Conservatism: controversies around economics etc

Hayek represents (in my view) the most influential modern version of the ‘liberal conservative’ view that economics is prior to politics; this is a view that is based on individualism, and ‘negative liberty’. Consequently liberal conservatives are in favour of personal rights, the market (as the best means of expressing individual preferences), and the minimal state (to protect individual rights, but not to do more than this). These ideas are then usually extended to include an attack on public sector ownership and welfare state politics, as infringements on individuals’ rights to make their own life-choices.

The government during Mrs Thatcher’s period of office (see Thatcherism), was influenced by Hayek (and Milton Friedman, 1912 – 2006, whose ‘monetarist’ ideas are broadly compatible with Hayek’s view of the market), and Sir Keith Joseph in particular was a convert.

Hayek’s ideas can be seen in predecessors such as Herbert Spencer (it is suggested that Mrs Thatcher got her phrase ‘there is no alternative [TINA] from Herbert Spencer see http://en.wikipedia.org/wiki/Herbert_Spencer, and his influence can be found in institutions such as the Mont Pelerin Society, IEA, Aims of Industry, The Freedom Association, The Adam Smith Institute, and the Centre for Policy Studies.

Vincent (1992) puts Hayek under liberalism (see Liberalism: Adam Smith, John Rawls, Liberalism Today), but he acknowledges that Hayek has also been classified as a conservative. However, Hayek himself wrote a piece called ‘Why I am not a Conservative’…

My own view is that he is exceptional among economists in his influence on politics (only Keynes comes near him in this respect), and he is distinctive in basing his economic theory on a set of premises about freedom, the law, and the nature of human action and society. Moreover, if one accepts his premises – and at first sight they are very convincing! – then, given the rigorous argument he puts together, it is hard not to accept his conclusions.

Finally, given Hayek’s emphasis on individual rights and freedom, his theory poses a challenge to libertarians and anarchists who would not accept his right-wing conclusions (opposition to welfare provision, implicit defence of inequality and the inevitability of elites).

Main works (of importance in political philosophy):

The Road to Serfdom, 1945

The Constitution of Liberty, 1960

1. Origins of society.

(Source mainly Butler 1983)

Hayek argues (powerfully, or so it seems at first reading) that human and social institutions (language, laws) have grown up unplanned, and as the result of many individual actions – which nevertheless have promoted the common good. For example, a footpath in the countryside is unlikely to have been planned: one person might find a short cut, trampling the ground as they go, and then others use the same route, until maybe the ground is so trampled that grass no longer grows there.

In the end, many people benefit from there being a path – though this was not the intention of the first to use that route.

Note that Hayek does not use the traditional distinction between ‘natural’ and ‘artificial’ as applied to human affairs: the results of human action have grown from individual (self-interested) actions, spontaneously and without it being always possible to predict the outcomes. The only thing, he might argue, that is ‘natural’ to humans is their ability to choose freely – and the outcomes of different choices will be different! Perhaps in this he approaches existentialism: it is the freedom of individuals that matters to him, and provided we all have this freedom, the outcomes will be for the common good. He does not rely on some essential human quality of kindness, sociability etc. In this, Hayek is also not a typical conservative; not only does he not believe there is some ‘natural’ human quality (even of selfishness!), but also he would not have respect for tradition, nor resist change. Other conservative views on human nature regard it as weak, and as tending to selfishness or corruption; from this point of view it is wrong to see individuals as primarily rational maximisers of their own utility (as Hayek does).

[Comment: his outlook here seems to me to be strangely optimistic: the outcome of free, spontaneous action by a number of individuals will be for the common good. Wouldn’t this argument be strengthened by positing, for example, a need to co-operate – and the desirability of co-operation (as do both Rousseau and Kropotkin)?]

To make sure that society runs on the best lines, what is needed is an ‘impersonal mechanism’ to integrate our individual actions. This mechanism is ‘end-independent’ (cf. Nozick here): that is, it does not plan the goals of society, it has no purpose other than co-ordination and protection of individuals’ freedom of action (presumably provided the individual does no harm to others…). The crucial argument behind this is that – apart from the observation above, that progress happens spontaneously – no individual can predict the outcome of their actions, so how could a government or other controlling body predict the outcomes of the actions of all the individuals in society?

In terms that have more of a bearing on economics, Hayek emphasises the point that the knowledge that exists in a society about what individuals want is scattered among many people. In The Road to Serfdom Hayek constantly attacks planned economies, especially because they set about to do the impossible – to accumulate all the knowledge society has about consumer wants, as well as information about production etc, in the hands of government. This has to mean, he argues (persuasively!) that the government either fails at the task, or has to plan individuals’ wants for them. Hence the equation of (state) socialism with serfdom: under a planned economy individuals must lose their freedom to make their own choices over their wants and needs.

[Comment: as far as I know, Hayek not only assumed, as did many during the 20^th century, that socialism had something to do with what was the practice in the Soviet Union, but he made no comments on libertarian socialism, where the planning is carried out “from the bottom up” by co-operatives and similar bodies working together. See, for example: Socialism before (and besides!) Marx]

Another persuasive argument that Hayek uses is that in any given society there is bound to be disagreement about priorities – so why not create a society in which there is the freedom for different individuals to pursue different priorities? Again, this view is echoed in Nozick’s work (Oakeshott and Nozick (20th century Conservatism). Hayek maintains that ‘human nature’ (especially in regard to what individuals want from life) is not fixed, it is constantly changing, being formed by the choices people make, and the new discoveries that are found. After all, who could have predicted when he was writing ‘Serfdom’ (1945), or even towards the end of the 20^th century, that people would want mobile phones, MP3 players, PCs on which they can ‘blog’ or ‘tweet’, a Facebook site…?

2. Hayek on ‘freedom’:

Hayek’s definition of freedom is the ‘negative’ one: he means ‘freedom from’ (from constraints that get in the way of action etc) – and not the ‘positive’ definition, which means ‘freedom to do’ something specified. This can be seen to follow from what was said above: we cannot predict or control the future, and should not try to (since this means ‘serfdom’); we can only create the circumstances in which new discoveries can be made. “The advance of reason rests on freedom and unpredictability.” The aim of society should be to remove constraints which get in the way of innovation; if we only do things which have predictable outcomes, then we are not free as Hayek understands the word.

The converse of freedom – coercion – means for Hayek being made to do something for another’s purposes. (Note he would not call being stopped from doing something ‘coercion’ – though it clearly would mean a loss of freedom…). There will be a need for some coercion, by government, to prevent coercion (!) - that is, of course, preventing coercion in the narrow sense of people being made to do things they would not do if they had the choice, and things which therefore must be in others’ interests. This requires a ‘rule of law’ (see below) – but note Hayek does not see this freedom as being the same as ‘laissez-faire’: as I understand him, laissez-faire is too conservative, too much a defence of ‘things as they are now’, while he is in favour of change and ‘progress’.

Hayek distinguishes his of freedom definition from others:

- It is not the same as ‘political freedom’ i.e. to choose a government, or to participate in government. This kind of freedom will not necessarily promote freedom from coercion. (Again a ‘liberal’ argument that is close to the anarchist view: if we elect people to do things on our behalf, what guarantee do we have they will act in our interests and not their own?)

- Nor is it a purely ‘inner’ freedom, since for good to be the outcome we must consider what we choose to do, and not just follow any whim (this strengthens the point made above about a good outcome for society of many individual choices). Strangely, this also reminds me of Rousseau’s dictum that if we must (are compelled to) follow the compulsions of our appetites and instincts then we are not free.

- It is also a more precise definition than making freedom the same as ‘power to do something’ – since there are things we might want to do that no-one is preventing us from (to fly like a bird?); also he is not talking about freedom to do something illegal (see below on the law).

[Comment: once again I find myself nearer to Rousseau than Hayek: it is surely inadequate to leave individuals free to follow their ‘reason’ – this underestimates the influence of culture and upbringing on how we reason, and what we regard as ‘reasonable’ to want. For social good to follow from a collection of individuals’ ‘reasons’ for doing something, there must be some socially accepted criteria for what is good for society. In other words, I believe that a ‘positive’ definition of freedom is needed – however difficult it may be to come to general agreement (Rousseau’s ‘general will’) on these criteria.]

3. Hayek on ‘progress’:

Progress is clearly a central value for Hayek – and it is perhaps puzzling to find him saying that he does not mean progress towards a known goal, but the “process of the formation and modification of the intellect” based on the fact that “possibilities, values and desires constantly change.” Progress seems to mean movement for movement’s sake – and it is not determined by a goal such as ‘happiness.’ Our intelligence, as humans, is shown by our living in and for the future, not the past. (Again, hardly a conservative formulation! It has a distinctly ‘postmodern’ feel about it to me).

Sometimes Hayek seems to move away from his individual-centred philosophy, for example when he says: “what is important is what freedom some person may need in order to do things beneficial to society.” It seems one thing to argue that individuals must be free to act in their own considered self-interest, and out of that social good will arise – and another to say that individuals must have the freedom to do what is socially beneficial (though clearly for Hayek these are not distinct positions).

I think my point, above, about the need for criteria to sort out what is agreed to be good for society has a bearing on this argument.

He also argues (provocatively!) that it is better for some to have much freedom, rather than for everyone to have only a small amount (since it is ‘maximum freedom’ that promotes new outcomes) – but surely those who have little or no freedom in comparison to others who have a lot would not be content with this? Here he seems to be close to a conservative position – there is no problem if there are ‘elites’ who have more freedom (or more money, wealth, better education etc) since the outcome of their actions will benefit everyone (the ‘trickle down theory’). In fact Hayek can be argued to stand for existing elites: so long as they "prove themselves by their capacity to maintain their position under the same rules that apply to all the others" (1960).

4. Rules and law; the ‘rule of law’:

When we look at Hayek’s arguments about ‘rules’ we begin to see that he tries to avoid some of the objections raised above: especially the argument that simple individualism can not be guaranteed to produce good outcomes – and maybe the point just made that his idea of progress seems to be empty, even ‘postmodern’…

For Hayek argues that human behaviour is not random, but does follow ‘rules’ such as not wanting to hurt others, or wanting to keep promises. This is because we learn from experience – that is, our social development has involved selecting rules that benefit us. Thus existing institutions (in the broad sense, including traditions, customs, values and behaviour patterns) contain ‘how to act’ knowledge. We often act on these rules without being able to explain them: we know what a smile or a frown is, we understand ‘fair play’ in different situations. Societies have a ‘framework’ of these rules, which thus provide knowledge for the society; they cannot be held by a central government, since they are abstract and not easy to formulate, and represent a kind of knowledge that is too vast to be held by any group of people – this is another example of the notion of ‘scattered’ information, held by many individuals, that is for the benefit of society. It explains his hostility to ‘central planning’.

On the other hand, Hayek does not accept ‘legal positivism’ (all laws together make ‘the law’): he draws a distinction between ‘private law’ and ‘public law’ (this is reminiscent of Oakeshott?). Private law covers relations between people, and includes criminal law – it is based on case law. Public law is the set of rules that are held in the constitution, and in administrative laws. For Hayek, the problem with ‘law’ in a collectivist society is that it consists entirely of ‘public law’ – hence the individual has no real protection.

In a free society, the law rests on its members’ acceptance of general rules for action, and it is ‘discovered’ by judges (not created by them, or by legislators presumably). In a free society the individual has a wide sphere that is protected against government interference. Laws are mainly ‘prohibitions’ rather than ‘demands’ (this squares with Hayek’s definition of freedom as freedom from…). Socialist laws, says Hayek, are not really laws at all, since they force a particular outcome on individuals. Such socialist ‘laws’ he compares to the ‘fiat’ of the tribal leaders that existed before the institution of private property: rules and laws we have now are such as to enable us to interact with people we don’t know, and are designed for the good of the whole society (everyone has a right to private property, not just those who fill designated roles inherited from the past as in ‘traditional’ or tribal society). Similarly, a ‘law’ that enforced a particular religion would clearly be an infringement of freedom, and not therefore a law in Hayek’s sense.

Again, the order that is established by these rules is ‘end-independent’, allowing differences of values and goals within society – and Hayek argues that this is what is meant by the ‘rule of law’. In a (planned) society, where ‘organisational’ or ‘public’ rules predominate, the interests of the people are replaced by those of the law-makers, and freedom is replaced by prescription (you are free to do what the government says you should do).

The rule of law also serves to puts limits on government – since true laws apply to all, not just to individuals or particular groups or categories of people.

Law is ‘instrumental’ – it puts into individuals’ hands the ability to do what they choose (rather than telling them what to do).

Laws can only be ‘tested’ as just or not by comparison with the whole system of laws and rules – there is no ‘objective’ standard to apply, since we cannot stand outside society.

5. Against social justice:

Since ‘justice’ is to do with the relationships between people, and it applies to conduct and the distribution of things between people – then the expression ‘social justice’ is simply meaningless, he argues. If ‘social justice’ is to do with, for example, making sure that the distribution wealth, or of positions in society, is ‘fair’ – then Hayek replies that it is not ‘unfair’ if someone has less wealth than someone else: since only “a mixture of individual skills and luck [is what] determines someone’s place on the ladder of income and wealth”. Someone’s social position is not the result of anyone’s deliberate action, but comes as a result of a process over which nobody has any control. So, again, how can it be called ‘unfair’ or ‘unjust’?

It follows, for Hayek, that someone cannot be rewarded according to their ‘value to society’ or their ‘merit’ – since all such outcomes are a result of unplanned individual actions.

When accused of tolerating poverty etc, Hayek’s response is that only a free capitalist society can eliminate poverty. He even goes so far as to say that those living in shanty towns would have nothing at all if it were not for those lucky enough to be living in the cities on which they depend.

6. The Market:

It should be clear by now that Hayek sees the world in ‘dualistic’ terms: we can either have freedom and the market or planning and lack of freedom. There is no ‘middle way’ (not even a ‘third way’!!!). It is probably his praise of the market that has had most influence on subsequent (‘new right’) thinkers – and politicians!

The usual criticisms of the market (that it is un-co-ordinated, unfair, wasteful and destructive) are dismissed with the following careful analysis of the concept:

- the market has no ‘purpose’ it only has ‘effects’ (so it cannot be called unfair, and it is wrong to expect it to co-ordinate anything; probably co-ordination smacks of planning for Hayek) – it is the effect of reciprocity, where individuals are operating in such a way as ensures their mutual benefit (not ‘for their mutual benefit’); its only ‘purpose’ is to ensure that competition lowers the cost of production

- it is a means to an end – and it is wrong to try to make it fulfil ends of its own (what would this mean anyway, since it is simply the sum of a large number of individual choices?)

- it does not have ‘values’ – as we saw, the strength of the market for Hayek is precisely in its lack of a purpose or goal of its own: it allows individuals to pursue their own purposes, exercise their own values etc (you can invest ‘ethically’, or in the arms trade or tobacco…)

- prices represent a network of communication, transmitting the minimum information needed for individuals to make their choices; all that needs to be known is whether something is scarce or plentiful (which determines its price), and whether there is a demand for it or not (which also affects the price, and which then guides the producer as to whether it is worth making more of the item concerned)

- more than this, by operating in this way the market ‘ensures that the cheapest mix of inputs’ goes into manufacturing, thereby freeing the maximum resources to be used for other purposes

- Hayek rejects the ‘labour theory of value’ since he argues that it is not labour that creates value but the other way round: the price that something can be sold at tells the producer how much (or if at all) it is worth paying for the labour needed to produce it…

- if government or other forces were to try to regulate incomes this would be wrong, as the market is the only efficient way of doing this – such interference would only amount to an ‘erosion of liberty’

- he also rejects (perhaps surprisingly) the notion of ‘perfect competition’ (which he sees as being behind the criticism that the market is wasteful – I think this means that if there were perfect competition the market would not be wasteful – a view from some on the right, who attack ‘imperfect competition’ and the ‘distortion of the market’ by powerful companies, trade unions, government regulation etc). For Hayek the whole concept of perfect competition is an unrealistic, static notion; the market is simply a process. Moreover, no one can have perfect knowledge – but the price mechanism acts to spread knowledge about demand and supply and price.

- the purpose of market competition is (as argued above) to provide new products: again, a distinctive position that does not find an echo in conservative thinking.

7. Government:

Government should, says Hayek, only intervene to provide services and help for those who cannot earn a minimum income through the market. It should not monopolise welfare, nor try to force the market to redistribute income or wealth – this would reduce the total wealth of society as Hayek sees it. He opposed any price or income regulation.

On the other hand, he recognises that government is needed to ensure the market works effectively by: providing an efficient monetary system, providing information, supporting education, preventing fraud, enforcing contracts, protecting property, and even controlling pollution – provided it doesn’t claim the exclusive right to do these things, and provided it does not invade the private sphere.

There is some similarity here between Hayek’s position and that of a conservative such as Enoch Powell: for the latter, the state should not interfere in areas which are "commensurable" (quantifiable) as here the market can work - but this should not stop the use of the state in areas which are "incommensurable" (e.g. defence, and the maintenance of law – and presumably the arts?). Also both accept state responsibility for some welfare, viz: "providing...those conditions which community action, and only community action, can provide" (i.e. through social services).

On the other hand, many conservatives have an organic view of politics and the state; ‘middle-way’ conservatism actually uses the state e.g. between the world wars, it was the Conservatives who first to begin nationalisation, and state broadcasting; Macmillan’s outlook included some corporatism, Keynesianism, and support for the provision by the state of education and health care etc.

8. Some comparisons with other conservative ideas:

On the other hand, Enoch Powell differed from Hayek in his respect for the historical, national tradition which he believed acts as a framework, providing restraints and context for government policy: the "unbroken life of the English nation over a thousand years"... institutions which "appear in England almost as works of nature". It was this side of Powell’s conservatism of course that led on to his attacks on Commonwealth immigration.

In comparison with Michael Oakeshott, (see: Oakeshott and Nozick (20th century Conservatism) there are similarities in that both have a libertarian aspect: the view that no part of society should have unlimited power; the view of freedom as the absence of concentrations of power; support for the rule of law, and opposition to the "discretionary authority" of collectivism; and the separation of public and private spheres.

Both Hayek and Oakeshott attack labour ‘monopolies’ (the influence of powerful trade unions) – Oakeshott in fact seeing them as more dangerous than other kinds of monopoly. Both argue that the effects of trade union activity ("monopoly prices and disorder") harm the "community as a whole" (a phrase I think is pernicious – who has the right to exclude [does it make any logical sense to exclude] organised labour from ‘the community as a whole’?).

On the other hand, Oakeshott is more typical of traditional conservatism when he stands for ‘the familiar’ and ‘things as they are now’ – as stressed above, Hayek’s belief in ‘change’ as ‘progress’ sets him apart.

9. The new right:

Definition: Vincent (1992) includes the ‘new right’ under conservatism, but stresses that it differs from the romantic, paternalistic, traditionalist strand of conservatism.

It represents a broad current, with some mutually incompatible components. Vincent also finds a link with liberal conservatism, and with Hayek and Oakeshott, as noted above.

Dunleavy (Theories of the State 1987): points out that the new right is opposed to the rejection by the "old right" of rationalism. For the new right, social science research and argument are crucial, and it exhibits philosophical/theoretical sophistication. It grew with the defeat of (paternalistic) Conservatism in the early 1970s; at a time when many began to believe that Keynesianism, the welfare state, and corporatism had all failed – but traditional conservatism was not able to come up with convincing alternatives.

Another way of assessing the new right is to see it as neo-liberalism. Some followers of the new right would advocate that the market should replace the state in every aspect of its activities (other than ‘policing the market’) - including health and education. In some respects then the new right is more extreme than liberal conservatism: for de-criminalising soft drugs, pornography, even blackmail! From this perspective, the new right/neo-liberalism is contrasted with neo-conservatism (see below*).

It is an amalgamation of:

- liberal conservatism,

- Austrian economic theory (von Mises, Hayek),

- extreme libertarianism (anarcho-capitalism),

- and populism.

And it can also include:

Friedmanites,

public-choice theorists – see next section.

Public choice theory:

Note: public choice theory is not intrinsically right-wing, but most of its adherents share Friedmanite pro-market views. The theory/approach takes the rational choice theory of market economics (i.e. that the market is based on utility-maximising individuals) and applies it as a critique to areas of public choice e.g. voting, welfare. (Marsh, Stoker ch 4, Dunleavy and O'Leary p 75. Thus it uses social science theory, and classical liberalism, to show how democratic and pluralist societies can become pathological.

From neo-classical economics it takes the argument that it is difficult to aggregate individual choices in order to define public welfare; so we need to look at choices which are not private: i.e. collective, social or non-market (state, bureaucracy, parties, manipulative behaviour etc). Different people have different views of "welfare", so we cannot simply measure/draw a graph as we can with individual utility. What is needed is a mechanism such as a voting procedure, which allows preferences to be ranked according to their value to society as a whole.

Public choice theory recognises there are "market failures" in politics as in economics: thus voting may lead to unintended and harmful consequences e.g. what happens when individual officials/politicians start acting in own interest rather than that of 'clients'?

It also draws on game theory (from mathematical political theory): situations in which an individual's decisions depend not only on their own preferences but on the preferences and decisions of others involved; e.g. the ‘prisoner's dilemma’: how the maximising by an individual of their own utility with minimum risk relates to the good of more than individual. Another ‘lesson’ drawn from the prisoner’s dilemma is that individuals do not always co-operate, even when they should, but they can learn to, and will do so for self-interested reasons...(loc cit p 79ff).

It also draws on social contract theory as with Hobbes: a strong state creates an environment where trust is possible... (again, cf. Game theory)

It reflects Jeffersonian democratic ideals: faith in the common people, and hostility to administration/bureaucracy. Hence it advocates minimal government, based on sturdy property-owning individuals; it also tends to see government in caricature: as the monolithic state bureaucracy pitted against isolated individuals (p 85).

Finally from Austrian economics (viz. Hayek), it represents an anti-Marxist theory of value, based on abstract utility rather than labour - therefore it stands for the liberal market in economics and politics.

Its methodology therefore is positivist i.e. assumptions about individual behaviour can be made, and then tested empirically, so operational laws can then be drawn up. It is opposed to inductive reasoning, which proceeds from experience alone, so argues that only deductive reasoning can produce a logically organised and empirically testable body of social science. It is also positivist in its separation of fact from value.

(*) Neo-conservatives/neo-authoritarians?

Some exclude ‘neo-cons’ from the new right; but while to do so may help give ideological coherence, it doesn't reflect the nature of the movement. The neo-conservative new right has more in common with traditionalist conservatism (than with liberal conservatism): it stands for nationalism, cultural/racial purity, natural inequality, the importance of disciplined family life, patriarchal authority, religious education.....Freedom and equality are of little interest (see e.g. Roger Scruton, the Salisbury Group).

Dunleavy and O'Leary, 1987, stress neo-cons: deliberately archaic language, their aim of limiting government authority, and that they wish to turn back egalitarianism in education, the welfare state, and gender relations...

10. References:

Barker, R: Political Ideas in Modern Britain, Methuen, 1978 (ch 7).

Butler, E: Hayek, His Contribution, Temple Smith 1983.

De Crespigny, A, Minogue, K, ed: Contemporary Political Philosophers, Methuen, 1975.

Cunningham, F: Theories of Democracy, Routledge 2002 (has a useful short discussion on democracy and capitalism)

Dunleavy, P. and O'Leary, B: Theories of the State,Macmillan. 1987

Marsh, D. and Stoker, G: Theory and Methods in Social Science, Macmillan 1995 (has more on rational choice theory)

Goodwin, B: Using Political Ideas, Wiley, 1990 ch 3

Vincent, A: Modern Political Ideologies, Blackwell 1992.