Hayek the Great and the invisible hand 5

Today is the 116th anniversary of the birth of F. A. Hayek. (Friedrich August von Hayek.) 

He is one of the greatest defenders of liberty in the history of the enlightened West.

His work as an economist is enormously important.

Milton Friedman said of him:

No person had more of an influence on the intellectuals behind the Iron Curtain than Friedrich Hayek. His books were translated and published by the underground and black market editions, read widely, and undoubtedly influenced the climate of opinion that ultimately brought about the collapse of the Soviet Union.

An article at Townhall by David Boaz lists some of the plaudits and honors he received:

Who was Hayek? He was an economist born and educated in Vienna. After the Nazi conquest of Austria, he became a British citizen and taught there [in Britain] and at the University of Chicago for most of his career.

He was awarded the Nobel Prize in Economics in 1974.

President Ronald Reagan called him one of the two or three people who had most influenced him

President George H. W. Bush awarded him the Medal of Freedom.

Margaret Thatcher banged his great book The Constitution of Liberty on the table at Conservative Party headquarters and declared “This is what we believe.” …

He is the hero of The Commanding Heights, the book and PBS series on the battle of economic ideas in the 20th century.

His most popular book, The Road to Serfdom, has never gone out of print and saw its sales explode during the financial crisis and Wall Street bailouts.

John Cassidy wrote in the New Yorker that “on the biggest issue of all, the vitality of capitalism, he was vindicated to such an extent that it is hardly an exaggeration to refer to the 20th century as the Hayek century”. 

If only! No Western country, even under leaders that held him in the highest esteem, put his theory into practice. Every one of them is a welfare state to some degree. In all of them government is an agency that redistributes wealth. Hayek believed the business of the state is to protect liberty with the rule of law, not to plan the economy, or intervene in the working of the free market. He taught that only the free market can provide the signals that make for the most efficient use of resources. Central planning is socialism – and socialism, Hayek explained, tends towards totalitarianism.

Here is Hayek, champion of free market capitalism, talking about Maynard Keynes, advocate of government intervention in markets and the economist whom Western states have preferred to follow:

In The Wealth of Nations, Adam Smith wrote:

“Every individual necessarily labours to render the annual revenue of the society as great as he can. He generally neither intends to promote the public interest, nor knows how much he is promoting it … He intends only his own gain, and he is in this, as in many other cases, led by an invisible hand to promote an end which was no part of his intention. Nor is it always the worse for society that it was no part of his intention. By pursuing his own interest he frequently promotes that of the society more effectually than when he really intends to promote it. I have never known much good done by those who affected to trade for the public good.”

Hayek (we quote from here) “called the free market system a ‘marvel’ because just one indicator, the market price of a commodity, spontaneously carries so much information that it guides buyers and sellers to make decisions that help both obtain what they want. The market price of a product, a component of the invisible hand, reflects thousands, even millions, of decisions made around the world by people who don’t know each other or what the others are doing”.

Hayek’s most popular and least technical books The Road to Serfdom and The Constitution of Liberty ought to be prescribed reading in every high school and every university in the world.

We doubt they will be. The socialists have won. The decline of the West may be irreversible.

Ayn Rand: recruiting sergeant 5

Of extraordinary interest, we think, is an essay by Anthony Daniels in The New Criterion, titled Ayn Rand: engineer of souls. (We cannot link to it, but it’s easy to find.)

We are admirers of Ayn Rand, but not uncritically. We believe, as she does, that capitalism is the only creator and sustainer of prosperity. We despise religion as she does. Like her we value reason. Her enormous novels Atlas Shrugged and The Fountainhead have probably won more believers in capitalism and devotees of personal liberty than any other book in any language, even surpassing Hayek’s essential text The Road to Serfdom; and for that she deserves lasting honor.

But her vision of humanity has a comic-book hyperbole about it which keeps her out of the rank of great writers. Her heroes are too big, too superior to us and everyone we’ll ever meet, to be likable. They inspire awe but not affection. We can be sure they’d look down on us if they knew us. We cannot emulate them, we can only wonder at them. They are like gods. They are intensely romantic, and romanticism is the enemy of reason.

Anthony Daniels lists her virtues and vices:

Rand’s virtues were as follows: she was highly intelligent; she was brave and uncompromising in defense of her ideas; she had a kind of iron integrity; and, though a fierce defender of capitalism, she was by no means avid for money herself. The propagation of truth as she saw it was far more important to her than her own material ease. Her vices, of course, were the mirror-image of her virtues, but, in my opinion, the mirror was a magnifying one. Her intelligence was narrow rather than broad. Though in theory a defender of freedom of thought and action, she was dogmatic, inflexible, and intolerant, not only in opinion but in behavior, and it led her to personal cruelty. In the name of her ideas, she was prepared to be deeply unpleasant. She hardened her ideas into ideology. Her integrity led to a lack of self-criticism; she frequently wrote twenty thousand words where one would do. …

A passionate hater of religion, Rand founded a cult around her own person, complete with rituals of excommunication; a passionate believer in rationality and logic, she was incapable of seeing the contradictions in her own work. She was a rationalist who was not entirely rational …

He goes on to paragraphs of stronger condemnation. He finds “horrible” cruelty in her. He perceives that though she was fanatically anti-collectivist, and though she had fled from Soviet Russia to the freedom of America, Stalin’s Russia remained within her.

Her unequivocal admiration bordering on worship of industrialization and the size of human construction as a mark of progress is profoundly Stalinist. Where Stalinist iconography would plant a giant chimney belching black smoke, Randian iconography would plant a skyscraper. (At the end of The Fountainhead, Roark receives a commission to build the tallest skyscraper in New York, its height being the guarantor of its moral grandeur. According to this scale of values, the Burj Dubai would be man’s crowning achievement so far.) Industrialists are to Rand what Stakhanovites were to Stalin: Both saw nature as an enemy, something to be beaten into submission. One doesn’t have to be an adherent of the Gaia hypothesis to know where this hatred of nature led.

Finally, Rand’s treasured theory of literature, what she called Romantic Realism, is virtually indistinguishable from Socialist Realism …

Rand’s heroes are not American but Soviet. The fact that they supposedly embody capitalist values makes no difference. Rand fulfilled Stalin’s criterion for the ideal writer: she tried to be an engineer of souls.

The analysis is not unjust.

But the recruiting sergeant to the Army of Light does not have to be the best exponent of the cause for which it fights.

While acknowledging and regretting all her faults, we keep, for her success as a dedicated recruiting sergeant, an abstract monument to Ayn Rand in our personal Hall of the Defenders of Individual Freedom.

Jillian Becker   June 19, 2010

Suicide, not murder 1

In a must-read article, Mark Steyn writes in the National Review about the possibility of American decline, pointing out that it is a matter of choice, and that the Democrats now in power are offering that choice. Here are some paragraphs:

Permanence is an illusion – and you would be surprised at how fast mighty nations can be entirely transformed. But, more importantly, national decline is psychological – and therefore what matters is accepting the psychology of decline. Within two generations, for example, the German people became just as obnoxiously pacifist as they once were obnoxiously militarist, and as avowedly “European” as they once were menacingly nationalist. Well, who can blame ‘em? You’d hardly be receptive to pitches for national greatness after half-a-century of Kaiser Bill, Weimar, the Third Reich, and the Holocaust.

But what are we to make of the British? They were on the right side of all the great conflicts of the last century; and they have been, in the scales of history, a force for good in the world. Even as their colonies advanced to independence, they retained the English language, and English legal system, not to mention cricket and all kinds of other cultural ties. Even in imperial retreat, there is no rational basis for late 20th century Britain’s conclusion that it had no future other than as an outlying province of a centralized Euro nanny state dominated by nations whose political, legal and cultural traditions are entirely alien to its own. The embrace of such an alien fate is a psychological condition, not an economic one.

Is America set for decline? It’s been a grand run. The country’s been the leading economic power since it overtook Britain in the 1880s. That’s impressive. Nevertheless, over the course of that century and a quarter, Detroit went from the world’s industrial powerhouse to an urban wasteland, and the once golden state of California atrophied into a land of government run by the government for the government. What happens when the policies that brought ruin to Detroit and sclerosis to California became the basis for the nation at large? Strictly on the numbers, the United States is in the express lane to Declinistan: Unsustainable entitlements, the remorseless governmentalization of the American economy and individual liberty, and a centralization of power that will cripple a nation of this size. Decline is the way to bet. But what will ensure it is if the American people accept decline as a price worth paying for European social democracy.

Is that so hard to imagine? Every time I retail the latest indignity imposed upon the “citizen” by some or other Continental apparatchik, I receive e-mails from the heartland pointing out, with much reference to the Second Amendment, that it couldn’t happen here because Americans aren’t Euro-weenies. But nor were Euro-weenies once upon a time. Hayek’s greatest insight in The Road To Serfdom is psychological: “There is one aspect of the change in moral values brought about by the advance of collectivism which at the present time provides special food for thought,” he wrote with an immigrant’s eye on the Britain of 1944. “It is that the virtues which are held less and less in esteem and which consequently become rarer are precisely those on which the British people justly prided themselves and in which they were generally agreed to excel.

The virtues possessed by Anglo-Saxons in a higher degree than most other people, excepting only a few of the smaller nations, like the Swiss and the Dutch, were independence and self-reliance, individual initiative and local responsibility, the successful reliance on voluntary activity, non-interference with one’s neighbor and tolerance of the different and queer, respect for custom and tradition, and a healthy suspicion of power and authority.” Two-thirds of a century on, almost every item on the list has been abandoned, from “independence and self-reliance” (40 per cent of people receive state handouts) to “a healthy suspicion of power and authority” – the reflex response now to almost any passing inconvenience is to demand the government “do something”, the cost to individual liberty be damned. American exceptionalism would have to be awfully exceptional to suffer a similar expansion of government and not witness, in enough of the populace, the same descent into dependency and fatalism. As Europe demonstrates, a determined state can change the character of a people in the space of a generation or two. Look at what the Great Society did to the black family and imagine it applied to the general population: That’s what happened in Britain…

One sympathizes with Americans weary of global responsibilities that they, unlike the European empires, never sought. The United States now spends more on its military than the next 40 or so nations combined. In research and development, it spends more than the rest of the planet put together. Yet in two rinky-dink no-account semi-colonial policing campaigns, it doesn’t feel like that, does it? A lot of bucks, but not much of a bang. You can understand why the entire left and an increasing chunk of the right would rather vote for a quiet life. But that’s not an option. The first victims of American retreat will be the many corners of the world that have benefitted from an unusually benign hegemon. But the consequences of retreat will come home, too. In a more dangerous world, American decline will be steeper, faster and more devastating than Britain’s – and something far closer to Rome’s.

In the modern era, the two halves of “the west” form a mirror image. “The Old World” has thousand-year old churches and medieval street plans and ancient hedgerows, but has been distressingly susceptible to every insane political fad from Communism to Fascism to European Union. “The New World” has a superficial novelty – you can have your macchiato tweeted directly to your iPod – but underneath the surface noise it has remained truer to older political ideas than “the Old World” ever has. Economic dynamism and political continuity seem far more central to America’s sense of itself than they are to most nations. Which is why it’s easier to contemplate Spain or Germany as a backwater than America. In a fundamental sense, an America in eclipse would no longer be America.

But, as Charles Krauthammer said recently, “decline is a choice.” The Democrats are offering it to the American people, and a certain proportion of them seem minded to accept. Enough to make decline inevitable? … In the words of [the seldom so insightful historian] Arnold Toynbee: “Civilizations die from suicide, not from murder.”

The leveler 0

 Obama is a leveler, Charles Krauthammer writes, and so – 

The credit crisis will pass and the auto overcapacity will sort itself out one way or the other. The reordering of the American system will come not from these temporary interventions, into which Obama has reluctantly waded. It will come from Obama’s real agenda: his holy trinity of health care, education and energy. Out of these will come a radical extension of the welfare state, social and economic leveling in the name of fairness, and a massive increase in the size, scope and reach of government.

If Obama has his way, the change that is coming is a new America: "fair," leveled and social democratic. 

Posted under Commentary by Jillian Becker on Friday, April 3, 2009

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