George Soros is to be commended for coming to the Cato Institute on Thursday for a civil and scholarly panel discussion. Soros appeared on an illustrious panel—including Richard Epstein, Ronald Hamowy, and Bruce Caldwell—discussing the impact and influence of F. A. Hayek’s The Constitution of Liberty, which the University of Chicago Press has recently published in a wonderful definitive edition. (You can watch the event here.) Soros’s appeal for more dialogue and understanding between two political persuasions—very roughly speaking “pro-market” and “pro-regulation”—was underscored by his willingness to come to Cato. I thank him for doing so.
So I want to continue the conversation he began Thursday—to open up lines of communication and articulate differences and points of contention. The focal point should be on Hayek, his ideas and his reputation.
Hayek was a complex and challenging thinker who deserves to be taken seriously by all who are interested in political philosophy. His most profound ideas are immense abstractions that can produce as much confusion as they do insight. Moreover, like all highly abstract ideas, Hayek’s insights are difficult to transform into concrete action and policy. In other words, there is a lot of disagreement over “what would Hayek do?”
But, at the very least, Hayek deserves more than simply calling him an “apostle of market fundamentalism,” as Soros did both at Cato and in his excerpted remarks in Politico. I think this characterization is fundamentally mistaken. Moreover, characterizing Hayek as a market fundamentalist only builds up the wall of miscommunication that Soros has criticized.
Calling Hayek a fundamentalist has become the preferred method of ignoring him. Whatever the term “market fundamentalist” actually means definitionally, its main purpose is to paint opponents as unthinking dogmatists. At best, Hayek was a “market presumptionist” who presumed that markets were the best choice absent compelling evidence that regulation or intervention was needed. He believed in a broad array of social welfare programs while being extremely skeptical about the effectiveness of centralized planning. He thought this not because he saw government as an immoral monstrosity, but because he believed that effective government action required effective knowledge and that knowledge “is not given to anyone in its totality.”
But some advocates of free markets would not even call Hayek a “market presumptionist.” Murray Rothbard, one of the most vehement supporters of free markets, resoundingly condemned The Constitution of Liberty in a memo: “F.A. Hayek’s Constitution of Liberty is, surprisingly and distressingly, an extremely bad, and, I would even say, evil book.” In a subsequent piece, Rothbard spent many pages listing, in bullet points, all the market interventions and government programs that Hayek advocated, including a minimal welfare state and social security. For Rothbard, this list said it all: Hayek was no friend of markets.
But Rothbard, like Soros, was wrong. Hayek was a great friend to markets and a supporter of government intervention. In this way, Hayek was like most modern political thinkers of a liberal (in the classic sense) democratic bent: a little bit of government with a little bit of markets, a dash of welfare programs for taste.
So why is Hayek so marginalized in modern political thought? Well, Hayek was leery of government regulation in a way that others, for example John Rawls, were not. By offering a systematic explanation for why “rule by experts” would likely fail, Hayek pretty much guaranteed that the would-be experts—professors, economists, other intellectuals—would condemn him. As Professor Russ Roberts and John Papola put it in the latest edition of the brilliant Keynes vs. Hayek rap battles: “The economy is not a class you can master in college, to think otherwise is the pretense of knowledge.”
Nevertheless, despite his relative academic marginalization, Hayek largely won the debate that most concerned him: the debate over large-scale central planning. After the war, particularly in Britain, large-scale planning was en vogue. Businesses and individuals were shuffled about the economic stage like pieces on a chess board. Quotas were given, prices were set, work weeks were limited, the minutiae of business were given over to government regulation. Even in pre-war America, the economic policies that were enacted as part of the New Deal, such as the National Industrial Recovery Act, would shock many modern observers as hubristic over-meddling by government.
Partially thanks to Hayek, our current debates are usually over less draconian government interference. Hayek deserves a place in this modern debate as a proponent of a subtle and nuanced position, not as a religious adherent to market purity that Soros describes. Understanding Hayek’s actual ideas can help us better communicate on these issues and follow Soros’s lead in reaching across to the other side. Let debates over Hayek and his ideas continue. Even (especially?) in rap form.