Hayek’s political philosophy

Here my second (and final) blog on Nicholas Wapshott’s short book Keynes Hayek: The Clash that Defined Modern Economics (Norton, 2011). Despite the title, it is more a book of history, biography and politics than it is of economics.

The last chapter, for me, was the most rewarding. Here are extracts, from pp. 290-291, that concisely describe the political philosophy of Austrian economist Friedrich Hayek (1899-1992).

Hayek remains a little-known figure, paradoxically both a hero to those who define themselves as marginalized and big business’s favorite economist.

Hayek was undeterred by his failure to win over those in positions of influence. He appeared to feel that to be cast out from mainstream academia confirmed the truth of his message. It was a startling display of self-confidence that over time brought on loneliness, insularity, and depression. Hayek steamed on, extending The Road to Serfdom to its ultimate conclusion: that only by turning over the whole of society to market forces can individuals become truly free. In [… books published in 1960, 1973-79,] and his final work, The Final Conceit: The Errors of Socialism in 1988, he proposed a utopia every bit as idealistic and unrealizable as all of the preceding ideal societies envisioned by thinkers ranging from Thomas More to Karl Marx.

He displayed such a strong sense of mission that it left many Hayekians with the feeling they had inadvertently joined a spiritual sect. This was intentional. Hayek declared in 1949, “…. The main lesson which the true liberal must learn from the success of the socialist is that it was their courage to be Utopian which gained them the support of the intellectuals and thereby an influence on public opinion.”

Hayek’s utopianism often spilled over into religiosity. …. In Hayek’s vision, government would be left to manage only those elements of society that could be run by no one else, such as defense. Among the services Hayek believed should be privatized were “all those from education to transport and communications, including post, telegraph, telephone and broadcasting services, all the so-called ‘public utilities,’ the various ‘social’ services and, above all, the issue of money.” Tellingly, and perhaps surprisingly for those who subscribe to Hayek’s general aims today, he advocated mandatory universal health care and unemployment insurance, enforced, if not directly provided, by the state, and he believed there should be free movement of labor across national borders. [Emphasis added.]

Hayek, never a conservative, had become a libertarian, but he did not propose a state of anarchy. In place of government he suggested that private companies carry out communal duties. There was “no need for central government to decide who should be entitled to render different services ….” Instead he envisioned “quasi-commercial corporations competing for citizens.” Those who did not like what the company offered should move elsewhere.

He concluded that representative democracy too often provided a “tyranny of the majority” that reduced individual freedoms and imposed unnecessary costs.

Nicholas Wapshott, Keynes Hayek: The Clash that Defined Modern Economics (Norton, 2011), pp. 290-291.


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