Is Hayek Still Relevant?

Jesse Larner has an interesting and much talked-about article on F.A. Hayek in the left-liberal journal Dissent (for links to other commentary on Larner's piece, see here). Larner gives Hayek credit for his pathbreaking critique of socialist central planning. But he argues that Hayek's thought is largely irrelevant today.

To very briefly summarize Hayek's two most important ideas, he argued that socialism can't work as an effective system for producing and distributing goods because it has no way of aggregating the necessary information about people's wants and needs. By contrast, the price system of the market is a very effective method for collecting and using information about people's preferences and the relative value of different goods. Hayek's 1945 article "The Use of Knowledge in Society" is the best short statement of this argument. Hayek also argued that government control of the economy under socialism necessarily leads to the destruction of democracy and personal freedom. The central planners' control of the economy enables them to crush potential opposition and strangle civil society. This, of course, was the main argument of Hayek's most famous book, The Road to Serfdom (1944).

Larner concedes the validity of both of these Hayekian claims. But he suggests that they are largely irrelevant today because the modern left has mostly abandoned central planning and because Hayek failed to recognize that "collectivism" could be a "spontaneous, nongovernmental, egalitarian phenomenon," not just a totalitarian order imposed by the state. He also suggests that "Hayek doesn't seem to grasp that human beings can exist both as individuals and as members of a society, without necessarily subordinating them to the needs of an imposed social plan (although he acknowledges that the state can legitimately serve social needs, he contradictorily views collective benefits as incompatible with individual freedom)."

Larner makes some defensible points. For example, he is right to imply that Hayek's arguments are more compelling as a critique of full-blown central planning than of more modest forms of government intervention. It is also true that full-blown economic central planning has a lot less support among left-wing intellectuals today than fifty or sixty years ago. Nonetheless, Hayek's ideas are far more relevant to our time than Larner thinks.

I. The Persistence of Central Planning in Left-Wing Thought.

Although the modern mainstream left no longer favors central planning of the entire economy, many left-wingers do favor government control of large parts of the economic system. Most European leftists and a good many American ones favor government control of the health care industry, which constitutes some 10-15% of the economy in advanced industrialized society. Some forms of government planning are favored not only by left-wingers but also by many moderates and conservatives. For example, government owns and operates some 90% of the schools in Western Europe and the United States. However much we take public education for granted, it still represents the socialization of a vast swathe of the economy.

In addition, many mainstream liberals such as Cass Sunstein and Supreme Court Justice Stephen Breyer (as well as some conservatives and moderates) favor giving broad regulatory authority to "expert" government bureaucrats. This is not quite the same thing as government ownership of large enterprises. But it has important ideological affinities with it, to the extent that both policies rely on central planning by expert government bureaucrats. Hayek's arguments in "The Use of Knowledge in Society" are certainly relevant as potential critiques of these various forms of planning - both those that involve government ownership of large enterprises in health care and education and those that rely on regulations administered by expert bureaucrats. If Hayek is right, all these planners and experts don't know as much as they think they do, and certainly can't aggregate knowledge as effectively as the free market can.

Finally, it's worth noting that even full-blown socialism isn't as completely dead as Larner assumes. For details, see my September 2007 post on "Why the Debate Over Socialism Isn't Over."

Fundamentally, most liberals and leftists still look to the state to plan large portions of the economy and other aspects of our lives. So too do many conservatives and moderates, as witness the rise of "big government conservatism" under George W. Bush. Today's advocates of government planning are more modest in their ambitions than the mid-twentieth century socialists whom Hayek criticized. But they are not modest enough to make his arguments irrelevant.

II. Hayek and "Voluntary" Collectivism.

Larner also criticizes Hayek for ignoring the possibility that "collectivism" could be voluntary rather than imposed by the state. He suggests that Hayek was wrong to ignore the thought of socialist anarchists such as Proudhon and Kropotkin, who favored communal enterprise without state control.

Much depends on what is meant here by "collectivism." To the extent that it simply means voluntary cooperation between individuals and groups in civil society, Hayek not only didn't ignore it, he was a great advocate of it. Throughout nearly all his major works, Hayek stressed the importance of voluntary social cooperation and repeatedly emphasized that individuals can't progress or even survive for long without civil society institutions and traditions that are the product of cooperation. Hayek's famous theory of "spontaneous order" was of course based on the idea that society progresses through the development of social norms and customs produced by voluntary cooperation in civil society. Hayek favored free markets and strict limits on government power in large part because he thought that they fostered such voluntary cooperation better than government planning does. Far from denying that "human beings can exist both as individuals and as members of a society, without necessarily subordinating them to the needs of an imposed social plan," Hayek wrote that:

[T]rue individualism affirms the value of the family and all the common efforts of the small community and group . . . [and] believes in local autonomy and voluntary associations . . [I]ndeed, its case rest largely on the contention that much for which the coercive action of the state is usually invoked can be done better by voluntary collaboration.

Hayek, "Individualism: True and False," in Individualism and Economic Order (1948), pg. 23

Larner is right to point out that Hayek ignored the socialist anarchists in his writings on socialism. But he would not have objected to them in so far as they advocated the formation of purely voluntary communities based on socialist or egalitarian principles, such as the Israeli kibbutzim. Indeed, Hayek, like John Stuart Mill, emphasized the importance of social experimentation in voluntary civil society. In his essay "Why I am not a Conservative," Hayek criticized conservatives for their excessive suspicion of change and new ideas. Few other libertarians would disagree.

Conflict between Hayekian libertarians and advocates of voluntary collectivism arises when one asks what we should do if it turns out that most people don't want to live in a collectivist commune, but would prefer a "capitalist" lifestyle instead. This is exactly what happened in the case of Israel's kibbutzim, the most successful modern experiment in voluntary collectivism. If voluntary collectivists are willing to accept this result, then there is no major disagreement between them and most libertarians, Hayek included. If, however, they prefer to use state or private violence to force dissenters into the communes against their will, then this form of socialism is no longer voluntary. Unfortunately, real-world socialist anarchists often chose the path of violence when faced with this contradiction between their commitment to collectivism and their opposition to state coercion. This is exactly what happened when socialist anarchists achieved a high degree of influence in 1930s Spain, arguably the movement's greatest period of success.

Perhaps more importantly, advocates of socialist anarchism and other forms of voluntary collectivism have never been more than a minor part of the political left as a whole. The vast majority of left-wing intellectuals (to say nothing of left-wing political leaders) favor a high degree of government control of the economy and society. If they have even heard of voluntary collectivism, they don't have much sympathy for it. Indeed, they probably have a lot less sympathy for it than Hayek would have.

I don't claim that Hayek was right about everything or that he perfectly foresaw our situation today. To the contrary, he made his share of mistakes. But his most important arguments haven't lost their relevance.