Tuesday, 5 July 2011

Frederick Hayek: the greatest political thinker of the 20th Century

There's a great video on YouTube - Fear the Boom and Bust: a Hayek vs. Keynes Rap Anthem. Well worth a listen. I certainly know whose side I'm on.

On her first – and last – visit to the Conservative Research Department in 1975 following her election as party leader, Margaret Thatcher had the pleasure of listening to a lecture recommending the pragmatic middle way as the best direction for the Conservative Party to take if it wished to gain power again. After this defeatist twaddle had stopped, she opened her briefcase and brought out a copy of F.A. Hayek’s The Constitution of Liberty. “This,” she said, slamming it down on the table, “is what we believe.”

Imagine any modern Tory leader being uncool enough to actually believe in anything. 

The year before Central Office discovered that their new leader was weird enough to hold political beliefs, two young British academics, John Casey and Roger Scruton, had set up the Conservative Philosophy Group. Its regular meetings were attended, at some time, by every significant right wing thinker and/or journalist of the era (including Hayek, Milton Friedman and Michael Oakeshott), as well as most major Tory politicians (including Thatcher, Heath, MacMillan and Enoch Powell). As John Casey later put it, “The early Thatcher years marked a very odd moment in the history of the Tory party when it decided to lie back and enjoy ideas.”

It gave up all that dangerous folderol the moment John Major assumed the leadership. (The Labour Party gave up believing in anything when Tony Blair took over.)                   

I’ve just read Friedrich Hayek’s The Road to Serfdom. Written during the Second World War while the Great Man was at the LSE, it was published in 1944. The book contains six main messages: Socialism inevitably leads to the enslavement of the people; central planning is a Very Bad Thing; Nazism and Fascism are both forms of Socialism; human liberty depends on the Free Market; “social justice” is a chimera; and the post-war world will have to choose between the glories of traditional British Liberalism (free trade, individualism, the rule of law, prosperity and freedom) and the horrors of Socialism (oppression, slavery, terror and poverty).

Books of political theory have often brought tears of boredom to my eyes: but The Road to Serfdom made me mist up with astonishment, admiration - and regret. 

I was astonished that anyone between 1941-1943 could have seen so clearly that Communist Russia and Nazi Germany didn’t represent opposing political ideologies, but, instead, formed one enormous ideological bloc which believed that human nature was in need of – and susceptible to – “improvement”, and that every aspect of existence would get better if centrally planned by teams of experts. This faith in planning, Hayek says, results from the fact that all modern forms of totalitarianism can be sourced back to German political thinkers of the 19th Century – and the German belief in planning is almost religious (perhaps because they’re very good at it). The Victorian era saw the triumph of British Liberalism – what the Germans came up with, and exported, was its very antithesis: the aim – clearly stated many times – was to crush Liberalism. In order to do that, Individualism – the idea that people should be allowed to choose their own ends – had to be destroyed. People should only exist for the good of the state, and the state would decide not only how they lived, but also what they should believe. 

You can hardly blame the Germans for playing to their strengths – but the philosophy their men of ideas devised (along with a lot of rubbish from the French Revolution) went on to create misery and devastation on an almost inconceivable scale, and continues to do so to this day. That’s because they failed utterly to understand one basic fact – without the signals generated by free-markets (most importantly, prices) economies will fail. Planners, bereft of meaningful information about what’s happening out there in the real world because there’s no sort of informational feedback loop, don’t have a clue whether their plans are working. The price of things in the marketplace tells you what’s in short supply.

I know nothing about economics, but I think this means that if the price of shoes in Plodz goes up by 500% in a year, the people of Plodz need more shoes, and production at the State Shoe Factory in Gradz needs to increase. But the planners don’t know there’s a shortage, because the prices are fixed. Therefore, it’s up to local party hacks to feed back that information: and they’re scared shitless, because the mere suggestion that the initial plan might not have been right would probably earn them a bullet in the brain. Even if the party boss in Plodz worked up sufficient courage to pass back the info, the central planners would bury the facts in case they ended up in a concentration camp for getting it wrong in the first place. Besides, the workers at The State Shoe Factory don’t have any incentive to increase production (apart, I suppose, from the desire to avoid starving to death in the Arctic tundra). 

Apply this model to wheat production, and millions die of starvation. 

This is probably the central economic insight in the book – but there’s practically one on every page.

Here, Hayek writes about the EU, well in advance of its creation: 
“Who imagines that there exist any common ideals of distributive justice such as will make the Norwegian fisherman consent to forgo the prospect of economic improvement in order to help his Portuguese fellow, or the Dutch worker to pay more for his bicycle to help the Coventry mechanic, or the French peasant to pay more taxes to assist the industrialisation of Italy?”
As Hayek lived until 1991, he learned the answer to his own question: a lot of educated fools imagined it, and we’re all suffering the consequences.

How could anyone not admire this marvellously wise man?

This is the section that brought tears to my eyes:
“What the German and Italian who have learned the lesson above all want is protection against the monster state – not grandiose schemes for organisation on a colossal scale, but opportunity peacefully and in freedom to build up once more his own little world.” 
Each of us inhabits our “own little world”: that thought should be tattooed on the retinas of every socialist.

My sense of regret came from realising that, released from one form of bondage, the free people of Europe and, currently, those of America, once more find themselves enslaved by a leftist philosophy whose poisonous nature and sheer stupidity was so cogently and brilliantly exposed by a gentlemanly Austrian  intellectual 66 years ago. 

Hayek’s ideas swiftly gained traction in the United States after it was published, but it probably wasn’t until Margaret Thatcher and Ronald Reagan began applying them that Keynesianism suffered its first major set-back, and the socialist consensus found itself genuinely challenged in the West. Unfortunately, we’ve all run back to Nursey since then – after all, she knows best.

Hayek, who was from a noble Austrian family, became a British citizen in 1938. He moved to the University of Chicago in 1950, and subsequently spent time in Germany and Austria. In 1974, he was awarded a Nobel Prize. In 1984, the Queen made him a Companion of Honour (he called it “the happiest day of my life” and anglicised his first name to Frederick). In 1991, President Bush awarded Hayek the Presidential Medal of Freedom. He died the following year.

I’m pretty sure that Hayek was – along with Jung – one of the two greatest thinkers  of the 20th Century: being right-wingers, they understood what made us tick.

Now we just need to find another British politician who’ll slam one of Hayek’s books down on the table and say, “This is what we believe!”


  1. In the improbable event that you have not read the book ["Those bloggers, they've read everything". Homer Simpson] Theodore Dalrymple's "Not with a Bang" has an excellent chapter on Hayek's book. Although he does not agree with everything he says [collectivism is not so incompatible with a free, or free-ish, market as Hayek supposed] the chapter is full of good perceptions - including side-swipes at Orwell and praise for Hilaire Belloc's book "The Servile State" [1912]. Belloc was picking up the danger signals from the newly established compulsory unemployment insurance. Please read this chapter. [In case you accuse me of Johann Hari-type pretensions I confess that I have never read Belloc, Orwell or Hayek].

    I watched the BBC News last night [being an OAP from the private sector staring penury in the face I cannot afford fancy luxuries like Fox and CNN] and went to bed thoroughly depressed. Erwin Rommel had a major flaw - he managed to be absent from the front at El-Alamein and Normandy when Montgomery struck and had to scurry back in disarray; our boy-Prime Minister [PR trip to Afghanistan, photo-op with Desmond Bloody Tutu in SA so he could be thanked for spraying even more of our money around] has also managed to be absent from the front on two occasions when the enemy has recently struck. If I could actually fit into my bath I would seriously think about pulling a Frankie Five Fingers.
    Tuesday, July 19, 2011 - 09:49 AM

  2. OAP,

    I have to admit I’ve never read The Servile State – but will get round to it. (Interestingly, given that he was a raving Catholic, Belloc referred to Jesus as a “milksop” – he was a big, roaring, angry, bullet-headed hard-drinker who accepted Catholicism because he thought it was true, rather than because he liked the message of peace, love and understanding – interesting man.)

    I’ve always thought of Theodore Dalrymple as a deeply pessimistic, traditional, no-nonsense conservative, very keen on preserving social order, which would make him more amenable to collectivism than Hayek, who’s a traditional liberal free-trader. They’re both right-wing, of course, but of different hues, I suspect. I’m a big fan of both.

    Someone in the BBC newsroom once remarked to me, about Desmond Tutu, that he had a lovely laugh. I said I thought he was an absolute ****. Nothing has happened in the last 20 years to make me revisit that opinion. God, he’s annoying!

    I’d wait till Ed Miliband got into power before pulling a Frankie Five Angels (Pentangeli).

    If I believed for an instant that your sole source of income was a state pension, I might also believe your protestations about not being able to watch CNN and Fox – but somehow I doubt that’s the case.
    Thursday, July 21, 2011 - 07:35 PM

  3. Pentangeli. Oh Dear....we now have a 6'4" Bercow to contend with. You will suffer because of your public correction. I once had to point out to my greatest friend that "The Cincinnati Kid" didn't actually take place in Cincinnati and he has winged me several times since. Gloves off.
    Friday, July 22, 2011 - 01:01 PM

  4. Well, I mean - calling someone "Five Fingers" would be like calling me Scott "Two Legs" Gronmark! If it makes you feel any better, I've made the same mistake re Mr. Pentangeli myself.
    Friday, July 22, 2011 - 03:23 PM