In the well known postscript to The Constitution of Liberty, entitled ‘Why I am not a Conservative’, Hayek states what he calls ‘the decisive objection to any conservatism which deserves to be called such’, which is ‘that by its very nature it cannot offer an alternative to the direction in which we are moving…. The tug of war between conservatives and progressives can only affect the speed, not the direction, of contemporary developments.’ He adds that while the conservative ‘generally holds merely a mild and moderate version of the prejudices of his time, the liberal today must more positively oppose some of the basic conceptions which most conservatives share with the socialists.’
At the time when those words were published – 1960 – they expressed an understandable distrust of European conservative parties, which seemed unable to offer an alternative vision to the collectivism that had prevailed in Europe since the Second World War. Hayek dedicated his book to ‘the unknown civilisation that is growing in America’, and he showed his impatience with the old elites of Europe, whose principal concern, in Hayek’s eyes, was to rescue from the jaws of the socialist machine as many of their privileges as they could, but who had no adequate rival notion as to how we should be governed. It is true that The Road to Serfdom, published towards the end of the war as a warning against the collectivism that had caused it, had been excitedly endorsed by conservatives and proposed as their bible by Winston Churchill. But Hayek did not believe that it had really changed the conservative agenda, and was acutely aware, in any case, of the damage that it had done to his own career in England, where the left establishment united to oppose this continental outsider who knew nothing of the road to Wigan pier.
Since that time, however, it has become increasingly apparent that it is people called conservative who have endorsed the arguments of The Constitution of Liberty, while those who campaign under the ‘liberal’ banner are usually the first to espouse the egalitarian values and statist politics that Hayek was attacking. Although it is true that labels are less significant than the things they stand for, it is nevertheless important to recognize that Hayek’s core arguments and ideas belong to the conservative tradition, and that his defence of freedom begins from premises, and arrives at conclusions, which align him with Burke against Paine, de Maistre against Saint-Simon and Hegel against Marx. In this chapter, therefore, I will defend the view of Hayek as a major theorist of conservatism, while suggesting ways in which his philosophy is also open to criticism from the conservative standpoint.
Spontaneous Order and Evolutionary Rationality.
For Hayek liberty is not the antithesis of order but a specific form of it. He contrasts two kinds of order: the planned order – taxis – which is dictated from above, usually by a government, and the ‘spontaneous order’- kosmos – which arises from below, by the free interactions of sovereign individuals. The inspiration for this contrast is Adam Smith’s conception of the ‘invisible hand’ – the process that generates, from our myriad intentional actions, a distribution of wealth, power and accountability that is no part of anyone’s intention. It is Hayek’s firm belief that – while there are malign ‘spontaneous orders’, such as the networks of corruption that arise under state bureaucracies – spontaneous orders survive if and because they are beneficial. They may require correction at the margins; but they are also self-correcting, since they adapt to changing circumstances in ways in which no planned order is capable of doing. He even compares his account of spontaneous order to the Darwinian theory of evolution, making the interesting suggestion that the inevitable collapse of the planned economy will come about, like the extinction of a species, from the failure to adapt. Spontaneous orders, he argues, do not derive from a rational plan; but they are rational in spite of this, and also because of it. They exhibit ‘evolutionary rationality’ – which consists not in a plan but a process, whereby individual plans adapt to the plans of others.
Hayek’s principal opponents try to undermine this defence of spontaneity, by developing theories of ‘market failure’, many of which have their origins in the Marxist critique of ‘the crisis of capitalism’. It is therefore often alleged that Hayek is proposing the market as the root of social order, and so exposing himself to the obvious criticism that long-standing institutions and moral ties are vulnerable to ‘market erosion’, as cheaper, less demanding or more exciting alternatives appear to replace them. However, the market exists side by side and in competition with other spontaneous orders in which value is not reducible to price. Thus, in volume I of Law, Legislation and Liberty , Hayek defends the Common Law against legislation, the first being a form of spontaneous order, the second an attempt to organize society according to an overarching plan. He defends ordinary morality against the ‘social justice’ of the socialists, and recognizes the constraints that ordinary morality places upon the market. His attack on egalitarianism is not based on any defence of the market economy but on the belief that inequality is the spontaneous outgrowth of peaceful exchange in every area of human intercourse, and that the attempt to suppress inequality is both bound to fail and also bound to threaten the collective accumulation of socially useful knowledge. And although he sometimes identifies himself as a ‘progressive’, Hayek recognises tradition as another form of spontaneous order, and a repository of knowledge that cannot be contained in a single head .
The Free Market.
The Austrian defence of the market reached its culmination in the ‘calculation debate’, initiated by Mises and Hayek in response to socialist proposals for a centrally planned economy. The Austrian response to these proposals turns on three crucial ideas. First, economic activity depends upon knowledge of other people’s wants, needs and resources. Secondly, this knowledge is dispersed throughout society and not the property of any individual. Thirdly, in the free exchange of goods and services, the price mechanism provides access to this knowledge – not as a theoretical statement, but as a signal to action. Prices in a free economy offer the solution to countless simultaneous equations mapping individual demand against available supply. When prices are fixed by a central authority, however, they no longer provide an index either of the scarcity of a resource or of the extent of others’ demand for it. The crucial piece of economic knowledge, which exists in the free economy as a social fact, has been destroyed. Hence when prices are fixed the economy either breaks down, with queues, gluts and shortages replacing the spontaneous order of distribution, or is replaced by a black economy in which things exchange at their real price – the price that people are prepared to pay for them. This result has been abundantly confirmed by the experience of socialist economies; however, the argument given in support of it is not empirical but a priori. It is based on broad philosophical conceptions concerning socially generated and socially dispersed information.
The important point in the argument is that the price of a commodity conveys reliable economic information only if the economy is free. It is only in conditions of free exchange that the budgets of individual consumers feed into the epistemic process, as one might call it, which distils in the form of price the collective solution to their shared economic problem – the problem of knowing what to produce, and what to exchange for it. All attempts to interfere with this process, by controlling either the supply or the price of a product, will lead to a loss of economic knowledge. For that knowledge is not contained in a plan, but only in the economic activity of free agents, as they produce, market and exchange their goods according to the laws of supply and demand. The planned economy, which offers a rational distribution in place of the ‘random’ distribution of the market, destroys the information on which the proper functioning of an economy depends. It therefore undermines its own knowledge base. It is a supreme example of a project that is supposedly rational while being not rational at all, since it depends on knowledge that is available only in conditions that it destroys.
One corollary of this argument is that economic knowledge, of the kind contained in prices, lives in the system, is generated by the free activity of countless rational choosers, and cannot be translated into a set of propositions or fed as premises into some problem-solving device. As the Austrians were possibly the first to realise, economic activity displays the peculiar logic of collective action, when the response of one person changes the information base of another. Out of this recognition grew the science of game theory, developed by von Neumann and Morgenstern as a first step towards an explanation of markets, but pursued today as a branch of mathematics with applications (and misapplications) in every area of social and political life.
Hayek’s epistemic theory of the market does not claim that the market is the only form of spontaneous order, nor that a free market is sufficient to produce either economic coordination or social stability. The theory asserts only that the price mechanism generates and contains knowledge that is necessary to economic coordination. Coordination can be defeated by business cycles, market failures and externalities, and is in any case dependent on other forms of spontaneous order for its long-term survival. John O’Neill, defending a mitigated socialism against Hayek’s advocacy of the free economy, argues that the price mechanism does not communicate all the information necessary to economic coordination, and that in any case information is not enough. There are good conservative reasons for agreeing with O’Neill’s claims; but they are reasons that Hayek accepts. The market is held in place by other forms of spontaneous order, not all of which are to be understood simply as epistemic devices, but some of which – moral and legal traditions, for example – create the kind of solidarity that markets, left to themselves, will erode.
Common Law Justice.
This conservative aspect of Hayek’s argument is best understood through the argument for common-law justice that dominates volume I of Law, Legislation and Liberty . ‘To modern man,’ Hayek argues, ‘the belief that all law governing human action is the product of legislation appears so obvious that the contention that law is older than law-making has almost the character of a paradox. Yet there can be no doubt that law existed for ages before it occurred to man that he could make or alter it.’ People cannot form a society and then give themselves laws, as Rousseau had imagined. For the existence of law is presupposed in the very project of living in society – or at least, in a society of strangers. Law is real, though tacit, long before it is written down, and it is for the judge to discover the law, by examining social conflicts and laying bare the shared assumptions that permit their resolution. Law in its natural condition is therefore to be construed on the model of the common law of England, which preceded the legislative powers of Parliament, and which for many centuries looked upon Parliament not as a legislative body but as another court of law, whose function was to resolve the questions that could not be answered from a study of existing precedents.
Hayek says many true and interesting things about common-law justice, pointing out that written law and sovereign legislation are late-comers to human society, and that both open the way to abuses which, in the common law, are usually self-correcting. The distinction between law and legislation has been tacitly recognized in many European languages – diritto versus legge , droit versus loi, Recht versus Gesetz , právo versus zákon and so on. Interestingly enough, however, it has no such clear marker in English, even though English law is nearly unique in preserving common-law procedure. The legislator sees law as a human artefact, created for a purpose, and may endeavour to use law not merely to rectify injustices but also to bring about a new social order, in conformity with some ideal or plan. There is nothing to prevent such a legislator from passing laws that fly in the face of justice, by granting privileges, confiscating assets and extinguishing deserts in the interests of some personal or political agenda. One sign of this is the adoption of ‘social justice’ in the place of plain justice, as the goal of law. For Hayek justice is an attribute of human conduct, and the attempt – inherent in the concept of ‘social’ justice – to apply the concept to a state of affairs, without any reference to the human actions that produced it, does violence to our understanding of responsibility and choice. The goal of the common law is not social engineering but justice in the proper sense of the term, namely the punishment or rectification of unjust actions. The judge, examining the specific case, attempts to find the rule that will settle it. According to Hayek, such a rule is part of a network of abstract rules, all of which are implicitly counted upon by those who engage in free transactions. The judge rightly thinks of himself as discovering the law, for the reason that there would be no case to judge, had the existence of the relevant law not been implicitly assumed by the parties.
Hayek’s theory of law, which is laid out with considerable erudition, has several distinct parts. For example, there is the notion of law as implicit in human intercourse, and discovered in the act of judgement. There is the idea of law as abstract rule. There is the theory that the abstract rules discovered by the methods of common-law judgment are the true rules of justice. And there is the criticism of modern styles of legislation, which see law as a policy-enforcing rather than justice-endorsing device. Clearly these ideas are independent of one another, though they all connect to an underlying conception of law as an essentially negative institution, concerned to prevent and rectify wrongdoing rather than to build some new form of social order.
In the English system it is certainly true that the law is discovered, rather than invented, by the judge. It is true too that the law is formulated as a rule – the Rule in Rylands v Fletcher, for example, which tells us that ‘the person who for his own purposes brings on his lands and collects and keeps there anything likely to do mischief if it escapes, must keep it in at his peril, and, if he does not do so, is prima facie answerable for all the damage which is the natural consequence of its escape’. But it is also true that a judge may find for one of the parties, without formulating explicitly the rule that justifies his judgement: it may be a matter of controversy what the ratio decidendi is, of a case that all agree to have been rightly decided. To point to this interesting fact is not to criticize Hayek’s theory but on the contrary to provide further support for the idea that the law exists prior to its judicial determination, and that the belief that this is so both guides the judge and limits his ambitions. You cannot use the common-law procedures to change the nature of society, to redistribute property that is justly held, to violate ordinary understandings or to upset long-standing expectations and natural relations of trust. For the common law is the working out of the rules already implicit in those things. It is a network woven by an invisible hand.
Abstract and Instrumental Rules.
Abstract rules, as Hayek calls them, govern conduct without specifying some independent end to be achieved by it. In a way it is unfortunate that Hayek chooses the term ‘abstract’ in this context, since it creates the erroneous impression that the common law is a system of deductively related norms, which can be expressed in terms that make no reference to the history and affections of a given human community. Against that a conservative (at least a conservative of my persuasion) would urge that the common law is, in contrast to the civilian system, essentially concrete. Its ultimate authorities are embedded in the history and experience of a human community, and although it aims to universalise its judgements, and so to achieve the abstract form of law, it is inseparable from a given content, which derives from conflicts within a shared historical experience. The distinction here is, to be sure, a distinction of emphasis, but it connects with a broader and deeper objection to Hayek’s method to which I return below.
The important contrast for Hayek is not that between the abstract and the concrete, but that between the abstract and the instrumental. And his target here is both legal positivism, in the forms defended by Bentham, Austin and Kelsen, and the legislative systems that have derived from it. For the positivists law is not discovered but made, and made for a purpose: hence they dismiss the common law as ‘judge-made’ law, implying that its force and validity are not implicit in its origins but dependent on the legislative decision to enforce it. However, when the English Parliament first began to turn itself into a legislative institution it regarded law as an independent and pre-existing system, to which it was adding new rules by the same process of discovery and adjustment that was exemplified by the courts. The aim was to provide remedies to the victims of injustice, and to emphasize the will of the sovereign to enforce and uphold the law. Law was an independent domain, which appointed the sovereign and stood over him in judgement. Legislation was regarded as law, only if it derived from and harmonized with the thing rightly so called, which was the body of precedents discovered in the courts. Such was explicitly said by Lord Chief Justice Coke, and reaffirmed by Blackstone in his commentaries. And such was assumed by the English Court of Chancery, through which appeals were made to the sovereign when the existing legal record seemed to provide no remedy. Indeed, the existence of Equity, and its ability even today to qualify and marginalize the decisions of Parliament, testifies to the deep commitment of English jurisdiction to the Hayekian view of law, as a system of negative side-constraints.
The legal positivists reversed the old order of things. For them a rule becomes law only if it is announced or confirmed as such by the legislature. For Hayek this theory is both mistaken and pernicious. It confuses the abstract rules of a legal system with the instrumental rules of a social engineer. It divorces law from the underlying conception – that of justice and the rectification of injustice – on which it depends for its authority and its sense. And it places in the hands of the legislature an indefinite authorisation to issue commands in every sphere of social life, and to compel general obedience to them. Hitherto the judge had been guardian of the law, and the law had been the shield that protected the subject from the arbitrary misuse of power, by compelling the sovereign to provide remedies for injustice. The appropriation of law by the legislature was at the same time an expropriation of the judicial power. And that is what the positivists set out to justify. Hence ‘the evil of positivism is that it made the guardians of the law unable to resist the advance of arbitrary government’. Hayek saw the rise of positivism as the triumph of an anti-liberal view of sovereignty – the view that he associated with Hobbes, according to which sovereignty is exercised by a body that stands above the law, instead of being an attribute vested in the law itself, arising by ‘an invisible hand’ from the free transactions of individuals.
Hayek’s attack on positivism and the legislative order should not be understood merely as a further argument against the socialist state. Although Hayek was deeply opposed to the idea of using the law to enforce socialist redistribution, this was in part because he was opposed to using the law to enforce any kind of social order, other than the one already implicit in the law’s discoverable rules. The law could be so used, of course, but only by ceasing to be an exercise of justice and so ceasing to be law proprement dite . Moreover, the instrumental use of law occurs in an epistemological vacuum – a vacuum created by itself. By destroying the base of the law in abstract rules of justice, instrumentalism renders the use of the law profoundly unpredictable. Whatever the goal, be it social equality, economic progress, the destruction of religion or the elimination of some ‘enemy within’, this goal will be fulfilled only by accident, and as an unforeseeable consequence of actions that destroy the ability either to predict or rationally to intend it. Sometimes, it is true, Hayek writes as though law has a purpose, and he quotes with approval Hume’s view that, while individual laws and judgements cannot be evaluated in terms of their consequences, the law as a whole serves a beneficial function. But this thought should be understood as an anthropologist might understand it. Law has a social function; but it is not by appeal to this function that laws or the judgements that flow from them are justified. For the function can be fulfilled only by those who treat laws as intrinsically valid, and open to neither correction nor justification from the consequentialist standpoint.
Law and Practical Knowledge.
Hayek’s argument picks up thoughts that form the core vision of a certain kind of very English conservatism. As Hayek frequently observes in the footnotes to Law, Legislation and Liberty , German jurisprudence in the nineteenth and twentieth centuries had not always made room for that English vision. One result of this could be seen in Carl Schmitt’s frightening theory of sovereignty (he is sovereign who ‘decides on the exception’, i.e. who takes power in emergencies, in particular those emergencies created by himself). It can also be found in the view of German jurists in the thirties, such as G. Radbruch, that the sovereign power can make any law it pleases, so long as it is consistent in enforcing it. This positivist view was endorsed by British socialists, in terms borrowed from well-meaning and not-so-well-meaning German jurists. Thus Harold Laski, subsequently to become Hayek’s archenemy at the London School of Economics, could write in 1934 that ‘the Hitlerite State, equally with that of Britain and France, is a Rechtsstaat in the sense that dictatorial power has been transferred to the Führer by legal order’. Of course, not all Germans at every epoch have endorsed the positivist theory – Hayek explicitly exempts Kant from the charge, and to that illustrious example we should add Hegel, Schopenhauer and Gierke, the third of whom goes unmentioned by Hayek, perhaps because his Deutsches Genossenschaftsrecht takes too firm a step in the conservative direction that I too shall take at the end of this chapter.
The extended argument about law and rules is by no means secure from criticism. Nor, as the work of Ronald Dworkin shows, does the theory of judicial discovery necessarily lead in a conservative direction, or necessarily create a divide between the pursuit of common-law justice and the pursuit of public policy. But Hayek’s argument is a tour-de-force of erudition and imagination, and entirely rescues him from the charge that he was merely an economic liberal, concerned to replace all forms of order with that of the free market. It adds concretion and depth to Oakeshott’s celebrated distinction between civil and enterprise association, and shows the intrinsic connection between civil association and the rule of law. Furthermore it has an interesting and highly conservative corollary, which is only occasionally given by Hayek with the clarity that it deserves. Abstract rules, as Hayek calls them, are not part of a plan of action, but arise from the enterprise of social cooperation over time. They are the parameters within which the cooperation of strangers to their mutual advantage becomes possible. As with the market the benefit that they confer is in part epistemic: they provide knowledge that has stood the test of time, by permitting the resolution of conflicts and the re-establishment of social equilibrium in the face of local disturbances. By following these rules we equip ourselves with practical knowledge that will be especially useful when venturing forth into the unforeseeable – namely, knowledge how to conduct ourselves towards others, so as to secure their cooperation in advancing our aims.
To put the point in another way, the law condenses into itself the fruits of a long history of human experience: it provides knowledge that can be neither contained in a formula nor confined to a single human head, but which is dispersed across time, in the historical experience of an evolving community. Just as prices in a market condense into themselves information that is otherwise dispersed throughout contemporary society, so do laws condense information that is dispersed over a society’s past. From this thought it is a small step to reconstructing Burke’s celebrated defence of custom, tradition and ‘prejudice’, against the ‘rationalism’ of the French Revolutionaries. To put Burke’s point in a modern idiom somewhat removed from his own majestic periods: the knowledge that we need in the unforeseeable circumstances of human life is neither derived from nor contained in the experience of a single person, nor can it be deduced a priori from universal laws. This knowledge is bequeathed to us by customs, institutions and habits of thought that have shaped themselves over generations, through the trials and errors of people many of whom have perished in the course of acquiring it.
Tradition, Morality and the Market.
For a contemporary conservative the most profound aspect of Hayek’s extended epistemological argument is the alignment between the defence of the market and the defence of tradition. Indeed, as Edward Feser has argued, the defence of tradition, custom and common sense morality could well constitute the most important aspect of Hayek’s social and political thought. Hayek’s theory of evolutionary rationality shows how traditions and customs (those surrounding sexual relations, for example) might be reasonable solutions to complex social problems, even when, and especially when, no clear rational grounds can be provided to the individual for obeying them. These customs have been selected by the ‘invisible hand’ of social reproduction, and societies that reject them will soon enter the condition of ‘maladaptation’, which is the normal prelude to extinction.
Implicit in Hayek is the thought that free exchange and enduring customs are to be justified in exactly the same terms. Both are indispensable distillations of socially necessary knowledge, the one operating synchronously, the other diachronically, in order to bring the experiences of indefinitely many others to bear on the decision taken by me, here, now. Hayek emphasizes the free market as part of a wider spontaneous order founded in the free exchange of goods, ideas and interests – the ‘game of catallaxy’ as he calls it. But this game is played over time, and – to adapt a thought of Burke’s – the dead and the unborn are also players, who make their presence known through traditions, institutions and laws. Those who believe that social order demands constraints on the market are right. But in a true spontaneous order the constraints are already there, in the form of customs, laws and morals. If those good things decay, then there is no way, according to Hayek, that legislation can replace them. For they arise spontaneously or not at all, and the imposition of legislative edicts for the ‘good society’ destroys what remains of the accumulated wisdom that makes such a society possible. It is not surprising, therefore, if British conservative thinkers – notably Hume, Smith, Burke and Oakeshott – have tended to see no tension between a defence of the free market and a traditionalist vision of social order. For they have put their faith in the spontaneous limits placed on the market by the moral consensus of the community. Maybe that consensus is now breaking down. But the breakdown is in part the result of state interference, and certainly unlikely to be cured by it.
It is at this point, however, that conservatives may wish to enter a note of caution. Although Hayek may be right in believing that the free market and traditional morality are both forms of spontaneous order and both to be justified epistemically, it does not follow that the two will not conflict. Socialists are not alone in pointing to the corrosive effects of markets on the forms of human settlement, or in emphasizing the contrast between things with a value and things with a price. Indeed many of the traditions to which conservatives are most attached can be understood (from the point of view of Hayek’s ‘evolutionary rationality’) as devices for rescuing human life from the market. Traditional sexual morality, for example, which insists on the sanctity of the human person, the sacramental character of marriage, and the sinfulness of sex outside the vow of love, is – seen from the Hayekian perspective – a way of taking sex off the market, of refusing it the status of a commodity and ring-fencing it against the corrosive world of contract and exchange. This practice has an evident social function; but it is a function that can be fulfilled only if people see sex as a realm of intrinsic values and sexual prohibitions as absolute commands. In all societies religion, which emerges spontaneously, is connected to such ideas of intrinsic value and absolute command. To put the matter succinctly, that is sacred which does not have a price.
It follows that the ‘game of catallaxy’ does not provide a complete account of politics, nor does it resolve the question of how and to what extent the state might choose to interfere in the market, in order to give the advantage to some other and potentially conflicting form of spontaneous order. This question defines the point where conservatism and socialism meet and also the nature of the conflict between them.
Socialism and Social Justice.
Hayek’s routine dismissal of ‘social justice’ has both an economic and a philosophical foundation and, although in later writings he sometimes refers (even approvingly) to the work of Rawls, it is clear that his account of justice is entirely incompatible with that expounded in A Theory of Justice . There is, for Hayek, no such thing as a just distribution, conceived independently of the deliberate choices that bring it about. It is human actions that are just or unjust, and just actions, reiterated over time, will produce, by an invisible hand, an unequal social order. Attempts to rectify this by legislation will invariably involve injustice, whether by expropriating people without their consent, or by forcing people to do what they otherwise would not do with their time, abilities or energy. Moreover such attempts are doomed to failure, since (to return to the root conception) they inevitably destroy the information that they will need for their own success.
Moreover, Hayek adds in later writings, there is something wrong with the very word ‘social’, attached like a mantra to otherwise desirable things: social justice, social market, social morality, social conscience, social liberalism. Hayek describes it as a ‘weasel word’, one that sucks the meaning from whatever term it is attached to, ‘as a weasel sucks eggs’. Words to which this parasite attaches itself are turned from their referential purpose, and made to perform a task that is the opposite of the one for which they were designed. In the name of social justice any amount of injustice can be inflicted; in the name of the social market the market itself can be destroyed; and so on. Moreover, the word ‘social’, used in this way, does not merely destroy its successor – it destroys itself. It no longer refers to society, that benign and spontaneous by-product of human sympathy, but to the state, which acts in the name of society but to society’s detriment. Social justice means state control, the social market means state distortion, and social morality means the chilling puritanical edicts with which socialists bar the way to success.
In this and related ways Hayek extended his attack on socialism from the narrow territory of the original ‘calculation debate’ to the realm of philosophy and culture. Hayek came close to Orwell, in seeing that state socialism goes hand in hand with the corruption of language. Much of the difficulty the Austrian economists had encountered in making themselves heard in modern Europe, arose from the fact that they were using words with their normal meanings, and without the ideological commitments that had been instilled by their systematic misuse. But this brings me to a problem that Hayek frequently addressed, but to which he never found a satisfactory answer: namely, what explains the triumph of socialism in his day, and of its more liberal derivatives in ours? Hayek was aware of the obvious fact, that the validity of an argument does not guarantee its widespread acceptance, and was fond of quoting Hume’s remark that ‘though men be much governed by interest, yet even interest itself, and all human affairs, are entirely governed by opinion ‘ . Difficult truths, such as those presented by the Austrian defence of the market or the Burkean defence of custom, are unlikely to influence events when more emotionally satisfying or exhilarating falsehoods compete with them.
In an article first published in the University of Chicago Law Review in 1949 , Hayek addressed the problem of ‘The Intellectuals and Socialism’, and made the following suggestion. First there is a distinction, of recent provenance, between the scholar and the intellectual. The scholar is interested in knowledge for its own sake, and is often master of some narrow, outwardly unexciting and in any case publicly inconspicuous field. The intellectual is a ‘second-hand dealer in ideas’ interested in exerting his mind in the public sphere, who will be naturally drawn to those theories and ideas that make thinking the avenue to action. He will be prey to visionary and utopian conceptions, and drawn to those theories that give to the intellectuals a special role in the redemption of mankind. Hayek points out that no socialist ever loses credibility with his fellows by the impracticality or extravagance of his ideas, while liberals (in Hayek’s sense of the term), who are dependent on the good-will of existing institutions and have no utopian formula for their improvement, will instantly damn themselves by an impractical suggestion. He also notes the prevalence of people ‘who have undeservedly achieved a popular reputation as great scientists solely because they hold what the intellectuals regard as ‘progressive’ views’, adding ‘I have yet to come across a single instance where such a scientific pseudo-reputation has been bestowed for political reasons on a scholar of more conservative leanings’. In the competition for influence, therefore, liberals (in Hayek’s sense) and conservatives are constantly eliminated while socialists advance from strength to strength. And because intellectuals effectively set the terms of political debate, both inside and outside the universities, they are able to make it seem as if all disputes are internal to the socialist program.
Much of what Hayek says in this bold and interesting essay is undeniably true. However, he fails to give an adequate explanation of the crucial item of socialist doctrine, which is the commitment to social equality. This commitment has shown an ability to survive quite out of proportion to its intrinsic plausibility, and outlasts all the theories that have risen and fallen in the attempt to enclose it in an argument. Indeed the theories of socialism stand to the belief in social equality rather as theology stands to the belief in God. They are ex post facto attempts to give a rational foundation to a dogma that will survive every rational attempt to refute it. Equality is, for the socialist intellectual, a matter of faith, and Hayek has no real explanation as to why this faith should have arisen or why it should have attracted to itself such an ardent priesthood. He himself is a believer in equality before the law, and recognizes that this is a consequence of the individualism that is the major premise of his thinking. But he rejects most other forms of equality as either unobtainable or undesirable – interferences, at best, in the natural working of the spontaneous order. Moreover, he adds, ‘equality of the general rules of law and conduct… is the only kind of equality conducive to liberty and the only equality which we can secure without destroying liberty.’
The Conservative Critique.
In The Constitution of Liberty Hayek shows himself to be a masterly, if uncommonly long-winded, exponent of the principles of classical liberalism. He rightly sees that liberty does not require, but on the contrary is threatened by, majority choice, and that the primary task for the classical liberal thinker is to devise a constitution that will both permit the effective exercise of political power, and also limit the areas in which it can be asserted, so that society can flourish according to its innate and ‘spontaneous’ principles. On the Hayekian view it is only within the spontaneous order of civil society that the information needed by the state can be generated. Moreover, he believes, even democrats must accept this truth, and therefore cooperate in searching for a constitution that will resist the pressures to conformity that arise when too much respect is paid to majority opinion. ‘The ideal of democracy rests on the belief that the view which will direct government emerges from an independent and spontaneous process. It requires, therefore, the existence of a large sphere independent of majority control in which the opinions of the individuals are formed.’
The problem for all liberal thinkers is contained in those remarks. What holds the ‘large sphere’ of ‘spontaneous’ processes together, and how does it defend itself against fragmentation? Classical liberals have tended to follow Locke in arguing for a society founded in a social contract. However contract does not create the bond of society but depends upon it. Without membership there is no motive to obey the contract, rather than to pretend to obey it in order to reap the advantages of other peoples’ obedience. It is this bond of membership that conservatives have traditionally sought to define and defend, believing liberal individualism to be a potential threat to it. Relations seen in contractual terms are subject to the constant erosion of self-interest; those based in membership are fortified by trials and by the love of neighbour and home.
Hayek does not exactly ignore this problem, which had been brought to the fore by Hume, both in his criticism of the social contract, and in his theory of justice as an ‘artificial’ virtue. Indeed Hayek’s approach helps to make the Humean objection to the social contract theory more precise. The social contract is supposed to explain what it is for a society to be founded on the consent of its members. It does so by envisaging a social order that is the object of a single act of collective consent, rather than the by-product of a myriad consensual transactions. It is an attempt, as one might put it, to construe the invisible hand as a visible handshake. But Hayek’s approach conceals what is really at stake in the Humean (and one might add Hegelian) objections to social contract theory. Hayek begins from the assumption of ‘methodological individualism’, as Joseph Schumpeter called it: the assumption that facts about collectives are to be explained in terms of individual plans. I don’t say that this assumption is erroneous, or that it does not have an important role in the search for genuine explanations, as opposed to enchanting descriptions, in the social sciences. But it causes those who adopt it to overlook the many ways in which individual plans depend upon collective states of mind. Hayek is suspicious of the Hegelian fashion in German social thinking, which attributes to the Volk , the Gemeinschaft , and the State a kind of identity above and beyond their constituent members. As a result he does not give sufficient weight to the truth that, however willing people may be to live with their neighbours on terms of free association under a rule of law, they will always make, and will always need to make, a distinction between the true neighbour and the interloper.
Hayek writes that ‘a group of men become a society not by giving themselves laws but by obeying the same rules of conduct’. But that states neither a necessary nor a sufficient condition of social membership. The rules of conduct that prevail in Britain are for the most part followed in France. And there are societies such as the Italian in which the rules change from town to town and season to season. What makes Britain, France and Italy into three separate societies is the emergence in each of them of a politically pregnant first-person plural. The British, the French and the Italians all recognize a distinction between those to whom they are bound by history, territory, language and allegiance and those against whom they might one day have to defend themselves. Only when this sense of membership is in place are people disposed to submit to a common rule of law and willing to place contractual obligations to strangers above tribal and family ties.
It is true that membership is a form of spontaneous order. But it is radically different from, and often in conflict with, the spontaneous orders studied by Hayek. It comes to us with imperative force. For some it has a religious meaning; for others it speaks of home, neighbourhood, language and landscape. Where the experience of membership is absent society fragments into families, gangs and clans, as in Africa today. And there is no instance of a catallactic order in the modern world that does not depend upon national loyalty – a loyalty that may very well be threatened by too great an emphasis on the free and sovereign individual.
Now conservatives will, I hope, agree with Hayek’s defence of the catallactic order. They will support the free economy, the rule of law and the precedence of tradition and custom over state control. However, they may be more concerned than Hayek was, to emphasize the tensions that arise between these several spontaneous orders, and the frequent need for a standpoint above and beyond them, from which their rival claims can be brokered. Moreover, it is characteristic of conservatism to suggest that free exchange and the rule of law require a sense of togetherness that they themselves do not generate. While tradition, the market and ‘abstract’ rules are all rational solutions to problems of social coordination, and maybe even unique avenues to socially necessary knowledge, the same is not true of the bond of membership. This is not a solution to a coordination problem, but the condition from which both problem and solution arise. The alternative to membership is the Hobbesian social contract, which creates a sovereign above and beyond the social order, a solution that Hayek expressly and rightly rejects, not least because it tries to replace ‘evolutionary rationality’ – the rationality of a society that solves its problems by spontaneous adaptation – with a constructivist rationality, that wishes to embody the solution to all future problems in a master-plan. And when the conditions of membership are abused or ignored – as when a ruling elite allows uncontrolled immigration from disloyal minorities and antagonistic religious groups – then all the benefits of a liberal social order are at risk.
The motives of membership are love, gratitude and fear – love of country, language, neighbours, family, religion, customs, and home, gratitude towards these things as the source of life and happiness, and fear of their dissolution and of the anarchy, enmity and predation that would then ensue. All of those feelings flow into a common reservoir of loyalty, which maintains the community in being and overcomes the problem of the ‘free rider’. For some this loyalty takes a religious form – the loyalty of the ‘creed community’ as Spengler called it. For others, who have passed through the Enlightenment experience, loyalty is directed to the nation and the homeland. Others still lack the feeling altogether, and identify themselves as in some way outside the society by which they are nevertheless surrounded and on which they depend for their groceries. Loyalty brings the capacity for sacrifice. And sacrifice means the preparedness to lose control of your budget, to cease to maximise your own utility, to lay down your life, in extremis, for your unknown friends. It is part of the business of politics to sustain the conditions under which this loyalty arises, and liberals (in Hayek’s sense of the term) have argued, on the whole, as though loyalty did not matter, or as though it could be costlessly replaced by relations of a purely contractual kind.
There is a tendency in Hayek, encouraged by his methodological individualism, to see ‘spontaneous order’ as the default position of human society – the position to which we naturally revert when the distorting pressures of political control and egalitarian planning are lifted. In this Hayek resembles those American neo-conservatives who believe that democracy is the default position of government, to which even a Middle Eastern society will revert when the gangsters have gone. In fact, however, spontaneous order, like democracy, is a rare achievement, extracted at great cost from the true default position of mankind, which is priest-haunted tyranny. One of the goals of conservative political thinking in our time, therefore, has been to give a coherent and humane account of the kind of pre-political membership that will sustain free institutions and a rule of law. Many conservatives have been attracted by the arguments of Wilhelm Röpke, in support of a ‘social market economy’: an economy in which the free market is combined with welfare provisions designed to retain the loyalty of those who might otherwise lose out. Others have seen the welfare state, even in the mild form proposed by Röpke and Beveridge, as a threat to the shared loyalty on which social survival ultimately depends. The question who is right in this confrontation is, by its very nature, not one that can be resolved by Hayek’s mode of argument. Classical liberalism of Hayek’s kind begins from the assumption that society exists, and that the distinction between the member and the non-member is securely established in the thoughts and emotions of those who are facing the future together – so securely established that it need not be mentioned.
Membership brings a vital piece of knowledge to those joined by it, namely knowledge that they are so joined, and therefore can trust each other. From that knowledge the catallactic process can begin. But membership involves altogether more visceral and less calculating feelings than those that drive the market, feelings that cause us to espouse policies and causes that could never stand up to examination under the withering eye of methodological individualism. Hence those thinkers who have taken membership seriously have tended to emphasize other aspects of law, custom and tradition than those singled out by Hayek. While Hayek points to the role of the common law in providing remedies to injustices suffered by the individual, Maitland, for example, is more interested in the role of equity in protecting the rights, property and identity of institutions. Gierke, the most articulate defender of the German common law, saw this law in similar terms, as arising from the need to protect the community, the ‘ Genossenschaft ‘, against predation by the sovereign power. This is not the place to expound Gierke’s interesting analysis. But I mention it in order to draw attention to the fundamental weakness in Hayek’s argument, which is his failure to take proper note of the emotions and motives that are presupposed by the enterprise of free association, and which will inevitably surface in, and draw limits to, the institutions and laws of a free society.
The Persistence of Egalitarianism.
This same weakness infects Hayek’s response to socialism. As I remarked above, Hayek fails to account either for the passion among intellectuals for equality, or for the resulting success of socialists and their egalitarian successors in driving the liberal idea from the stage of politics. This passion for equality is not a new thing, and indeed pre-dates socialism by many centuries, finding its most influential expression in the writings of Rousseau. There is no consensus as to how equality might be achieved, what it would consist in if achieved, or why it is so desirable in the first place. But no argument against the cogency or viability of the idea has the faintest chance of being listened to or discussed by those who have fallen under its spell. Why is this? I shall conclude with a suggestion.
Hayek is right to distinguish the intellectual from the scholar, and to see the intellectual as striving for an influence that the true scholar may abhor. And in his introduction to Capitalism and the Historians he argues plausibly for the view that recent historians, like other intellectuals, have been animated by an anti-capitalist bias. This bias has caused them to misrepresent capitalism as a form of exploitation, and private profit as achieved always at the expense of the workforce that helped to produce it. Indeed, it seems to be characteristic of a certain kind of intellectual to perceive all economic activity as a zero-sum game. If someone gains, another loses. This zero-sum vision underpins Marx’s theory of surplus value, and crops up again and again in the socialist attacks on private enterprise, selective schools, inheritance, and just about anything else that creates a benefit that not everyone can enjoy. The idea that inequality (of reward, status, advantage or whatever) might be in the interest of both parties, the better off and the worse off, is either not accepted, or seen as irrelevant to the charge against the capitalist order. It is to the credit of Rawls that he believes that inequality can be justified. Yet, according to the Difference Principle, the justification must show that inequality benefits the worse off. But why does inequality have to be justified? And why must the justification be framed in terms of the benefits brought to the underdog, and not in terms of those enjoyed by the dog on top of him? These questions suggest that the belief in equality is being built in to the arguments offered in support of it. Like a religious belief, it is being protected rather than questioned by the arguments adduced in its favour.
Hayek sees that the zero-sum vision is fired by an implacable negative energy. It is not the concrete vision of some real alternative that animates the socialist critic of the capitalist order. It is hostility towards the actual, and in particular towards those who enjoy advantages within it. Hence the belief in equality remains vague and undefined, except negatively. For it is essentially a weapon against the existing order – a way of undermining its claims to legitimacy, by discovering a victim for every form of success. The striving for equality is, in other words, based in ressentiment in Nietzsche’s sense, the state of mind that Max Scheler identified as the principal motive behind the socialist orthodoxy of his day. It is one of the major problems of modern politics, which no classical liberal could possibly solve, how to govern a society in which resentment has acquired the kind of privileged social, intellectual and political position that we witness today.
If you accept the Nietzschean explanation of egalitarianism, then you will perhaps accept the burden of my conservative critique of Hayek, which is that he pays too much attention to the search for rational solutions to socially generated problems, and not enough to the motives that prompt people to believe or disbelieve in them. For all his brilliance in uncovering a thread of argument that (in my view) decisively establishes the intellectual superiority of liberal-conservative over socialist politics, Hayek does not engage with the real, deep-down conflict between conservatism and socialism, which is a conflict over the nature and conditions of social membership. In this conflict liberalism must learn to fight on the conservative side. For liberalism is possible only under a conservative government.
See Law, Legislation and Liberty , vol. 2, London 1976, p. 12, and also the arguments marshalled by Edward Feser in ‘Hayek on Tradition’, Journal of Libertarian Studies , vol. 17, no. 1 (Winter 2003), pp. 17-56.
The argument that I have here condensed is spelled out in detail in Ludwig von Mises, Socialism: An Economic and Sociological Analysis , tr. J. Kahane, London 1936 (first published 1922 as Die Gemeinwirtschaft: Untersuchungen über den Sozialismus), and in the essays in Hayek’s Individualism and Economic Order , London and Chicago 1948, especially the three essays on ‘Socialist Calculation’ there reprinted.
Ancient writers on the whole concurred with Hayek’s view of life. According to Demosthenes ‘every law (nomos) is a discovery and a gift of the gods’ (Antiphon I, iii, 27), a view maintained by Plato in The Laws, by the Greek tragedians, and many other ancient sources. See the discussion in Rémi Brague, La loi de Dieu: histoire philosophique d’une alliance, Paris 2005.
Jeremy Bentham, An Introduction to the Principles of Morals and Legislation, London 1789, John Austin, The Province of Jurisprudence Determined, ed. H.L.A. Hart, London 1954; Hans Kelsen, General Theory of Law and State, Harvard 1945.
See especially the argument of Dworkin in ‘Hard Cases’, reprinted in Taking Rights Seriously, 2 nd Edn, London 1978. For an overview of Dworkin’s theory of law in a study that deals also with Hayek and Oakeshott, see Charles Covell, The Defence of Natural Law, London 1992.
Of course the processes involved are different in either case. Prices are informative partly because those who over-price or under-price their goods are quickly driven from the market; the common law is informative because judgements that create conflicts are gradually overruled, and judgements that reinforce the implied social order gradually assume the status of precedents.
Feser, cit ., note 2 above. Others have written of a tension between liberal rationalism and conservative traditionalism in Hayek – notably C. Kukathas, Hayek and Modern Liberalism , Oxford 1990, and John O’Neill, cit . – though it seems to me that the concept of evolutionary rationality is designed precisely to defuse this tension.
Those looking for points of vulnerability in Hayek’s argument might question the idea of the ‘just action’, rather than the ‘just person’, as the fundamental application of the concept. To explore this topic would, however, take us too far from the present argument. Suffice it to say that the Aristotelian approach to morality, in terms of the virtues and vices of the human character, made little impact on thinkers brought up in the atmosphere of ‘methodological individualism’.
See Wilhelm Röpke, A Humane Economy , tr. Elixabeth Henderson, Chicago 1960, and the papers in Alan Peacock and Hans Willgerodt, eds, German Neo-Liberals and the Social Market Economy , New York 1989. For a contemporary defence of this position, see John Gray, The Moral Foundations of Market Institutions, London, IEA, 1992.
I have made the attempt in ‘Gierke and the Corporate Person’, in The Philosopher on Dover Beach, Manchester 1990. Das deutsche Genossenschaftsrecht was published over many years, the last volume appearing in 1913 when the author was 73 years old. It has never been fully translated, though important parts are available, tr. F.W. Maitland, as Political Theories of the Middle Ages, Cambridge 1900, and tr. Sir Ernest Barker, as Natural Law and the Theory of Society 1500-1800, Cambridge 1934.