Von Hayek and What We Mean When We Say ‘the Austrian School’

Von Hayek is a conservative political theorist and a liberal economist, who lived a long life and was active in the from the 20’s until the time of his death in the mid 90’s (I think). As such, his ideas and writings were inspirational for the leo-liberal turn in the late 80’s under Reagan and Thatcher.

Hayek is of the same generation of Keynes, whom we primarily associate with the economics of the New Deal of FDR. For most of Hayek’s life, he has been living in, and fighting against Keynes’s school of economics and its larger vision of society, which we today would associate with the welfare state.

To understand Hayek and his conservative view point, we have to understand that he is deeply part and parcel with traditional German academics of the traditional, Weberian cast. This is the tradition that seemed to have a brooding preoccupation with things like “What does history mean?” and carried a overriding fear of the decline of “Western civilization.” Spengler’s The Decline of the West is a good example of this kind of thinking.

Hayek thus has a meta-narrative  about what it means to be ‘European’, which he calls the “Great Society”. The Great Society is the typical myth of western civilization: progress, and a sort of martial male aggressiveness, that we might safely call imperialism. The result is a reinvigoration of classical liberalism, and an overriding paranoia of socialism of any kind, which he thinks leads inevitably to a sort of asiatic totalitarian state. Ultimately, Hayek is a man engaged in an economic debate with Marx and with Keynes, and even late in life, he was still fighting this battle.

Hayek lived and thought, in my opinion, in the nineteenth-century, not the twentieth. A sharp distinction dominates his thought liberalism or socialism; there could be no middle ground; the slightest socialism led eventually to slavery. He ignores the obvious question: “Aren’t all existing economic systems based on a mix of liberal and social attributes?” and “What about the success of the western european welfare states?”

This, like all conservative thought when someone attempts to actually rationalize it all out, leads to bombastic, comic-book villain pronouncements like “altruism, compassion, and empathy are  the ruin of society, selfishness is the only virtue”, etc. Conservative thought either has to make compassion a sin, and comically worship selfishness, or ignore the problem completely (This is just the way it is), or postulate the Martin Luther conception of man and mankind, namely, that because of the soul, men’s bodies can be dominated, because the soul will still be good (this separation of body and soul is totally untenable. Oppose it when ever you encounter it. The soul, whether we interpret it religiously or metaphorically, is completely intertwined and insuperable from the body. There is no such thing as “spiritual” freedom during physical unfreedom).

Hayek thinks that these emotions (altruism, empathy) are a remnant of when humanity lived essentially in tribes, when everyone could work towards a common aim. This is no longer the case. Through generations of hardship, the Great Society has been erected, based on abstract contract and financial gain. Hayek gives no indication why this might be better, aside from pointing out that the Great Society can maintain a higher level of human population. Hayek admits that the Great Society, as it is based on selfishness and abstract relationships is profoundly alienating, yet offers no reason why it must be this way.

What I find most damming about Hayek is that he is oblivious to the realities of advanced capitalism, the capitalism of Wall Street and the massive multi-state corporations (Wal-mart had the GDP of the Netherlands for example). Nor is he aware of the fundamental similarity between the big corporate business and the state. The two terms completely fool him; he is unable to see the parallel in the reasoning behind each institution. Terrified of state intervention, he is unable to see that slavery doesn’t have to be political. Slavery because of greed doesn’t appear as a threat to him, only slavery due to empathy. Massive, impersonal institutions are based ultimately in the realm of instrumental reason, logic, and the imperative of profit, or power.

Hayek quotes Adam Smith frequently. We all like Adam Smith; how could you disagree? But the fundamental problem is the disconnect between modern society, and the neoliberals who want to blame the government for the angst generated by the uprooting and displacement and poverty generated by the “monopolistic” or “predatory” capitalism.

Hayek, like most modern day conservatives, mistake a response and attempted solution for the root problem, which because of his meta-narrative of the Great Society, he is unable to question or understand.

The basic fear that a change in society would lead to its collapse – highly doubtful as human beings love routine and crave a certain amount of normalcy and seeing as society worked just fine before capitalism, the military, and the government, etc and all the joys they have brought us (these things are part and parcel, remember) – forces conservatives to attack socialism for attempting to moderate the problems of a modern technological and urban society. The fear of the ‘tribalism’ of empathy speaks to an odd insecurity; a fear of questioning the larger meaning and ultimate destination of the way we live.

When Hayek says that capitalism is the “most successful system because the decision making process is decentralized”, I find myself in complete agreement. What I don’t understand is his failure, and the failure of all conservatives to understand that big corporate business, and the financial sector seek to monopolize and dominate in order to maintain their profits. Big businesses “centralize” and can only lead to complete centralization, unless stopped by, the law, which means, well, government.

I am all for “decentralization” of decision making, and I completely agree that society must rest on self-interest (but not selfishness, and I understand that’s a tricky one, but it is very important none-the-less), and I think there will always exist a certain level of hierarchy, and I don’t think we should go back to living in tipees, or the like, but it is time to recognize that what Hayek feared, the tribal instincts of “empathy”, should be encouraged. We need to decentralize not just government, but business, and even the way we conceive ourselves politically and socially.





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