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

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