant, parodying undergraduateness again, shall we? I am a big fan of your blog, BTW.

Posted by: Chirag Kasbekar on July 9, 2003 11:40 PM

>>And you should re-read what you wrote in the last post. It reflected no understanding of what Hayek actually wrote -- including what he wrote about tradition and privilege. It is tantamount to illegitimate demonising.

I reiterate that Brad's argument, right down to the use of the word "Rechtstaat", parallels that of John Gray's "Hayek on Liberty", which boasts an enthusiastic endorsement from FA Hayek itself on the cover of its paperback edition.

Posted by: dsquared on July 10, 2003 12:59 AM

In the mid-50's, Britain had nationalised statutory monopolies in post, telecommunications and broadcasting, recently nationalised railways, effectively nationalised electricity supply and generation, nationalised gas supplies, increasingly centralised education and health services serving the great bulk of the population, an aviation market dominated by government-owned airways, municipal bus services, nationalised ports, and had recently abandoned rationing, and at the same time virtually no judicial review.

While percentage measures of government activity as a proportion of GDP might indicate that government was then less influential than now, it is far from obvious that the average Briton of the mid-50 wasn't subject to considerably greater unchecked interference with his or her life than is his or her modern counterpart, still less the average modern American. Moreover, the contrast between Britain in the mid '50's even with the Britain of the '30's in which Hayek arrived in was starker than any modern economic transformation.

Posted by: Peter S on July 10, 2003 01:14 AM

Peter S wrote, "...it is far from obvious that the average Briton of the mid-50 wasn't subject to considerably greater unchecked interference with his or her life than is his or her modern counterpart..." Maybe. But how does it compare to Pinochetist Chile, which Hayek seems to have refrained from criticizing?

Posted by: Stephen J Fromm on July 10, 2003 03:16 AM

I would like to propose DeLong's Law, a corollary of Godwin's Law: In any blog thread mentioning Hayek or Friedman, the probability of Chile/Pinochet being cited approaches one, as time passes.

Posted by: George Zachar on July 10, 2003 05:08 AM

>>I reiterate that Brad's argument, right down to the use of the word "Rechtstaat", parallels that of John Gray's "Hayek on Liberty", which boasts an enthusiastic endorsement from FA Hayek itself on the cover of its paperback edition.>>

D-squared, by "parallels", do you actually mean "operates in a parallel universe to"? ;-)

(http://www.crookedtimber.org/archives/000212.html)

Since I haven't read Gray's Hayek on Liberty, maybe I should get a copy soon. Especially as D-squared tells me it holds the following goodies:

1. That "in his core," Hayek most likely didn't find any use for any kind of democracy -- yes, not even institutional value.

[Funny, that Hayek should then have to say any nice things to say about democracy at all. And I thought Hayek was railing against egalitarianism/multiculturalism, not democracy in that passage from LLL III, p.172. Sheesh, what have I been smoking?]

2. That Hayek was a social conservative because he advocates respecting the discipline of social conventions as a primary vehicle of social selection.
[Hmmm. Hayek says: "It is not by conceding a 'right to equal concern and respect' to those who break the code that civilisation is maintained. Nor can we, for the purpose of maintaining our society, accept all moral beliefs which are held with equal conviction as equally legitimate, and recognise a right to blood feud or infanticide or even theft, or any other moral beliefs contrary to those on which the working of our society rests." Blood feud, infanticide, theft -- a social liberal wouldn't discipline anyone who believed in these. No, Gray must be right -- Hayek is an oppressive social conservative.]

3. That Hayek believes that "we should shut up and be grateful".

[This is crazy. Why did I ever think Hayek believed that BOTH "being grateful" and "attributing blame" for a living condition which wasn't caused by human intention would be an anthropomorphic fallacy? I need a shrink. But I have a question: whom does Hayek think we should be grateful to, if we can't blame anybody either? Hayek was so inconsistent. I also see Gray's point that because Hayek thinks we can't call their misfortune a 'social injustice', he also thinks they should shut up and not complain at all. People should only be allowed to speak, according to Hayek, if their misfortune can be characterised as a 'social injustice', which he says is impossible! What a loser!]

4. That Hayek never made the argument that something can be categorised as 'injust' only if it is directly the product of human action.

[No, the point of The Mirage of Social Justice was that we should "shut up and be grateful to... someone".]

5. That Hayek's [purported] arguments that "something can be categorised as 'injust' only if it is directly the product of human action. " leads to the unfortunate conclusions that slavery and serfdom are completely just.

[Yes, and the slaves should just shut up and be grateful. At least the slaves know whom to be grateful to...]

;-)

Chirag

Posted by: Chirag Kasbekar on July 10, 2003 06:34 AM

Minor observation: Europe, today, is a heavily regulated, almost command economy, where every part of employment, production, sales - every facet of commercial life - is shaped and directed by multiple levels of government control. When a shop is open, how, when, and how much a person can contract to work, how goods are manufactured, are all under government direction. I would say Hayek would call Europe a gilded cage. Life is comfortable, because so much can be produced by an economy with so much capital, labor, and technological knowhow. But it isn't fundamentally free, in the way Hayek meant. He would say that Europe is much farther down the "road to serfdom" than it was 50 years ago. Government hasn't taken away the material comforts or the personal freedoms, yet. That doesn't mean they won't. (America is probably marching down the same road, in Hayek's terms.)

Milton Friedman, on the point of Chile, has pointed out that he(Friedman) had been in China and Yugoslavia around the time he had been in Chile, and delivered the same speech he did in Chile - all were slowly moving away from authoritarian and toward more liberalized regimes. He is only criticized for visiting Chile under Pinochet. It is clear that someone can visit a place and even make speeches there, without necessarily endorsing everything done by the regime in power. Indeed, Friedman (and Hayek) didn't publicly condemn the Pinochet regime. They were trying to get Pinochet to listen to them - to attract flies with honey, as it were. They weren't going to alienate him, during that effort. Just because they were economists and libertarians doesn't mean they were incapable of diplomacy.

Hayek was clearly (to my mind) trying to influence Pinochet to keep moving in the direction of liberalization. One does not maintain influence with a military dictator by criticizing him in public. One maintains influence by pointing out how wise the dictator is to do that with which you agree.

Posted by: rvman on July 10, 2003 07:16 AM

The other point I'd like to make is that, before the liberalization scheme started, Chile was rather low profile as third-world authoritarian states go, at least outside of the left. Bloody military dictators ruled virtually every country in South America, many in Asia, and most in Africa. Until Pinochet took what was, and in many ways still is, a unique interest in liberalization, there was no particular reason for Hayek to mention Chile as anything unusual. Allende was a cause celebre of the left, but to the right, even the libertarian right he was just a questionably democratically elected quasi-communist leader overthrown by a military coup. (Allende won 36-35% - legally elected under Chilean law, but hardly representative of the majority.)

Posted by: rvman on July 10, 2003 07:52 AM

"before the liberalization scheme started, Chile was rather low profile as third-world authoritarian states go, at least outside of the left. Bloody military dictators ruled virtually every country in South America, many in Asia, and most in Africa"

You need to look at some Chilean history, rvman. Before the Pinochet coup, Chile had a fairly lengthy history of constitutional democracy. "Bloody military dictatorships" may have ruled elsewhere in S. America, but not in Chile. It is therefore exactly a test case for Hayek's views about the relative importance of democracy and private property rights.

Posted by: rea on July 10, 2003 08:17 AM

Sorry for the typos in my last post -- 'unjust', not 'injust', for example.

Posted by: Chirag Kasbekar on July 10, 2003 08:36 AM

rvman wrote, "He [Friedman] is only criticized for visiting Chile under Pinochet." Right, this is a standard line of defense of Friedman (Friedman himself used it, IIRC). But the political implications and ramifications of Friedman's advice for the regimes receiving that advice were not the same.

Re "but to the right, even the libertarian right he was just a questionably democratically elected quasi-communist leader overthrown by a military coup. (Allende won 36-35% - legally elected under Chilean law, but hardly representative of the majority.)" With this reasoning, would it be OK to use violence to throw Bush out of office? rea understands the point---not only was Allende thrown out of office by violent, unlawful means, the constitutional nature of Chile was grossly harmed as a result.

Posted by: Stephen J Fromm on July 10, 2003 08:45 AM

Untold scores of academics, of all intellectual stripes, plied the globe in the 20th century, meeting with democrats and demagogues from Moscow to Minneapolis.

To simplistically bash Friedman and Hayek for their contact with Chile is to ignore the enormity of their work, the nature of the world they lived in, and the nuts-and-bolts of how economists and rulers interacted.

How many US scholars went to the Soviet Union during the heights of Stalin's terrors?

Did their presence on Russian soil, and polite meetings with Kremlin leaders, mean they endorsed the forced famimes and the gulag? Of course not.

Posted by: Bucky Dent on July 10, 2003 09:12 AM

Being a democrat means believing that the people have the wisdom to choose their government.
The taxation regime may be progressive or flat, consume 10% of GDP or 50% of GDP. It is the citizens right to chose.
To advocate anything else is anti-democratic and shows a stunning lack of faith in the ability of democracies to correct their mistakes.

Posted by: Scott McArthur on July 10, 2003 03:22 PM

>To advocate anything else is anti-democratic...

How about these classic counterexamples:

Democracy is 4 men and 2 women voting on whether or not to have an orgy.

Democracy is 3 wolves and 2 sheep voting on what to have for dinner.

Or the real world examples of popularly elected theocrats who impose their views on minorities.

Unbounded, pure democracy has the potential to morph into mob rule.

Posted by: Bucky Dent on July 10, 2003 04:11 PM

My guess is Friedman and Hayek were discreet and cagy enough not to go on record. I'm sure that they regarded Pinochet's worst acts as temporary expedients, a necessary transition, birth pangs of freedom, etc.

Reactions to "The Road to Serfdom" mark an enormous political divide in American political life.

One of Hayek's theses was, roughly, that democratic socialism and the welfare state were stepping stones to Leninist-style totalitarian control. The divide is between those who say history has confirmed Hayek on this point, and those who say that (after ~50 years) history has refuted him.

Those who say that history has confirmed Hayek on this point basically control the US government today. To them, government control of the economy, in and of itself, is totalitarianism. I once heard a Tom Delay type explaining that the Swedish government share of the Swedish GNP was as great as the Soviet Union share of the Soviet GNP (~50%) and that, therefore, Sweden was a Communist dictatorship.

I wanted to say -- yeah, except with no Gulag, no secret police, a thriving economy, no enforced ideology, an elected government, a multi-party system, and the freedom of citizens to leave Sweden and come back. Otherwise, it's just as bad as the USSR.

And at the very same time, these free-marketers are all too indulgent of pro-business low-tax authoritarian states such as Singapore or Chile. Hayek and Friedman for example.

(As I remember, that same Delay clone was also arguing that free market capitalism is right there in the Sermon on the Mount if you only read it right. Or something like that.)

Strong-version Hayekians are all too common. I find them impossible to argue with, thoroughly repellent, and quite frightening. I guess I have a problem there.

Posted by: zizka on July 10, 2003 05:09 PM

>Those who say that history has confirmed Hayek on this point basically control the US government today....

And those who disagree ran the govt during the prior 8 years.

Posted by: Bucky Dent on July 10, 2003 05:34 PM

Yeah, I think that the Clintonistas were smart enough to see that Sweden was nothing like the USSR. Delau isn't, and probably Bucky isn't either.

Posted by: zizka on July 11, 2003 12:56 PM

>Sweden was nothing like the USSR. Delau isn't, and probably Bucky isn't either.

A child can distinguish between a path, and its destination.

Feigning simple-mindedness, or projecting it onto others, is a waste of bandwidth.

Posted by: Bucky Dent on July 11, 2003 01:35 PM

That was my point, Bucky. For Hayek to say in 1955 or so that Sweden would end up like the USSR was excusable. Forty or fifty years later we can see that he was wrong. There's got to be a time limit on predictions, or alse all predictions are true. The Second Coming of Lenin didn't happen, and it's not going to. But you can sit waiting on your hilltop if you want to.

You're a nickel smarter than DeLay since at least you're aware that it hasn't happened yet.

Simplemindedness? -- if the shoe fits, Bucky.

Posted by: zizka on July 11, 2003 05:27 PM

>for Hayek to say in 1955 or so that Sweden would end up like the USSR was excusable.

Why? The Cold War was at its zenith. The Baltic States had been absorbed by Moscow. Neighboring Finland became a verb meaning Kremlin-intimidated.

It is easy NOW to say Hayek was silly. But at the time, the world looked very very different.

>The Second Coming of Lenin didn't happen...

Mao? Pol Pot? Myanmar? Zaire...

Posted by: Bucky Dent on July 11, 2003 05:45 PM

My mistake zizka...I misread your post as saying INexcusable. I'm going to bed.

Posted by: Bucky Dent on July 11, 2003 06:24 PM
Post a comment