On the Genius of Friedrich Hayek


By: Ron Lipsman

The United States was founded upon certain fundamental ideas and principles – political, cultural, social and economic. As the American people’s faith in and adherence to those principles have eroded over the decades, those of us who cling to them attribute much of the decline to the miserable education that our youth receive. Our schools – from kindergarten to graduate school – have done, in the last two generations, a deplorable job of inculcating in our children the ideas that animated our Founders. The names, much less the thoughts, of those responsible for the principles upon which America was established are virtually unknown to the youth of America. Alas, they are often equally unknown to their parents. How many among us recognize the name or words of Adam Smith, Edmund Burke or William Gladstone? Our children might know that Thomas Jefferson wrote the Declaration of Independence, but how many recognize James Madison as the “Father of the Constitution?” Furthermore, the lack of knowledge of the content of these seminal documents is shocking.

Going forward, the populace’s ignorance of the great philosophers who followed the Founders in the 19th century – de Tocqueville, Lord Acton and John Stuart Mill – is equally dismaying. The deficit grows even stronger in the twentieth century as Ludwig von Mises, Russell Kirk and (to a lesser extent) Milton Friedman are completely off the radar screen of mainstream educators. But the most egregious instance for me is the disregard paid to one of the great minds of the 20th century – Friedrich Hayek, a Nobel Prize winning economist. Hayek’s writings in the middle part of the 20th century should be required reading for every high school and college student in America.

Americans show an appallingly poor grasp of the political ideas of Madison (individual liberty, limited government, separation of powers, republican government). Lacking same, it is not surprising that they fail to understand the proper role of the Federal Government, State Sovereignty or what the Rule of Law really means. Equally bad is their lack of exposure to or appreciation for the basic economic ideas of Adam Smith. How else to explain the most entrepreneurial country in history in which politicians and the people routinely blame their economic woes (real and imagined) on “business interests and corporate greed?” Both deficiencies could be remedied if Hayek were on the syllabus. But alas he is not – in fact, I sometimes wonder whether those who draw up the syllabus have ever heard of him.

My purpose here is to provide a modest sampling of the brilliance of Hayek’s thought. He wrote approximately a dozen and a half books – the most well-known being The Road to Serfdom (1944) and The Constitution of Liberty (1960). The quotes below are all from The Road to Serfdom (Fiftieth Anniversary Edition, U. of Chicago Press, 1994). My hope for this brief compendium is that readers will be so struck by the clarity, relevance and insight of Hayek’s words that they will be tempted to share them with others – especially non-readers of this journal, who are sorely in need of some enlightenment.

Chapter 4: The “Inevitability” of Planning, p. 49: It is a revealing fact that few planners are content to say that central planning is desirable. Most of them affirm that we can no longer choose but are compelled by circumstances beyond our control to substitute planning for competition. The myth is deliberately cultivated that we are embarking on the new course not out of free will but because competition is spontaneously eliminated by technological changes which we neither can reverse nor should wish to prevent. This argument is rarely developed at any length – it is one of the assertions taken over by one writer from another until, by mere iteration, it has come to be accepted as an established fact. It is, nevertheless, devoid of foundation. The tendency toward monopoly and planning is not the result of any “objective facts” beyond our control but the product of opinions fostered and propagated for half a century until they have come to dominate all our policy.

Chapter 5, Planning and Democracy, pp. 69-70: The inability of democratic assemblies to carry out what seems to be a clear mandate of the people will inevitably cause dissatisfaction with democratic institutions. Parliaments come to be regarded as ineffective “talking shops,” unable or incompetent to carry out the tasks for which they have been chosen. The conviction grows that if efficient planning is to be done, the direction must be “taken out of politics” and placed in the hands of experts – permanent officials or independent autonomous bodies.

Chapter 6, Planning and the Rule of Law, pp. 91-93: If the law says that such a board or authority may do what it pleases, anything that board or authority does is legal – but its actions are certainly not subject to the Rule of Law. By giving the government unlimited powers, the most arbitrary rule can be made legal; and in this way a democracy may set up the most complete despotism imaginable…The conflict is thus not, as it has often been misconceived in nineteenth-century discussions, one between liberty and law. As John Locke had already made clear, there can be no liberty without law. The conflict is between different kinds of law – law so different that it should hardly be called by the same name: one is the law of the Rule of Law, generally principles laid down beforehand, the “rules of the game” which enable individuals to foresee how the coercive apparatus of the state will be used, or what he and his fellow-citizens will be allowed to do, or made to do, in stated circumstances. The other kind of law gives in effect the authority power to do what it thinks fit to do.

Thus the Rule of Law could clearly not be preserved in a democracy that undertook to decide every conflict of interests not according to rules previously laid down but “on its merits”…The Rule of Law thus implies limits to the scope of legislation: it restricts it to the kind of general rules known as formal law and excludes legislation either directly aimed at particular people or at enabling anybody to use the coercive power of the state for the purpose of such discrimination. It means, not that everything is regulated by the law, but, on the contrary, that the coercive power of the state can be used only in cases defined in advance by the law and in such a way that it can be foreseen how it will be used. A particular enactment can thus infringe the Rule of Law. Anyone ready to deny this would have to contend that whether the Rule of Law prevails today in Germany, Italy, or Russia depends on whether the dictators have obtained their absolute powers by constitutional means.

Chapter 9, Security and Freedom, pp. 144-147: The general endeavor to achieve security by restrictive measures, tolerated or supported by the state, has in the course of time produced a progressive transformation of society…This development has been hastened by another effect of socialist teaching, the deliberate disparagement of all activities involving economic risk and the moral opprobrium cast on the gains which make risks worth taking but which only few can win.

We cannot blame our young men when they prefer the safe, salaried position to the risk of enterprise after they have heard from their earliest youth the former described as the superior, more unselfish and disinterested occupation. The younger generation of today has grown up in a world in which in school and press the spirit of commercial enterprise has been represented as disreputable and the making of profit as immoral, where to employ a hundred people is represented as exploitation but to command the same number as honorable…Where distinction and rank are achieved almost exclusively by becoming a salaried servant of the state, where to do one’s assigned duty is regarded as more laudable than to choose one’s own field of usefulness, where all pursuits that do not give a recognized place in the official hierarchy or a claim to a fixed income as inferior and even somewhat disreputable, it is too much to  expect that many will long prefer freedom to security. And where the alternative to security in a dependent position is a most precarious position, in which one is despised alike for success and failure, only few will resist the temptation of safety at the price of freedom. Once things have gone so far, liberty indeed becomes almost a mockery, since it can be purchased only by the sacrifice of most of the good things of earth. In this state it is little surprising that more and more people should come to feel that without economic security liberty is “not worth having” and that they are willing to sacrifice their liberty for security.

There can be no question that adequate security against severe privation, and the reduction of the avoidable causes of misdirected effort and consequent disappointment, will have to be one of the main goals of policy. But if these endeavors are to be successful and are not to destroy individual freedom, security must be provided outside the market and competition left to function unobstructed. Some security is essential if freedom is to be preserved, because most men are willing to bear the risk which freedom inevitably involves only so long as that risk is not too great. But while this is a truth of which we can never lose sight, nothing is more fatal than the present fashion among intellectual leaders of extolling security at the expense of freedom.

It is essential that we should re-learn frankly to face the fact that freedom can only be had at a price and that as individuals we must be prepared to make severe material sacrifices to preserve our liberty. If we want to retain this, we must regain the conviction on which the rule of liberty in the Anglo-Saxon countries has been based and which Benjamin Franklin expressed in a phrase, applicable to our lives as individuals no less than as nations: “Those who would give up essential liberty to purchase a little temporary safety deserve neither liberty nor safety.”

Chapter 11, The End of Truth, pp. 178-179: Once science has to serve, not truth, but the interests of a class, a community, or a state, the sole task of argument and discussion is to vindicate and to spread still further the beliefs by which the whole life of the community is directed…The word “truth” itself ceases to have its old meaning. It describes no longer something to be found with the individual conscience as the sole arbiter of whether in any particular instance the evidence…warrants a belief; it becomes something to be laid down by authority, something which has to be believed in the interest of the unity of the organized effort and which may have to be altered as the exigencies of this organized effort require it.

The general intellectual climate which this produces, the spirit of complete cynicism as regards truth which it engenders, the loss of the sense of even the meaning of truth, the disappearance of the spirit of independent inquiry and in the belief in the power of rational conviction, the way in which differences of opinion in every branch of knowledge become political issues to be decided by authority, are all things which one must personally experience…Perhaps the  most alarming fact is that contempt for intellectual liberty is not a thing which arises only once the totalitarian system is established but now which can be found everywhere among intellectuals who have embraced a collectivist faith…Not only is even the worst oppression condoned if it is committed in the name of socialism, and the creation of a totalitarian system openly advocated by people who pretend to speak for the scientists of liberal countries; intolerance, too, is openly extolled.

Chapter14, Material Conditions and Ideal Ends, pp. 223-224 & 234-235: It was men’s submission to the impersonal forces of the market that in the past has made possible the growth of a civilization which without this could not have developed; it is thus by submitting that we are every day helping to build something that is greater than any one of us can fully comprehend…unless this complex society is to be destroyed, the only alternative to the submission to the impersonal and seemingly irrational forces of the market is submission to an equally uncontrollable and therefore arbitrary power of other men. In his anxiety to escape the irksome restraints which he now feels, man does not realize that the new authoritarian restraints which will have to be deliberately imposed in their stead will be even more painful.

What are the fixed [moral] poles now which are regarded as sacrosanct, which no reformer dare touch, since they are treated as the immutable boundaries which must be respected in any plan for the future? They are no longer the liberty of the individual, his freedom of movement, and scarcely that of speech. They are the protected standards of this or that group, their “right” to exclude others from providing their fellowmen with what they need. Discrimination between members and nonmembers of closed groups, not to speak of nationals of different countries, is accepted more and more as matters of course; injustices inflicted on individuals by government action in the interest of a group are disregarded with an indifference hardly distinguishable from callousness; and the grossest violations of the most elementary rights of the individual…are more and more often countenanced even by supposed liberals. All this surely indicates that our moral sense has been blunted rather than sharpened. When we are reminded, as more and more frequently happens, that one cannot make omelettes without breaking eggs, the eggs which are broken are almost all of the kind which a generation or two ago were regarded as the essential bases of civilized life. And what atrocities committed by powers with whose professed principles they sympathize have not readily been condoned by many of our so-called liberals”?

Hayek’s thinking would be most accurately labeled in today’s lexicon as libertarian rather than conservative. That doesn’t change the fact that the fundamental truths which he espouses should serve as a guide to conservative politicians and economists, indeed to all people in the nation whose desire for the country is success and prosperity. But because of the purity of Hayek’s libertarian thought, acceptance of his ideas requires more than just sound reasoning and an open mind. It requires faith. Not religious faith, but more a faith in the reliability of historical observation, acquired wisdom and the unformulated but immutable laws of human nature. Hayek explains why free markets work better and are more just than collectivist planning. He describes how social values and cultural morals that are developed by communal trial and error are more reliable and humane than behavior dictated by political elites. He argues that social advancement and individual accomplishment are better served by uninhibited competition than by edicts and artificial rules imposed by anointed experts. In order for one to accept the legitimacy of Hayek’s reasoning one must be willing to trust the efficacy of “unseen forces,” invisible hands, seemingly irrational and/or random processes and unprovable theories over and above the desire for order decreed and enforced by leaders and experts. To do so arguably goes against human nature. It requires a difficult leap of faith. And if teachers do not accept the paradigm in the first place, their students learn its negative – despite the vast history that shows how accurate Hayek’s formulations for societal and economic organization have proven to be.

Periodically, we experience a breakthrough. The popularity of Allan Bloom’s book, The Closing of the American Mind is a prime example. Others that occur to me are: the willingness of the American people to entertain Ronald Reagan’s ideas; the positive response to conservative thought for a brief moment in 1994; even the fact that John Stossel survived for a while in the belly of the beast (at ABC); or the recent eruption of the popular Tea Party movement. But for the most part, the people of the United States have been blind to the wisdom of Hayek. The ascent of the Obama-Pelosi-Reid gang is a testament to that blindness. The popularization of Hayek’s work would be a tremendous step forward in combating said blindness.

We cannot blame our young men when they prefer the safe, salaried position to the risk of enterprise after they have heard from their earliest youth the former described as the superior, more unselfish and disinterested occupation. The younger generation of today has grown up in a world in which in school and press the spirit of commercial enterprise has been represented as disreputable and the making of profit as immoral, where to employ a hundred people is represented as exploitation but to command the same number as honorable…Where distinction and rank are achieved almost exclusively by becoming a salaried servant of the state, where to do one’s assigned duty is regarded as more laudable than to choose one’s own field of usefulness, where all pursuits that do not give a recognized place in the official hierarchy or a claim to a fixed income as inferior and even somewhat disreputable, it is too much to expect that many will long prefer freedom to security. And where the alternative to security in a dependent position is a most precarious position, in which one is despised alike for success and failure, only few will resist the temptation of safety at the price of freedom. Once things have gone so far, liberty indeed becomes almost a mockery, since it can be purchased only by the sacrifice of most of the good things of earth. In this state it is little surprising that more and more people should come to feel that without economic security liberty is “not worth having” and that they are willing to sacrifice their liberty for security.

There can be no question that adequate security against severe privation, and the reduction of the avoidable causes of misdirected effort and consequent disappointment, will have to be one of the main goals of policy. But if these endeavors are to be successful and are not to destroy individual freedom, security must be provided outside the market and competition left to function unobstructed. Some security is essential if freedom is to be preserved, because most men are willing to bear the risk which freedom inevitably involves only so long as that risk is not too great. But while this is a truth of which we can never lose sight, nothing is more fatal than the present fashion among intellectual leaders of extolling security at the expense of freedom.
It is essential that we should re-learn frankly to face the fact that freedom can only be had at a price and that as individuals we must be prepared to make severe material sacrifices to preserve our liberty. If we want to retain this, we must regain the conviction on which the rule of liberty in the Anglo-Saxon countries has been based and which Benjamin Franklin expressed in a phrase, applicable to our lives as individuals no less than as nations: “Those who would give up essential liberty to purchase a little temporary safety deserve neither liberty nor safety.”

Chapter 11, The End of Truth, pp. 178-179: Once science has to serve, not truth, but the interests of a class, a community, or a state, the sole task of argument and discussion is to vindicate and to spread still further the beliefs by which the whole life of the community is directed…The word “truth” itself ceases to have its old meaning. It describes no longer something to be found with the individual conscience as the sole arbiter of whether in any particular instance the evidence…warrants a belief; it becomes something to be laid down by authority, something which has to be believed in the interest of the unity of the organized effort and which may have to be altered as the exigencies of this organized effort require it.

The general intellectual climate which this produces, the spirit of complete cynicism as regards truth which it engenders, the loss of the sense of even the meaning of truth, the disappearance of the spirit of independent inquiry and in the belief in the power of rational conviction, the way in which differences of opinion in every branch of knowledge become political issues to be decided by authority, are all things which one must personally experience…Perhaps the most alarming fact is that contempt for intellectual liberty is not a thing which arises only once the totalitarian system is established but now which can be found everywhere among intellectuals who have embraced a collectivist faith…Not only is even the worst oppression condoned if it is committed in the name of socialism, and the creation of a totalitarian system openly advocated by people who pretend to speak for the scientists of liberal countries; intolerance, too, is openly extolled.

Chapter14, Material Conditions and Ideal Ends, pp. 223-224 & 234-235: It was men’s submission to the impersonal forces of the market that in the past has made possible the growth of a civilization which without this could not have developed; it is thus by submitting that we are every day helping to build something that is greater than any one of us can fully comprehend…unless this complex society is to be destroyed, the only alternative to the submission to the impersonal and seemingly irrational forces of the market is submission to an equally uncontrollable and therefore arbitrary power of other men. In his anxiety to escape the irksome restraints which he now feels, man does not realize that the new authoritarian restraints which will have to be deliberately imposed in their stead will be even more painful.
What are the fixed [moral] poles now which are regarded as sacrosanct, which no reformer dare touch, since they are treated as the immutable boundaries which must be respected in any plan for the future? They are no longer the liberty of the individual, his freedom of movement, and scarcely that of speech. They are the protected standards of this or that group, their “right” to exclude others from providing their fellowmen with what they need. Discrimination between members and nonmembers of closed groups, not to speak of nationals of different countries, is accepted more and more as matters of course; injustices inflicted on individuals by government action in the interest of a group are disregarded with an indifference hardly distinguishable from callousness; and the grossest violations of the most elementary rights of the individual…are more and more often countenanced even by supposed liberals. All this surely indicates that our moral sense has been blunted rather than sharpened. When we are reminded, as more and more frequently happens, that one cannot make omelettes without breaking eggs, the eggs which are broken are almost all of the kind which a generation or two ago were regarded as the essential bases of civilized life. And what atrocities committed by powers with whose professed principles they sympathize have not readily been condoned by many of our so-called liberals”?

Hayek’s thinking would be most accurately labeled in today’s lexicon as libertarian rather than conservative. That doesn’t change the fact that the fundamental truths which he espouses should serve as a guide to conservative politicians and economists, indeed to all people in the nation whose desire for the country is success and prosperity. But because of the purity of Hayek’s libertarian thought, acceptance of his ideas requires more than just sound reasoning and an open mind. It requires faith. Not religious faith, but more a faith in the reliability of historical observation, acquired wisdom and the unformulated but immutable laws of human nature. Hayek explains why free markets work better and are more just than collectivist planning. He describes how social values and cultural morals that are developed by communal trial and error are more reliable and humane than behavior dictated by political elites. He argues that social advancement and individual accomplishment are better served by uninhibited competition than by edicts and artificial rules imposed by anointed experts. In order for one to accept the legitimacy of Hayek’s reasoning one must be willing to trust the efficacy of “unseen forces,” invisible hands, seemingly irrational and/or random processes and unprovable theories over and above the desire for order decreed and enforced by leaders and experts. To do so arguably goes against human nature. It requires a difficult leap of faith. And if teachers do not accept the paradigm in the first place, their students learn its negative – despite the vast history that shows how accurate Hayek’s formulations for societal and economic organization have proven to be.

Periodically, we experience a breakthrough. The popularity of Allan Bloom’s book, The Closing of the American Mind is a prime example. Others that occur to me are: the willingness of the American people to entertain Ronald Reagan’s ideas; the positive response to conservative thought for a brief moment in 1994; even the fact that John Stossel survived for a while in the belly of the beast (at ABC); or the recent eruption of the popular Tea Party movement. But for the most part, the people of the United States have been blind to the wisdom of Hayek. The ascent of the Obama-Pelosi-Reid gang is a testament to that blindness. The popularization of Hayek’s work would be a tremendous step forward in combating said blindness.

About The Author Ron Lipsman:
Ron Lipsman, Professor Emeritus of Mathematics, Former Senior Associate Dean College of Computer, Math & Physical Sciences University of Maryland
Website:http://home.comcast.net/~ronlipsman

1 Comment

  1. Pingback by Twitter Trackbacks for On the Genius of Friedrich Hayek [thelandofthefree.net] on Topsy.com

    [...] On the Genius of Friedrich Hayek thelandofthefree.net/conservativeopinion/2010/10/13/on-the-genius-of-friedrich-hayek/

RSS feed for comments on this post. TrackBack URI

Sorry, the comment form is closed at this time.