Monday, December 31, 2012

Why No Outrage? More on How Economism Works

 Dr. Roy Poses, blogmeister of Health Care Renewal, has been kind enough to mention The Golden Calf and my arguments about economism:

Dr. Poses now asks, in his New Year’s Eve posting, for responses to the question—why, in the face of so much incompetence, greed, and corruption in high corporate places (he’s concerned about health care organizations, but why stop there) is there as yet no organized opposition to what deserves to be called the Second Gilded Age? (

Johnny One Note that I am, I naturally believe the answer to his question is: economism. But the way he asked the question forces me to think harder about just how economism works in seducing all of us. Actually I have a two part answer, one theoretical and one practical.

First let’s start with what it means to say that economism functions as a quasi-religious ideology. When I first started writing The Golden Calf, I had intended to say more about linguist George Lakoff’s idea of frames in political dialogue, such as he analyzes in his Moral Politics. Most of that draft ended up on the cutting room floor, so let me fill in some of the blanks here.

A political frame is what surrounds an argument or statement or question, that is treated as background and accepted as is, without itself giving rise to any further discussion or questions. Lakoff noted that today’s conservative movement in the U.S. started working on frames back in the 1970s, generously funding many conservative think tanks and paying their best minds to do this work. Liberal think tanks, at the same time, avoided this intellectual spadework and tried to find ways to make a real difference in people’s lives. Lakoff stated that this gave the conservatives a huge head start that the progressives have never yet caught up with.

Economism works very well as a frame. Consider the old bumper sticker slogan, “If you like the Post Office, you’ll love national health insurance.” Notice what has to be true for this slogan to work—and it does work, for even people like me who support national health insurance snicker a bit and shake our heads at how effective it is. For this slogan to do its job, it has to be an article of faith that the U.S. Post Office is laughably inefficient. The reason for this faith is that we see the Post Office as a government bureaucracy—two four-letter words in economism’s lexicon. Government bureaucracies are ponderously expensive and inefficient, virtually by definition. (Notice that in America, private enterprise may have layers and layers of managers tripping over each other and messing things up royally, but somehow no corporation ever has a bureaucracy—that hated enemy, government, is the only place such abominations exist.)

People who have studied the matter carefully note that everywhere else in the world that has national health insurance manages to provide health care for their populations at much lower administrative cost than we do in the US, and that government health plans in the US such as Medicare, Medicaid, and the VA all manage to meet the standards of those other national plans, running at around 3-5 percent administrative costs. We also know that when, under Obamacare, the U.S. private insurance industry was told that they would have to get by on merely 20 percent administrative costs, they hollered and screamed that that was impossible. So there is a lot of evidence that adopting national health insurance would make our system more efficient, not less. But such an argument never gains any traction in the U.S. It’s not worth even talking about because we just know from the get-go that government bureaucracies are inefficient.

I could have attacked that bumper sticker from the other end. On what basis do we make fun of the U.S. Post Office? When was the last time somebody sent you a letter or a package and you didn’t get it? How long does it take you to get the average letter you are mailed? But again, no one even bothers to ask such questions, because we just know the answers beforehand.

An ideology like economism doesn’t win this type of war overnight. If it was only a year or two ago that this ideology had begun to spread, then we might hear serious questions about its assumptions today. The point is that this way of thinking has had nearly 40 years to worm itself into the fabric of our national thinking, and it had on its side excellent right-wing orators such as Ronald Reagan who devoutly believed it—and, perhaps even more important, so-called center-left orators such as Bill Clinton who decided it was a matter of political expediency not to oppose or expose it.

That’s the theoretical answer; now for the practical answer.

From what quarter, in American society, might we expect to hear the call for a political movement to end the Second Gilded Age? The Occupy movement was great for a while but apparently had no staying power. If we look back in time to when we last had some balance, when large corporations did not always get their way, the main countervailing force was labor unions. So my practical answer to the question is that we cannot expect much to happen to derail the Second Gilded Age while unions are held in such disrepute by so much of the American public—which gets back to the theoretical answer in explaining how this disrepute came about.

I was saddened to hear a recent report on NPR that interviewed three generations of residents of Flint, Michigan. The oldest member of the family walked the picket lines during the great auto strike of the 1930s when the UAW was created. The middle generation worked for the auto industry and reaped all the benefits of unionization in higher wages and ample benefits. The youngest generation is now struggling to make it in a town that has shuttered factories and massive unemployment. The grandson works in a non-union shop and sees no reason to join a union or to have anything to do with unions. Within one generation, all the life experiences and memories of the grandmother and the father have simply been erased.

I spent some time in The Golden Calf wondering about the virtual destruction of the American union movement, noting among other things that the union hall was more than a power center for those opposing and exposing corporate power. The union hall was most people’s exposure to practical democracy in action. With so few Americans belonging to unions, it is not surprising that democracy in our nation is at such low ebb—or that we now have such a low bar for what democracy is supposed to consist of (like going to vote every four years, if you can spare the time, and ignoring public events in the interim).

Incidentally, if you wonder about the force behind political frames, consider the incredible power that the American right accumulated when it managed to label state laws that emasculated the unions as “right to work laws.” In a country when Republicans talk about right to work laws, and Democrats answer them back as if the term is completely acceptable and noncontroversial, you know that the political frame is stacked heavily on one side of the power equation.

I wish, obviously, that I had the answer to all this, but at any rate this is what I think a big part of the problem is.

Sunday, December 9, 2012

Haidt’s The Righteous Mind: How Limited is Liberal Thinking?

            In the previous post:
--I summarized the main messages from Jonathan Haidt’s book, The Righteous Mind: Why Good People Are Divided by Politics and Religion. I noted:

Based on a large-scale survey of ethical attitudes, Haidt holds that our ethics is determined by our views on six basic scales—care/harm, liberty/oppression, fairness/cheating, loyalty/betrayal, authority/subversion, and sanctity/degradation. His research indicates that conservatives are well grounded in all six areas. Liberals, by contrast, base almost all their ethical thinking on care/harm and liberty/oppression, with some concern for fairness/cheating, while largely ignoring loyalty, authority, and sanctity. The broader base for conservative ethics makes it easy for many in the population to dismiss liberalism as empty at best and a threat to society at worst.

            So one important question for people like me to try to answer is—is our liberal ethical and political thinking really as limited and as deficient as Haidt makes it out to be? A full answer to that will require the volume that I hope to write sometime soon as a follow-on to The Golden Calf, in which I will go beyond pointing out the deficiencies in economism and lay out an adequate alternative framework for thinking about human society. So here I will offer simply some brief hints.
            According to Haidt, and based on his careful empirical research, liberals seem to be saying that when they decide what should be done, they tend to focus on care, liberty, and fairness, and to discount loyalty, authority, and sanctity. My question is—is this really what liberals think? And when I ask what liberals think, let me bring it down to the nitty gritty—what sorts of people do liberals hope their children will turn into?
            Since I haven’t done any large scale research I can only speak for myself. Maybe Haidt would declare me an oddity and perhaps I am really a closet conservative claiming to have liberal politics. Maybe all this reflects the way that I was raised in the 1950s. Be that as it may, I am prepared to say the following: I hope that my children feel loyalty to all those who are worthy of that feeling. I hope that my children have a reasonable and healthy respect for those in legitimate positions of authority (including their parents). And I hope that my children have an appreciation for the sacred and spiritual dimensions of life and are not base materialists, whether that’s expressed through religion or some other manner.
            As I said, I may be a very odd duck in liberal’s clothing, but I am going to take a leap here and to imagine that I’m not really all that atypical. In fact I’d be rather surprised to meet a so-called liberal who did not have fairly similar aspirations for her children.
            So what might be going on, when Haidt accuses liberals of ignoring certain bases for ethics that conservatives value, and I insist by contrast that liberals might indeed have a healthy respect for those features? A possibility that I need to develop in more detail on another occasion is that Haidt may have a flat, unidimensional view of morality and politics while I favor a multi-layered view. I think one major difference between typical liberals and conservatives today is not the ethical values they espouse, but where in society they expect to find those values at work.
            Let’s take an example from a different one of Haidt’s ethical bases, fairness/cheating. Liberals want there to be robust welfare programs to assist the less fortunate, while conservatives oppose such programs as encouraging lazy people to avoid doing their fair share of the work. There are a number of factual issues involved in these views, but as Haidt insists, our ethical views are much more formed by emotion and intuition than by dispassionate assessment of the facts. So let’s consider the person who actually is a classic Reagan-type welfare cheat—somebody who could easily go out and get a decent job and earn money, but prefers to stay home and mooch off the system, for no good reason except self-indulgence.
            To hear the conservative talk, the liberal is not bothered by such a person at all, which shows why liberals are a) naïve and b) a threat to social stability. Are these charges true?
            The case that I’d wish to argue is that the liberal agrees fully with the conservative—show me such a person and I will find him morally reprehensible. Where the two disagree is where in society they believe the function of judging such a person ought to occur. This answer shows a certain logical inconsistency within the conservative argument.
            The liberal might say—before you can judge any person you need to know a fair amount of detail about her life story. Some people might look to outsiders like cheats, but if we knew all the facts, we’d realize that they have major disabilities or other good reasons why they have not been able to make their way under their own power. So the right place within society for such judgments to be made is within families, churches, and community groups where people have a lot of detailed knowledge of how each other behave. If those groups came down on people who cheat the government out of welfare benefits, then such behavior would get a lot rarer—most folks don’t want to be cast out of the groups whose approval is most valuable to them. (How to make such judgments more common in society is another issue I have no space here to discuss.)
            The liberal goes on to explain that if you tried to set up the government program in such a way that it had primary responsibility for assuring that not a single cheat made it onto the welfare rolls, two bad results would occur. First, many deserving people would be pushed aside because the government agents could never know enough about each individual’s life to make reliable judgments. Second, in trying to make such judgments, the government would get much deeper into our lives than anyone concerned about freedom and privacy would want. This is where the inconsistency comes up—conservatives presumably want to keep the government out of our private lives (though many social conservatives today want to come into our bedrooms and dictate to us our sexual and reproductive behavior).
            Bottom line—it’s not that the liberal has a totally different moral sense than the conservative about what sorts of behavior deserve blame or praise. It’s rather that politically, the liberal wants to see these functions carried out at different levels of social organization—ones that the liberal argues are more appropriate to the task.
            If I were to have the space to defend this argument in detail, I’d draw on the work of such philosophers as John Rawls, Martha Nussbaum, and Amartya Sen, who I think provide good grounds for taking the stance that I sketched above. All I have space for here is to suggest that Haidt may have been too hasty in concluding that the liberal base for ethical thought is so much narrower than the conservative.

The Righteous Mind: Orthodoxy vs. Conservatism

            A book about ethics, The Righteous Mind: Why Good People Are Divided by Politics and Religion by psychologist Jonathan Haidt, has deservedly been getting a lot of recent media attention. Haidt’s book poses several interesting challenges for the views expressed in this blog and in The Golden Calf, so I hope to devote at least a couple of posts to discussing those issues.
            Haidt’s basic message can be summarized as follows: we do ethics primarily by emotion and intuition and reason comes along later to explain what we did; humans are programmed by our evolution to be mostly competitive individualists but also to have strong needs for  group identity and community; and we can discover six bases for ethics, of which today’s conservatives are better able to incorporate a broad scope than are liberals, giving the former group a clear advantage in winning hearts and minds.
            Let me here take up the last point. Based on a large-scale survey of ethical attitudes, Haidt holds that our ethics is determined by our views on six basic scales—care/harm, liberty/oppression, fairness/cheating, loyalty/betrayal, authority/subversion, and sanctity/degradation. His research indicates that conservatives are well grounded in all six areas. Liberals, by contrast, base almost all their ethical thinking on care/harm and liberty/oppression, with some concern for fairness/cheating, while largely ignoring loyalty, authority, and sanctity. The broader base for conservative ethics makes it easy for many in the population to dismiss liberalism as empty at best and a threat to society at worst.
            Haidt concludes that the culture wars are unfortunate because a well-rounded social ethic would draw on both liberal and conservative thought. He illustrates this conclusion by telling his own story. He began as a pretty much garden-variety academic liberal, but more recently has come to see the value of conservative views. He attributes this recent enlightenment to a particular book that he ran across in 2005, Conservatism by the historian Jerry Muller. Haidt found in Muller a much more sympathetic portrayal of conservative views than he had previous encountered, and much of what he read resonated with his own thinking.
            What struck me as most interesting as I read Haidt’s account of his own conversion at the hands of Muller’s book was how he said Muller began his work—by drawing a sharp distinction between conservatism and orthodoxy. Quoting from Muller, Haidt explained, “Orthodoxy is the view that there exists a ‘transcendent moral order, to which we ought to try to conform the ways of society.’ Christians who look to the Bible as a guide for legislation, like Muslims who want to live under sharia, are examples of orthodoxy. They want their society to match an externally ordained moral order, so they advocate change, sometimes radical change. This can put them at odds with true conservatives, who see radical change as dangerous.”
            Muller further develops this point by placing conservatism firmly within the intellectual precincts of the Enlightenment (now quoting Muller directly): “What makes social and political arguments conservative as opposed to orthodox is that the critique of liberal or progressive arguments takes place on the enlightened grounds of the search for human happiness based on the use of reason.”
            From that point on Haidt explains what Muller has to say about conservatism, assuming that we’ve cast orthodoxy aside and agreed that that could hardly be a suitable basis for politics. But the main argument that I offer in The Golden Calf is that to the extent that today’s conservatives are wedded to the ideology of economism, they have not cast orthodoxy aside at all—they remain orthodox through and through.
            Haidt seems to have an inkling, but only an inkling, of this problem. Trying to be even-handed, he admits that libertarians might have something useful to say about ethics too, even though their thinking has an even narrower base than does liberalism, since they are almost solely concerned about one aspect only, liberty/oppression. So the lesson he believes that others need to learn from libertarian thinking is “markets are miraculous.” In discussing this point, he makes the following interesting comment: “If God is commonly thought to have created the world and then arranged it for our benefit, then the free market (and its invisible hand) is a pretty good candidate for being a god. You can begin to understand why libertarians sometimes have a quasi-religious faith in free markets.”
            This passage is interesting because seldom, in this book, does Haidt see any need to invoke God or religious language, even though he sees religion as one important way humans bond together in communal identity. He appears to make no distinction between libertarianism and economism, though as I explain in The Golden Calf there are important differences. So Haidt simply does not take into account the possibility that in believing in economism, people who call themselves both conservative and libertarian have not abandoned orthodoxy at all, and are in their own ways as fundamentalist as those calling for sharia law.
            While for most of his career, doing the research that he summarizes in his book, Haidt taught at the University of Virginia, he now is attached to the Stern School of Business at New York University. I cannot say whether the transition from the broader university environment to the narrower range of thinking one finds in the typical business school had any impact on Haidt’s apparently not seeing the orthodox features of economism.
            Anyway, Haidt abjures liberals like me to be more understanding of where conservatives are coming from and what wisdom they bring to the table, and I will try to address that point in a later post. I even agree with Haidt, as I stated in The Golden Calf, that markets when they work well are pretty miraculous things (and Haidt admits that there’s a clear danger that markets won’t work well, which is where he thinks the liberals’ message needs to be heeded). But if what gets called conservatism is really orthodoxy, then Haidt and Muller would apparently both agree that there’s not much wisdom to be gained from that source—and I’d claim that that’s true so long as economism holds such a grip on the American public consciousness.

Economism: Where Are We after the Election?

            Barack Obama’s re-election, by a strong showing in the electoral college and a decent margin in the popular vote, has warded off two great dangers. First, we are now spared the sorts of Supreme Court justices that an economism advocate such as Romney would no doubt have appointed, that would have further tilted the court in the coming decades in a pro-corporate direction (and no doubt led to more decisions such as Citizens United). Second, we can predict with reasonable confidence that this President will probably preside over an economic recovery. This of course would have happened no matter who was elected. But had Romney been elected, given the voters’ apparent love affair with imagining that the President has some control over the nation’s economy, the popular political narrative would have been that Romney was chosen by the voters, and so therefore his favored policies caused the recovery. That narrative would have polluted any serious thinking about economic and monetary policy, again for a couple of decades at least.
            Besides dodging these bullets, what the various pundits are saying about the election is somewhat reassuring for people who believe that we’ll make policy progress in the U.S. only once we can get the albatross of the economism ideology off our necks. Perhaps the most striking comment was one I overheard on an NPR segment, that to the extent the people who actually show up at the polls on Election Day look like the country, the Democrats do well and the Republicans do badly. If true, this suggests that the Republicans, if they win elections, are not winning on message; they are winning by keeping a representative sample of voters away from the polls. That’s further suggestive that the Republican message, which coming out of the mouths of Romney and Ryan was all-out economism, is simply not a winner with the American public at this time.
            So all that may be encouraging, but the fact remains that nearly half of those who voted were willing to vote for Romney, and presumably at some level bought into his economism shtick that because he was a successful businessman, he could be trusted to be the kind of president that would know what needed to be done to right the economy and create jobs. So a great deal of work needs to be done.
            As I noted in The Golden Calf, Obama has generally been wary of any direct attacks on economism—apparently wishing to maintain his bona fides as one willing to reach across the aisle and promote bipartisan compromise. Obama made a couple of major speeches in which he seemed to start in a direction of exposing economism’s untruths and illogic, but then he tacked back toward the center. Attacking Romney as a rich man out of touch with the majority of Americans is a sort of swipe against economism, which portrays the rich as God’s chosen people and hence worthy of our accolades. But in choosing Obama over Romney, the American voters were not presented with a clear choice of economism yes or no.
            If we are to create a firm basis for sensible national policy, and clear the ground for such reasonable thinking by sweeping economism aside, then much more work remains.

Tuesday, October 23, 2012

The CEO Myth and Romney’s Misleading Rhetoric

The Health Care Renewal blog talks about how hospital systems today are often being run into the ground by executives that don’t know squat about health care. The nice folks at the blog were therefore pleased to tell us about an article by Gretchen Morgenson in the New York Times in September:

Morgenson in turn reported on a study conducted by Charles M. Elson and Craig K. Ferrere of the University of Delaware. These folks looked at the argument used by corporate boards to justify sky-high pay for their CEOs—that the CEO of one successful company is likely to jump ship and go work for another big firm unless well compensated, and so to decide fair CEO pay, the board needs to look at a wide range of comparable firms. That in turn assumes that the successful CEO has extensive general knowledge of how businesses work, and can easily transfer those skills from a company that makes automobiles to one that makes computers or pharmaceuticals.

Elson and Ferrere looked at the record and decided that this idea of easily transferable skill is a myth. CEOs, it turns out, do better by far when they stick to the company that they know and understand. If they try to take on a very different sort of firm, they usually flop. In short, it really does matter whether the company you run makes widgets or something else.

What does this have to do with today’s presidential politics? Somehow Gov. Romney has pulled the wool over most everyone’s eyes through his mantra that as a successful businessman, he knows what it takes to get the nation’s economy back on track. Now, this is wrong at almost too many levels to count. As Paul Krugman has pointed out repeatedly, what a businessman needs to know to run a firm and what government leaders need to know are radically different things. Krugman also recently pointed out:
--that Gov. Romney has had the gall to say that not only is he an experienced businessman; he’s also experienced in small business—pointing to the few employees Bain Capital had when it started up.

Now, my daughter may know something about starting up a small business. She worked for a while making artfully decorated cake pops for some local shops and private parties, and had to fill out a ton of forms to get the required permits. But if she was bankrolled when she started out to the tune of $37 million—the amount of dough that Bain Capital had at its disposal as a “small business startup”—then somehow I missed hearing that fact.

So Romney is wrong when he tells us that because he once ran a business, he knows how to be President and run the nation’s economy so as to make more jobs. But the Delaware study shows that he‘s even more wrong because he suggests that because he knew how to run one business, he must know all about all businesses. That, as their CEO survey reveals, is pure hogwash.

So why does the American voter so eagerly lap up this nonsense? That’s where we’re back to the seductive powers of the quasi-religion known as economism.

Thursday, October 11, 2012

The Incoherence of the Republican Right; and How Economism Accounts for It

            This is a belated commentary on the first Presidential debate which addresses two points—first, why the Tea Party fringe that seems to have commandeered the Republican Party appears incapable of coherent thought; and second, in what way the ideology of economism helps us better understand that.
            I need to explain that I did not actually watch the debate, which does not matter, as the point I wish to make has nothing to do with what actually happened there, much less what I thought of it. The point is rather how (reportedly) the Republican base responded to Mitt Romney’s performance.
            The mainstream media helpfully informed us that Romney won the debate and in the process energized his party pumping enthusiasm into many voters who’d been lukewarm toward him since the primaries. The media also informed us that Romney “won” in good part by coming across as a moderate. Let’s assume all that’s accurate.
            Now, as best as I can recall the mood of the Republican right wing back in the spring, their main complaint was that Romney was too moderate for them and was not trustworthy as a true conservative. So, if this wing of the party was capable of coherent thought, the response to this debate should have been, “We knew it all along! We could never trust that guy. As soon as he had the nomination wrapped up, he runs right back to the center, just as he did when governor of Massachusetts.”
            So how is one to explain this sudden falling in love with the previously distrusted candidate, once he proves that the reasons for distrust were perfectly valid?
I propose that the reason is very simple—in the debate, he looked like he could defeat Obama. The right wing wants above all else to defeat Obama. Anyone who can do so is their darling of the moment.
So—how does economism help to explain all this illogic?
The absolute, unmitigated hatred of Obama, among the denizens of the right wing, requires some explaining. Clearly, in my view, some of it is racially motivated, as much as all try to deny it. I really doubt that if Obama was white, there would be the “birther” gang out there; and that so many would apparently believe he’s Muslim despite his insistence that he’s nothing of the sort.
But the fact that so many on the right felt so comfortable in saying from the very moment of his inauguration that defeating him was their absolute number one priority—never mind if they wrecked the nation in the process—seems to me to indicate a key premise of economism at work.
Economism is warmed-over religion disguised as economic science. The two religious traditions from which economism draws—see our “economism primer,” coalesce around the idea that God determines the way the world is down to the smallest detail.
So this visceral hatred of Obama seems to arise from a deep conviction that Obama represents something unworthy in the eyes of God. This could be for some voters because he is pro-choice or accepting of gays. For many voters, this would be because he seems antithetical to the unregulated free market. For some it would be both. But from God’s point of view, this man is an “Obamanation” as the book title has it, and he must go.
For people who get their marching orders directly from God, or think they do, all of this hangs together and makes good sense.

Saturday, September 29, 2012

The Economism Frame at Work: The “Assault” on Texas Higher Education

Paul Burka wrote the cover story for the October issue of Texas Monthly, “The Battle over UT” (, subscription required for full article). I’m sure this veteran political writer (or so I gather) thought that he was presenting a reasonably balanced account of Gov. Rick Perry, Jeff Sandefer and his Texas Public Policy Foundation, and the conservative assault on Texas’s flagship universities, University of Texas and Texas A&M. In actuality the article is highly biased, and in seeing why, we understand how “frames” work in political discussion.

Linguist George Lakoff explained frames in books such as Moral Politics. In framing a political statement, we may think we’re using neutral language, but may in actuality be adopting language that adheres to the key assumptions of one side of the debate. That means that anyone who wishes to argue the other side starts off at a disadvantage, because the debate has already been laid out in terms favorable to the other side—terms that make it sound like the other side is sensible and its critics are muddle-headed. If, for example, we frame the debate over immigration policy as, “Are you in favor of upholding the law of the land, or do you endorse amnesty?” then we’re doing the sort of framing that Lakoff objects to.

Burka’s article is shot through with the economism frame. He accepts as unassailable the assumptions that:
·         A college degree is a commodity
·         The goal of college is to “buy” a degree and then use it to get a good job
·         What you learn in college can be precisely quantified by standardized tests
·         It makes sense to argue that a college should be run as if it were a business
Defenders of higher education’s role in a democratic society by creating an educated, critically thinking populace automatically sound old-fashioned and out of touch as soon as you adopt this frame. Philosopher Martha Nussbaum, for example, in her valuable book, Not for Profit: Why Democracy Needs the Humanities, obviously has nothing worthwhile to say according to the economism formula.

Perhaps the worst example of one-sided framing comes at the end of this long article when Burka seems to accept the notion that the old-fashioned university faculty types represent an elitist view of higher education while Sandefer and his gang, who want to hold down tuition and make more on-line learning available, are the populists in this contest. Thomas Frank, in his One Market Under God (which I discuss at length in The Golden Calf), shrewdly dissects economism’s claim that it represents populism and true democracy via the marketplace, since in the free market, the consumer can purchase whatever she wants. By contrast, any form of government regulation is elitism, with other people telling you what to do. Yeah, right, says Frank, the US corporation is a wonderful example of democracy—Bill Gates assures us that we’ll have the widest possible choice of operating systems for our computers and we can pick whichever one we want. And if Bill Gates’s employees didn’t like the way he was running Microsoft, they could take a vote and get rid of him.

If you want to know the real scoop about what’s elitist and what’s populist in the American university, read Christopher Newfield’s essential book, Unmaking the Public University. His thesis would seem to be a wild conspiracy theory if he had not documented and supported it so thoroughly. On his view, in the late 1960s, the elite, wealthy white males that were used to running America the way they saw fit got into a snit. Women and minorities were increasingly rising to positions of power in an expanded and highly educated middle class. The skittish one-percenters looked around at where these people were coming from, and discovered the source of the problem—the large public university. So they decided that two things had to happen if they were to remain in control. First, the university had to be robbed of its essential funding. Second, equally important, the university as a source of knowledge had to be delegitimated in the eyes of the populace. Newfield makes a good case that the entire assault on affirmative action in the 1990s (for instance) was a part of this delegitimation process.

Burka admits that he’s personally biased because he’s a part-timer at UT-Austin, teaching one course a year on politics for low pay and no benefits and outside the tenure system. He’s the sort of faculty member that would be the only employee of UT if Sandefer had his way. Burka talks movingly about how faculty like him usually have something many tenured professors lack—real-world experience. That is supposedly the reason why Sandefer wants to hire so many of them. The fact that such profs are for the most part cheap and docile labor couldn’t possibly be the real reason conservatives love them so much. (My own personal bias is the opposite of course since in my day job, I’m a tenured professor teaching humanities in a professional school.)

The final bit of evidence that Burka has totally swallowed the economism frame is what he proposes to do about the future of the university. Suppose that you agreed with all the following:
·         The large public university is a huge public good, producing both education for the masses and essential research.
·         In today’s world the university, like everything else, is increasing expensive to maintain.
·         Raising tuition to pay for the increased costs adds unacceptable levels of debt to young people just starting their careers, and excludes many others from even getting a degree.
Now, if you agreed on all those things, a logical conclusion would be that we have to belly up to the bar and pay for a public good with more public money—that is, taxes. That would be logical unless you’d adopted the economism frame, where raising taxes is taboo. So the possibility that the real problem in Texas, despite its relatively booming economy, is inadequate public funding for its schools (K-12 even worse than higher ed) gets completely left out of Burka’s discussion.

Am I a defender of the status quo? I believe that universities need to do more to cut costs while retaining quality, must address the tuition problem more aggressively, and that faculty need to be more accountable for how they spend the taxpayer money entrusted to them. But we need open-minded discussions of how to do all that—not warmed-over economism.

Friday, September 28, 2012

Who's Entitled?

The Democrats are like a dog with a bone, with Romney's secretly-videotaped speech in which he labeled 47 percent of the American public as non-tax-paying moochers who think they're entitled. As I said previously, this speech is fair game as it comes straight out of the economism playbook, and Romney has made it clear all through this campaign that economism is in fact his religion. (Okay, so maybe he's a Mormon on the side.) But let's for now take a somewhat closer look at this question of just who in our society think they're "entitled."

Academics (those troublemakers again) have recently done several studies about the ethics of the rich vs. regular folks. Here is a blog post based on just one such study:

What these studies find, routinely, is that wealthier research subjects generally are more likely to cheat, and feel more entitled to get ahead, so that any means they need to use to get ahead is all right with them. Yet when we talk in our society, for example, about "entitlement programs," we always seem to talk about programs that aid the poor and middle class; we never seem to treat the wealthy (the cherished "job creators" of the Republicans) as "entitled" folks. These recent research results simply add more evidence of a pervasive double standard, fueled by the ideology of economism, that the rich are different and better than the rest of us.

Now, when I say something like this, I am likely to get the response, why am I picking on the rich? Do I believe that all rich people are rotten? Do I believe that all poor people are angelic?

Well, I happen to believe that some rich people and good and some are bad. I happen to believe that some poor people are virtuous and hard-working and some are bastards. I imagine that most of us, if we thought about it, would believe the same. So why is it even necessary to go through the motions of saying such an obvious truism?

The reason one has to say such things is that economism has had its way with us for so long that its defenders have had an incredibly easy time of it. The rest of us drank the Kool-aid and agreed that what economism preaches is simple common sense and must be true. So they got lazy about thinking of arguments that actually support economism in any substantial way. (That's just as well for their peace of mind, as economism is so full of contradictions, and so thoroughly undermined by real-world evidence, that trying to seriously defend it is a real headache.) So all it takes is a person like me questioning a single feature of the economism's religious ideology, and the defenders go berserk, figuring that anyone so crazy as to doubt economism must be trying to destroy civilization as they know it.

The good news is that finally us crazies are coming out of the woodwork.

The Truth about CEOs

NBC News brought us up to date yesterday about a university study of CEO pay:

Basically what these folks from the University of Delaware found is:
  • If you assume that you have to pay a company CEO huge megabucks because other companies pay their CEOs those sums, your company will not perform any better and is probably wasting its money.
  • If you want your CEO to do well, pick somebody who actually has experience in the business you're in. Don't hire a successful CEO from a totally different type of company.
Now, if we lived in a sensible world, these observations would produce the usual response when we read about an academic study: "Everyone already knew that anyway so why did these silly professors have to get a grant to study this?" But we don't live in a sensible world. We live in a world where economism has somehow morphed itself into everyday common sense, and so we do need to learn these lessons.

Why are the lessons of economism at odds with these very sensible findings--and how have those beliefs led to out-of-sight CEO pay and the creation of an overclass of the wealthy to whom all other Americans so willingly defer? First, as I explained in The Golden Calf, economism has repackaged old religious beliefs that go toward imagining that if you're rich, you must be especially favored by God. So it's simply God's will that you'll be showered with riches and that the rest of us should kiss the hem of your whatever.

The more subtle answer is that economism is joined at the hip with the most simplistic form of neoclassical economics, which in turn believes that everything of importance in the world can be predicted by means of its mathematical models. These models are basically the doctrine of the supposedly free market. This worship of neoclassical economics and its presumed mathematical precision (a precision purchased at the cost of grossly misrepresenting the real world) leads to the impression that it's possible to be an expert in the free market, and to have a sort of financial wisdom that transcends any specific industry. On this basis, people readily imagine that if you managed to make a ton of money as CEO of a widget company, you can become president of a hospital system and be equally successful (at making money at least, even if none of the patients get any healthier).

Let's for a minute apply this to Mitt Romney. He's running for president on the platform that he, much better than that idiot Obama who never "met a paycheck" as they like to intone, knows how to get the American economy moving forward again. And how does he know this? Presumably because he was successful, in terms at least of personal wealth accumulation, as an executive of a certain sort of firm, a venture capital company.

Again, let's assume for a minute we lived in a sensible world. In that world people would note two things. First, being president of the U.S. is quite different from running a business, and there's no reason whatever to believe that somebody skilled at one would be skilled at the other. Second, what Romney proved to be good at was doing one very specific form of financial dealing--which actually amounts to leveraging huge amounts of debt and then forcing others to pay off that debt for you, as Matt Taibbi explained for us in detail in the August 29 issue of Rolling Stone (subscription required).

Maybe some day we will live in a sensible world again.

Sunday, September 23, 2012

Romney’s 47 Percent—Right Out of the Economism Scripture

            I was about to write a comment about the now-infamous video of Mitt Romney speaking in Boca Raton, FL about the 47 percent of Americans whom he’d write off in the election, but Paul Krugman sort of beat me to it in his New York Times economic column:
            Has Krugman read The Golden Calf? I know he has a copy, since like most aspiring authors, I sent copies to several important figures whom I had quoted in the book, hoping that some of them would see fit to give the book a little notice (dream on, as it turned out). But I have no idea whether he has actually looked at it. In any event, he was writing things before that book appeared that anticipated many of the messages in it, and since the book has appeared his columns seem to channel ideas in the book even more.
            The gist of this latest column is that today’s Republicans have a deep and serious disdain for ordinary working people, so it’s not in the least out of character for Romney to say what he did. If you work for someone else, by definition, you’re not one of the “job creators” that the Republicans idolize. Forget that those capitalists and investors would never have a dime if the working stiffs of America weren’t the world’s most productive workers, and hadn’t slaved away so that those guys could be rich while seeing their own income stagnate ever since 1980.
            What I had been about to add to that observation was that what Romney was captured saying in Boca Raton was vintage economism—so again, it’s not as if he was misquoted or that they caught him on a bad day. The creed of economism allows people like Romney an easy conscience when casting aspersions against so many of their fellow citizens.
            Using its two religious roots, the Protestant ethic and English evangelicalism, economism has concluded that where anyone is in the economic pecking order is exactly where they ought to be, for two reasons. The first reason is overtly religious. Both of the above religious doctrines held that God designed the world down to the last feather on the last sparrow. If the people who fall into the tax categories that Romney poo-pooed happen to be those who generally make less than $50,000 per year, and by the merest coincidence, Republican donors had to pay $50,000 a plate to attend the dinner in Boca Raton where Romney spoke, well, no reason at all for the donors to feel embarrassed. God made them rich because they were especially worthy, and he made the others poor because they were especially sinful.
            That’s the first reason. The second reason is that economism believes devoutly in neoclassical economics, which in turn teaches that everything about the economy can be exactly predicted by its neat mathematical models. Those models show that so long as you have a free market, then whatever happens in the world is the best possible thing that could have happened. If the market is free and the 1 percent are fabulously wealthy and the rest of us are miserable, then that outcome is the best possible way that the world could be organized. The only fly in the ointment is what happens if the market is not, in fact, ideally free. But that’s a minor change of the subject, as the devotee of economism then goes into a rant that the entire problem is due to the market not being free enough, and that hated government regulation is what is messing everything up.
            So the Republican donors can take their pick. They can all have an easy conscience because it’s God’s will. Or they can all have an easy conscience because precise mathematical laws prove that the world is ideal the way it is. Or for that matter they can believe in both. After all, they paid fifty grand for a place at the table—might as well throw in an extra ideology as a bonus.

Thursday, September 13, 2012

So Why No Jobs?

A number of reports on the US economy agree that in recent months, companies have been sitting on huge wads of cash. They have not, for the most part, used any of that cash to expand their workforce. Nevertheless profits are up, because existing workers are more productive than ever before—this coming on top of figures I noted in The Golden Calf, that American workers already were leading the rest of the world in productivity.

Economism teaches us that if we just lower taxes on the rich and on corporations, they will be the “job creators.” So why no jobs, if they are so flush with funds?

The students of economism offer us an answer. The problem, they allege, is uncertainty. Right now these companies have money, but who knows about tomorrow—maybe those nasty Democrats will raise taxes again, or enforce some new regulations. It’s not enough that the job creators have a lot of money; they have to be in the right frame of mind. This excuse as to why we don’t have jobs, when all the conditions seem to be just what economism ordered, is what economist and columnist Paul Krugman memorably labeled the “Mom, he’s looking at me funny” rationale.

So, says the political right wing, if you want jobs, it is not enough to put wads of cash in the hands of employers. You also have to ease their uncertainty that anyone could ever take that cash away from them. So be sure to elect Republicans to control both the White House and Congress, and then to appoint only pro-business, activist judges. And while you’re at it, dismantle American electoral democracy to be sure that the guys never get voted out of office (something economism believes but doesn’t like to say out loud).

It is part of the brainwashing job that economism’s acolytes have pulled off on American society that all this can be said with a straight face. So let me see if I can state the rather obvious flaw in this reasoning, even if no one in the political debate in the U.S. seems willing to go there.

Economism claims that the unregulated free market is this powerful force for good in society, and that if we just let it alone, it will do everything we desire. Everyone will be prosperous, except of course for those who don’t deserve to be, because obviously they didn’t work hard enough or didn’t have the right entrepreneurial moxie. Or God doesn’t like them.

Then when we line up all the ducks in a row the way economism says, and there are still no jobs, we are supposed to believe that the problem is uncertainty and lack of confidence. Somehow this incredibly powerful free market thing is so weak and unreliable that it will fall apart if it sees its own shadow.

So you can have a (so-called) free market that grandly sweeps all before it. Or you can have a free market that’s so wimpy and undependable that you have to make really nice to it to get it to do what you want. One way or the other, guys—make up your minds.

Sunday, September 9, 2012

Republican Worship of Hayek’s The Road to Serfdom: Part 4. The Mystery Economist Revealed

    Note: This is Part 4 of a four-part discussion that makes the most sense when read in order. For the other three parts see:       

 Okay, let’s recap. In Part 2 of our discussion of Hayek I summarized the main ideas that Hayek proposed and that have won him such a following among today’s defenders of economism. Then, in Part 3, I compared Hayek with the Mystery Economist who was writing at just about the same time, the mid-1940s. That Mystery Economist, by contrast, turned out to be no friend of the major beliefs that make up today’s economism faith. The Mystery Economist, in short, seems to be hardly the sort of person that Ronald Reagan, Glenn Beck, Paul Ryan, or other supporters of economism could possibly agree with. So by now you’re probably tired of this game and want to know just who the Mystery Economist is.
            Drum roll, please. The Mystery Economist is—Friedrich Hayek.
            That’s right. Every idea that I have attributed to the Mystery Economist comes straight out of The Road to Serfdom.
            Bruce Caldwell, the editor of Hayek’s collected works, writes of The Road to Serfdom, “Hayek’s book may have been widely, but it was not always carefully, read.” (2) One has to wonder, if Glenn Beck and Ronald Reagan and others have worshipped Hayek as the originator of today’s economism, how carefully they actually read his book.
            A confirming comment on this aspect of Hayek’s thinking is provided by somebody you might have guessed was the Mystery Economist, because he was probably the most prominent English economist of that time—John Maynard Keynes. Keynes is the economist most usually associated with the New Deal in the U.S. and the welfare state in Britain—developments that today’s economism advocates view with horror. So it is interesting to see what Keynes had to say about Hayek’s book.
            As Caldwell summarizes (23-24):
[Keynes] delighted Hayek when he wrote him that [The Road to Serfdom] was “a grand book” and that “morally and philosophically I find myself in agreement with virtually the whole of it; and not only in agreement with it, but in a deeply moved agreement.” Keynes went on to say, though, that “You admit here and there that it is a question of knowing where to draw the line. You agree that the line has to be drawn somewhere, and that the logical extreme is not possible. But you give us no guidance whatever as to where to draw it.”
Keynes, it appears, found much in Hayek’s book to agree with. Keynes was declaring himself to be no fan of Nazi or communist central planning. But Keynes at the same time nailed Hayek on the book’s main deficiency. Keynes realized that Hayek could not have it both ways. The Hayek of economism rigidly claims that if we stray a single step from the path of market competition, we will bring about totalitarianism. Yet the same Hayek, now in the guise of the Mystery Economist, very reasonably advocates a robust role for government alongside private enterprise and market competition.
Keynes asks Hayek—just where do you propose to draw the line? Where does appropriate government regulation and supplementation of the market, to make up for the market’s inherent limitations, leave off? Just where does the inevitable slide to totalitarianism begin? Keynes could find no answer to this key question when he read The Road to Serfdom. Nor can we.

Hayek, as it turns out, is only a partial author of today’s economism. He was, by today’s standards, far too reasonable. Advocates for economism today accordingly find it necessary to deny those reasonable things that Hayek wrote, about the non-existence of completely unregulated markets and about the limited power of the market to achieve social welfare. In doing so, they continue to praise Hayek’s book as if it agreed completely with their revised program, which shows (as we’ll come back to many times) how economism is long on religious fervor and short on respect for facts.


F.A. Hayek, The Road to Serfdom: Text and Documents: The Definitive Edition, ed. Bruce Campbell (Chicago: University of Chicago Press, 2007).

Here are the page sources in Hayek for all the quotations attributed to the Mystery Economist in Part 3:
 “Where, for example, it is impracticable”: 87
In no system that could be rationally defended”: 88
Providing a decent minimum of food, clothing and shelter: 86-7, 147, 215
Regulating working hours: 86-87
Requiring workplaces to be reasonably safe: 86-87
Limiting the concentration of wealth due to inheritance: 134
Government should be involved only insofar as market competition fails: 87
Government social programs should promise every citizen: 147, 215
“Nor is the preservation of competition incompatible”: 87
Too great a concentration of corporate power: 205

Republican Worship of Hayek’s The Road to Serfdom: Part 3. Hayek vs. the Mystery Economist

Note: This is the 3rd part of a four-part commentary that makes the most sense when read in order. For the first two parts see:

           Let’s stick with our friend Hayek and his book, The Road to Serfdom. It turns out that quite a different program was proposed by an economist at just about the same that Hayek was publishing his book in 1944. The contrasts between this alternative program and my summary of Hayek’s views in Part 2 are striking and suggestive. I’m going to have a little fun with this alternative author and call him the Mystery Economist for now, and invite you to guess his identity. (No fair peeking ahead to Part 4 where all will be revealed.)

The Mystery Economist’s Program
One way to approach the Mystery Economist’s program is to contrast it with a list of things that true believers in economism tend to accept without question:
  • “The best outcome for society” is synonymous with “the end result of free market exchanges.” To live in a world governed by an unregulated free market is to live in Utopia.
  • Markets are self-regulating. The best thing government can do for the market is simply to get out of the way.
  • Any social problem can be solved through market principles; government intervention is never called for.
  • If a corporation grows so large that it can control markets, that is simply the way the market (and God) wanted it to be.
The Mystery Economist, it turns out, disagreed with each of these statements. Let’s see how and why.
            Markets define social good. The Mystery Economist attacks this idea head-on:
Where, for example, it is impracticable to make the enjoyment of certain services dependent on the payment of a price, competition will not produce the services; and the price system becomes similarly ineffective when the damage caused to others by certain uses of property cannot be effectively charged to the owner of that property. In all these instances there is a divergence between the items which enter into private calculation and those which affect social welfare; and, whenever this divergence becomes important, some method other than competition may have to be found to supply the services in question.
The Mystery Economist is saying that there are certain things that are important for society that simply won’t emerge from market competition, since no individual can manage to produce those things in a way that yields a satisfactory profit. Economism states that those things are simply not wanted or needed. But the Mystery Economist disagrees. He claims that “items which enter into private calculation” (that is, what figures in the marketplace) and “social welfare” may be two different things. By making this simple statement he pulls the rug out from under one of economism’s main tenets.
            The Mystery Economist goes on to provide examples of what he has in mind. He does not think that private-enterprise competition will get most roads built or prevent the worst sorts of pollution.
            Self-regulating markets. The Mystery Economist is quite consistent in rejecting the notion that marketplace forces actually can manage the market. He refers repeatedly to the intricate system of legal regulations that is needed for markets to be able to function, and that these laws must come from outside and cannot be generated through market activity itself. He also offered the observation that in his own time, many of these laws were poorly developed: “In no system that could be rationally defended would the state just do nothing. An effective competition system needs an intelligently designed and continuously adjusted legal framework as much as any other. Even the most essential prerequisite of its proper functioning, the prevention of fraud and deception (including exploitation of ignorance), provides a great and by no means yet fully accomplished object of legislative activity.”
In short, the Mystery Economist thinks that economism’s “unregulated free market” is an illusion. Markets, he argues, simply won’t work without a heavy dose of government regulation.
            Government’s role in solving social problems. Besides building roads and avoiding pollution, the Mystery Economist lists a number of functions that he assigns to good government because he believes that market competition alone will never achieve the desired results:
  • Providing a decent minimum of food, clothing and shelter for everyone in society
  • Regulating working hours
  • Requiring workplaces to be reasonably safe and sanitary
  • Limiting the concentration of wealth due to inheritance
You might imagine by now that the Mystery Economist is a raving socialist, but he’s careful to deny this charge. He always hedges his recommendations for government action with the proviso that government should be involved only insofar as market competition fails; as soon as a market mechanism is available to reach the desired social goals, the government should back off. For instance, he is quite careful to stipulate government social programs should promise every citizen the security of a decent minimum of the necessities of life, but should never promise prosperity or any given level of wealth. He nevertheless insists, “Nor is the preservation of competition incompatible with an extensive system of social services—so long as the organization of these services is not designed in such a way as to make competition ineffective over wide fields.”
            Opposing monopolies. Traditionally, economics has viewed a monopoly as a threat to the free market. The Mystery Economist agrees and is especially forceful in denouncing monopolies, since he thinks they are the entering edge of the wedge that will start the slide down the slope to central planning. But he thinks that the prime force behind the creation of economies in the first place comes not from government but from the capitalists who own the corporations, and fears that they will use their political pull to hijack government power toward maintaining their monopoly status. In short, the Mystery Economist is very suspicious (along with his predecessor, Adam Smith, if you actually read what he wrote) of too great a concentration of corporate power in a few hands.
            As you can see, the Mystery Economist seems to be no fan of much of what today’s defenders of economism like to think. So who is this masked man? We’ll find out in Part 4 of this discussion:


For the source of all the direct quotes above for the Mystery Economist, see Part 4.

Republican Worship of Hayek’s The Road to Serfdom: Part 2. What Hayek Stood For

Note: This is the second part of a 4-part commentary that makes the most sense when read in sequence--for the first part see:

In my earlier post (Part 1) I talked about Hayek’s time in history when he wrote this book in 1944, and how issues that seemed alive and vital then have significantly faded today—a point widely ignored by Hayek’s adoring fans in the world of economism.
Ignoring the historical background of Hayek’s work is not the only thing that those who worship at his altar today are guilty of ignoring. In this and later posts I’ll take apart just what Hayek actually seems to have stood for—and whether it bears any resemblance to today’s economism belief system. I’ll begin by reviewing the position that Hayek advocated.
            As one widely worshipped as a high priest, if not the patron saint, of economism, Hayek is somewhat disappointing as a source of descriptions of what the ideal society envisioned by economism would look like. Hayek was quite convinced that democratic people of his day, particularly Americans and English, had two choices—either maintain steadfastly a society run according to market-competition principles, or else sink into totalitarianism. He did not, therefore, have to argue for his version of economism by telling us in detail about the wonderful world it would create; he simply had to warn us of how terrible the alternative, totalitarian world would be.  Indeed, even if the world that resulted from his vision turned out to be not so great, it could hardly be worse than Hitler’s Germany or Stalin’s Russia. And in fact much of The Road to Serfdom is taken up with the grim description of the evils of totalitarianism.
            Of the things that Hayek did include about his own positive vision, he naturally stressed the central role of freedom. Since he thought that totalitarianism and collectivism went hand in hand, he saw individualism as the opposite of collectivism. To him individualism meant above all the freedom of persons to decide how to live their own lives. This freedom led, he thought, to a “sense of power over their own fate, the belief in the unbounded possibilities of improving their own lot…” (70).
            Hayek’s view of European history was that this sense of individual freedom became prominent in the early years of the nineteenth century, and resulted in a rise in living standards that surpassed anything previously known in human history. As Hayek saw it, even though he admitted that the story contained some “dark spots” (70), this rise in living standards was quite evenly distributed throughout society. Economic plenty and individual freedom were flip sides of the same coin: “a free growth of economic activity,” Hayek postulated, was “the undesigned and unforeseen by-product of political freedom” (69). (Many historians, reviewing the effects that the Industrial Revolution had on the laboring classes in its early decades, would say that the “dark spots” were dark indeed and much more widespread than what Hayek lets on, but for now let’s not quibble with his account.)
            Individual freedom has two other important implications from Hayek’s standpoint. Individualism, he insists, does not mean that “man is egoistic or selfish or ought to be.” (102) The point rather is that (going back to his stark choices as to how to run a society) either people are free to choose what they value most in life, or else some central planning authority tries to do it for them. The latter way, for all the reasons Hayek has listed, will spell disaster; so the only sound way to manage society is to allow maximal freedom to choose.
            Second, Hayek saw in private property the most important insurance policy for preserving individual freedom. This is true, he added, both for those who own property and those who don’t. He reasoned that when property, which he equated with the means of production, was held in many hands, then “nobody has complete control over us, [and] we as individuals can decide what to do with ourselves.” (136)
            Hayek thought this individual freedom to choose found its ideal expression in market competition, leading to another key element of his vision. How can a society be managed in a coordinated fashion when all individuals are free to choose what they value the most? We need some means of communicating all relevant information about individuals’ value choices and their resulting behavior. For Hayek, this system of communication must be complete, instantaneous, and infallible. “This,” he concludes, “is precisely what the price system does under competition, and which no other system even promises to accomplish.” (95)
            Here Hayek reveals what sounds today like a naïve faith in the power of neoclassical economic theories. Economists of that stripe are so enthralled with the mathematical precision and elegance of their theoretical models that they simply assume that the world must function in accord with the models, and reject the idea that their models may be at best a very rough approximation of reality. There are a great many ways that a price system in any real-world market can be manipulated by various parties to take advantage of other parties, and will generally fail to record accurately people’s true preferences and values. (Just look at what happens to the price of gasoline in any average year.) But Hayek can say that no other system comes even close to the competitive free market in conveying the needed information, simply because he assumes that the pricing system in the market functions to perfection. Quite naturally, no other system can achieve perfection, so according to Hayek, capitalism has no peer.
            Hayek has already told us that individualism need not mean that “man is egoistic or selfish or ought to be.” Yet in one place, in presenting his ideal vision, Hayek seems to come rather close to saying exactly that. Hayek has to grapple with one implication of his extolling individual freedom so highly. One way that we can all lose some measure of freedom is by becoming involved in any collective enterprise with our fellow citizens. When we agree to become a part of any joint activity, we lose some freedom to do things our own way.
Hayek is therefore forced by his theory to take a very dim view of almost any sort of collective. What does he do, then, when faced with the fact that some worthy social ends require cooperation among large numbers of individuals? Hayek first finds it necessary to admit that there are some such projects that are worthy of support—but he then has to backpedal lest he seem to be endorsing a too great a loss of individual freedom. So he adds important restrictions. First, he says that the only social goals that are worthy of being pursued in this way are those that people in society agree to as self-interested seekers of their own benefit—as Selfish Calculators (see the definition of economism). Second, he suggests that it would require that all people in society agree unanimously, and any one individual, who did not find it to his personal benefit that the project be completed, might veto the whole thing. Only in this way, he suggests, can these worthy social goals be pursued in a manner truly consistent with individual freedom.
These restrictions show just how critical individual freedom is to Hayek’s ideal vision of society. Imagine a football team that could not take the field unless every member of the team fully agreed with every part of the coach’s game plan. Or imagine a construction site where nothing could happen unless every proposal made by the foreman was endorsed by a unanimous vote of all the workers. It doesn’t take much thinking to see that if we demanded the preservation of individual freedom that Hayek asks for, we’d have to give up almost every worthy social goal that could be achieved by human teamwork and cooperation. Either Hayek is quite willing to give up on all those important and worthy goals, or else he believes that getting unanimous consent at every step of the process is much easier than experience proves.
            Hayek’s unwillingness to accept any restrictions on freedom has important implications at a more general social level. Why, we might ask, shouldn’t the United States government sell off the U.S. Capitol to be developed as a shopping mall or as luxury condominiums, or maybe paved over for a parking lot? Why shouldn’t the government sell off the Grand Canyon to be strip-mined? The answer for Hayek seems to be—those actions would only be wrong, insofar as every single individual U.S. citizen decides that maintaining the Capitol and the Grand Canyon as is serves his or her personal benefit. All it would take would be one person saying that his benefit would be increased by selling the property off and thereby having a lower tax burden—and the properties would have to go on the auction block. The possibility that we might have a common social commitment to preserve the grand works of our history or of nature simply is not part of any calculation that Hayek engages in. So in this regard at least, Hayek’s insistence that his vision is not that of an “egoistic or selfish” society seems strained.
            To summarize, let’s list some of the features that emerge from Hayek’s discussion in The Road to Serfdom:
  • Individual human freedom is the highest value.
  • Individual freedom is preserved in a capitalist society and destroyed by a totalitarian state. Any state that deviates only slightly from ideal capitalism is in danger of sinking into totalitarianism.
  • The most important exercise of individual freedom is deciding what to do with our own lives. Only strict protection of private property rights can preserve this freedom.
  • In order to have control over our own lives, we need an infallible information system to find out the actual consequences of any actions we might take. Only the price system under an ideal capitalist market economy functions as this sort of perfect information system.
  • Any collective action has to be viewed with suspicion because it is a threat to individual freedom.

We have now reviewed some of what Friedrich Hayek, as a sort of founding father of economism, had to say about human freedom. In the next post I’ll compare Hayek’s thinking to that of a Mystery Economist—and invite you (and all the Hayek fans out there) to guess who this mystery person is:


F.A. Hayek, The Road to Serfdom: Text and Documents: The Definitive Edition, ed. Bruce Campbell (Chicago: University of Chicago Press, 2007).