Remembering Friedrich Hayek After 25 Years

Yesterday, March 23rd, was the 25th anniversary of the death of Nobel Prize-winning economist Friedrich August von Hayek, a man who had an almost unparalleled influence on the conservative and libertarian movements since the second half of the 20th century. Today, those same movements could stand to remember his cogent and subtle arguments.

Hayek is best known for his 1944 book, The Road to Serfdom, in which he warned that the “third way” of a planned economy embedded in a system of democratic government inevitably trended toward authoritarianism of the Soviet and fascist varieties the Allies were then on the verge of defeating. It is, quite simply, the best logical refutation of the conceit “it can’t happen here” ever written.

Although I find Hayek’s 1960 tome, The Constitution of Liberty, to be a more mature work, rereading The Road to Serfdom for a graduate school project last year reminded me just how impressively encompassing and tightly argued it is. Every argument about the slippery slope of the intervention of big government into society that conservatives make today seems a caricature of one of Hayek’s points.

Readers will recognize the warnings it offers about powerful men who take the reigns of the state simply because the people want someone who will “get stuff done” while democracy results only in gridlock; such men are disproportionately likely to be the worst of us because they must be willing to toss the virtues of a constitutional government out the window to achieve the so-called virtues of directed societies.

Bad men in control are but the last blow to a free society that a stroll down the road to serfdom brings about, should it be followed for too long. Even well-intentioned leaders cannot achieve a society as advanced as that which adheres to the principles of Anglo-American classical liberalism.

Perhaps the most important point Hayek continually drove home was the role of knowledge in bringing about a well-ordered society spontaneously. A better social thinker than an economist, he nevertheless found the clearest example of aggregate knowledge employed to the effect of spontaneous order in the free market via prices. It was an idea that needed to be reiterated lest it be taken for granted. In his essay “The Use of Knowledge in Society,” he wrote:

…I fear that our theoretical habits of approaching the problem with the assumption of more or less perfect knowledge on the part of almost everyone has made us somewhat blind to the true function of the price mechanism and led us to apply rather misleading standards in judging its efficiency. The marvel is that in a case like that of a scarcity of one raw material, without an order being issued, without more than perhaps a handful of people knowing the cause, tens of thousands of people whose identity could not be ascertained by months of investigation, are made to use the material or its products more sparingly; i.e., they move in the right direction. This is enough of a marvel even if, in a constantly changing world, not all will hit it off so perfectly that their profit rates will always be maintained at the same constant or “normal” level.

I have deliberately used the word “marvel” to shock the reader out of the complacency with which we often take the working of this mechanism for granted. I am convinced that if it were the result of deliberate human design, and if the people guided by the price changes understood that their decisions have significance far beyond their immediate aim, this mechanism would have been acclaimed as one of the greatest triumphs of the human mind.

Today, government growth and strong executives have returned, but even so, most of the Western world is not on the verge of 1930s totalitarianism because the arguments of Hayek got through to eventual leaders such as Ronald Reagan and Margaret Thatcher, who changed the direction of the state, as well as what it was thought the state was capable of.

Hayek did not consider himself a conservative, despite attempts to attach the label to him, even writing an essay explaining why he wasn’t. He placed himself in the tradition of the British Whig statesman Edmund Burke, ironically seen today as the father of modern conservatism, who held down the right-wing of the classically liberal Whig party, and who, according to Hayek, “would have shuddered at the thought of being regarded as a [conservative, monarchistic] Tory.”

Yet, The Constitution of Liberty is, like Mill’s On Liberty, a defense of the traditions of British (and American) classical, constitutional liberalism (most significantly to my memory, the rule of law.) It is an attempt to recast the collected wisdom regarding government in a new way in an attempt to rekindle an appreciation of it and thus preserve it — though whereas Mill did so by filtering the arguments through his utilitarianism, Hayek did so always with Burke’s definition of the statesman floating between the lines: “A disposition to preserve and an ability to improve, taken together…”

Today, the direction of the party which has largely attempted to preserve classical liberal thought in America is finding nationalism, protectionism and isolationism alluring. Another Hayek, a new “Constitution of Liberty,” may be in order to remind us, in modern parlance, of the virtues of government infused into the American system by our founders have, by reason and experience, been shown to be the most prudent foundations of a free society.

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J. Cal Davenport

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