Hayek: the Daddy of Neoliberalism
Friedrich von Hayek was the daddy. He was the Thatcher government’s philosophical anchor. He was one of the high priests of neoliberalism. Hayek was the man whose book Thatcher famously slammed down on a table and declared “This is what we believe in”! The book in question was Hayek’s second attack on socialism titled The Constitution of Liberty. His first, The Road to Serfdom is given similar veneration by Conservatives and is no less visceral in its straw man critiques of socialism and liberalism. This is an odd position for a man who was wedded to the ideals of classical liberalism but it is the social aspects of liberalism that Hayek rails against, not its economic message.
In the first chapters of the book, Hayek rails against both liberalism and socialism. He holds Britain (or England as he says) as a model economy and it is through Britain’s free trade policies of the 19th century that his notion of liberty is predicated. he says,
The rule of freedom which has been achieved in England seemed destined to spread throughout the world
He ignores the methods by which the British idea of freedom was exported throughout the world: by the barrel of a gun. The Road to Serfdom was published in 1944. Hayek, an Austrian economist had taken a position at the London School of Economics. In Vienna he had been influenced by Ludwig von Mises, the founder of the Austrian School of Economics whose name has gone on to grace the title of a US right wing libertarian think tank. Interstingly enough for a self-confessed ‘liberal’, von Mises gave his support to Englebert Dollfuss’s Austrofascist regime. Von Mises served as economic advisor to Dollfuss until the latter was assassinated by the Nazis. The Jewish von Mises would have found it difficult to live under a Nazi regime because of its racial purity laws.
The von Mises Institute ‘scholar’, Lew Rockwell has a selective take on fascism here. He completely rewrites history by airbrushing out von Mises involvement in Dollfuss’s regime. Indeed apologists for von Mises will brush aside any suggestion of his collaboration with the “it was a lesser evil [than communism]” defence. We can see the start of a pattern here: those who would describe themselves specifically as classical liberals would go on to offer their support for authoritarian regimes. Hayek and Friedman both lent their support to Pinochet’s Chile – Hayek visited there in 1984. The libertarian rhetoric obscures the reactionary and authoritarian tendencies that are present within their strain of classical liberalism. Von Mises left Austria for the United States and together with Hayek and Friedman they founded the Société du Mont-Pèlerin, which became a sort of anti-Kenynesian think-tank; a hothouse for neoliberal thinkers. You can read their Statement of Aims here.
Neoliberalism is essentially a late 20th century variant of classical liberalism. Whereas the the emphasis of classical liberalism was on free trade, limited government and so forth, Hayek and his contemporaries Ludwig von Mises and Milton Friedman, placed greater emphasis on the notion of the individual as a sovereign being who was unimpeded by regulation or ‘red tape’ and free to act as
agents consumers within a ‘liberal democracy’. This, they posited, would move human society along a progressive path because competition, they argued, is the natural human condition and the logic was that competition was therefore good for progress. In other words, system that entirely deregulated economic activity would produce greater wealth and thus greater happiness and provide an outlet for natural competition. To achieve this, all social relations would become market relations: everything that was once publicly-owned would be bought and sold in a market place (Gilbert, 2008). This included the welfare state, much of which was largely dismantled by Thatcher in the 1980’s. Neoliberalism is classical liberalism that has been taken to an extreme. Everything and everyone must make a profit. Thatcher once declared that she wanted to see a “nation of entrepreneurs”. Everyone would become an entrepreneur, un petit capitaliste, a shopkeeper, a spiv whether they wanted to be one or not. The former nationalized companies were expected to make profits for their shareholders, the lessons of history were apparently forgotten as the government sold the public a romanticized image of the age of the great railway companies; it was an image that was intended to restore a lost pride in an underfunded rail network that was now re-branded using, in some cases, the names of the Big 4 rail companies (like GWR).
Nostalgia was a new way of selling government ‘products’. But nostalgia is history that has been purged of those discourses that do not conform to the narrative of the dominant ideological class. Gil Scott-Heron says in his beat poem, B-Movie
The idea concerns the fact that this country wants nostalgia. They want to go back as far as they can – even if it’s only as far as last week. Not to face now or tomorrow, but to face backwards.
What the government failed to mention was the fact that all the so-called Big 4 railway companies (Southern, LNER, GWR and LMS) were struggling before they were nationalized in 1945. LNER never made a profit. It is impossible for an enterprise that serves the public interest, such as a publicly-owned railway, to turn a profit. They are public enterprises. Such enterprises are necessary for the greater good of the nation because they stimulate the economic growth of which Hayek and his disciples claim to be in favour. Publicly-owned enterprises are therefore too important to be left to the devices of the market. As we have seen with rail privatization, the situation is chaotic: there are multiple train operating companies, a separate rail infrastructure company and at least 3 different regulators, which includes the Department for Transport.
Material wealth underpinned this notion of the individual and the human being was magically transformed into a rational calculating machine free only to make money and consume commodities. This is best illustrated by Adam Curtis’s examination of Nash’s game theory and its employment in the neoliberal project in his documentary, The Trap – What Happened to our Dream of Freedom? (BBC2, 2007). In the film he says that the theory was employed by the West during the Cold War. It produced the so-called theory of ‘Mutually Assured Destruction’, which was a sort of ‘who blinks first gets annihilated” game. Nash’s theory also filtered into the sphere of economic thought and resonated with Hayek. It was posited that human beings are irrational beings that act only in their own self interest and that people need to be given targets to acheive that will eventually become benchmarks. In Hayek’s grand vision there is no room for altuism. There is no alternative (TINA). One of the cornerstones of neoliberalism is its insistence on personal responsibility
Freedom to order our own conduct in the sphere where material circumstances force a choice upon us, and responsibility for the arrangement of our own life according to our own conscience, is the air in which alone moral sense grows and in which moral values are daily recreated in the free decision of the individual. Responsibility, not to a superior, but to one’s own conscience, the awareness of a duty not exacted by compulsion, the necessity to decide which of the things one values are to be sacrificed to others, and to bear the consequences of one’s own decision, are the very essence of any morals which deserve the name.
Nietzsche would question the use of the word “morality” here. He said “morality is the herd instinct of the individual”. Morality is imposed on others by those who dishonestly claim that they have some form of moral authority or a superior framework of morals to the Other.
The Tories were in the electoral wilderness for 13 years. During this time they had 4 leaders, 3 of whom offered little different to the standard Hayekian formula that had been fused with romanticism (Hague’s Save the Pound campaign slogan). The election of David Cameron in 2007 was portrayed as a break with the past. He was a fresh-faced old Etonian with some blue blood in his veins. In spite of his evident poshness, Cameron was immediately compared to Blair but the comparison relied solely on the fact that they were both relatively young when they became party leaders. Blair had no philosophical anchor unless you count Giddens. Indeed Blair claimed to be “beyond ideology”. He was neither right nor left (sic).
There is no such confusion with the Tories, they are right wing. But Cameron
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had to make some kind of break with the past. Hayek was deemed too old fashioned; too closely associated with the Thatcher years. More importantly, they were swept along by the tide of libertarian thinking in the United States. These libertarians were searching for a new ‘philosopher’ to help them solve the economic mess that they and their associates in the banking and finance sector had got us into. They looked for a new way of justifying their attacks on the poor. So with nary any hesitation, they turned to Ayn Rand.
Last year, I was watching Newsnight, I don’t remember the exact month but they were running an item on Rand. If I remember correctly, Douglas Carswell, MP for Clacton, whom I had never heard of at the time, came on to talk about her.
That was the first sign of what was to come.
I also noticed that Rand was being talked about more in the quality press. There was talk of Brad Pitt and Angelina Jolie making a film based on Atlas Shrugs. Pitt and Jolie are self-confessed fans of Rand. There are others too ranging from Oliver Stone to Ronald Reagan. In April of last year, Carswell penned this blog.
Rand ’s ideas are back. Or more accutrately, Rand’s ideas never went away. They were simply ignored by that leftist elite that presides over our culture and our institutions. But now the internet means all those quangocrats, bogus academics and Guardianistas no longer call the cultural shots like they did.
The left are going to hate it.
Not just the left but anyone with a shred of humanity in their soul, Doug. Carswell talks of a “leftist elite” but what is this “leftist elite”? He assumes that because the UK hasn’t fully embraced the authoritarian libertarianism of Hayek et al, then the country is dominated by these “leftist elites”. To be sure, this is a phrase that Carswell has borrowed from the lexicon of the US Right where Rand is still very big business. Carswell also ignores the fact that his own party, the Conservatives is a party full of elitists – many of them are millionaires and sit in cabinet (there’s 22, count them).
Rand, like Hayek, placed the individual at the centre of her philosophy. The Noble Soul was the habitus for her ideas of rational self-interest or, as I would suggest it be called, rationalized selfishness. This selfishness was further rationalized as ‘freedom’. For Rand, freedom could only be achieved through unbridled laissez-faire capitalism which she described as “the unknown ideal”.
When I say “capitalism,” I mean a full, pure, uncontrolled, unregulated laissez-faire capitalism—with a separation of state and economics, in the same way and for the same reasons as the separation of state and church.
The sudden fetishization and appropriation of Rand’s philosophy by some Conservatives is odd. On the surface, there is little to choose between Hayek and Rand. In both cases, the arguments against collectivized activity by Hayek and altruism by Rand ignore the complexities of human existence which reduces humanity to its most bestial level; an unfeeling lump of flesh that only has the capacity for making money . Emotions, community and family ties, empathy, sympathy and kindness are all erased by Rand. If one should show kindness to another, she would argue, then it is done entirely out of self interest. She does not say why. Regarding emotions, she wrote,
Emotions are the automatic results of man’s value judgments integrated by his subconscious; emotions are estimates of that which furthers man’s values or threatens them, that which is for him or against him—lightning calculators giving him the sum of his profit or loss.
This is a rather strange rationalization of emotions, which are in themselves, hard to pin down. What this passage certainly reveals to us is Rand’s coldness. Perhaps it is because she thought of relationship with other people as a means to an end. So cold was she that she rationalized emotions as products in a system of exchange, profit and loss. Her coldness is further revealed in her pronouncements on humour.
Humor is the denial of metaphysical importance to that which you laugh at. The classic example: you see a very snooty, very well dressed dowager walking down the street, and then she slips on a banana peel . . . . What’s funny about it? It’s the contrast of the woman’s pretensions to reality. She acted very grand, but reality undercut it with a plain banana peel. That’s the denial of the metaphysical validity or importance of the pretensions of that woman. Therefore, humor is a destructive element—which is quite all right, but its value and its morality depend on what it is that you are laughing at. If what you are laughing at is the evil in the world (provided that you take it seriously, but occasionally you permit yourself to laugh at it), that’s fine. [To] laugh at that which is good, at heroes, at values, and above all at yourself [is] monstrous . . . . The worst evil that you can do, psychologically, is to laugh at yourself. That means spitting in your own face.
It is arguable that Rand had no sense of humour because it does not figure in the calculus of profit and loss.
Ayn Rand has been portrayed as a philosopher. Her philosophy, which she named Objectivism, has become the template for those who are either unfamiliar with Hayek or have been persuaded to read her fiction because it is supposed to be some sort of rite of passage. It is possible to argue that Rand was deeply misanthropic, seeing only the potential for making money and rejecting human complexities as an almighty inconveniences – which she categorically ignored. She once said,
Money is the barometer of a society’s virtue.
It is not clear what she means by the word “virtue” but she employs the word in the title of her book The Virtue of Selfishness. When Rand died her followers placed a wreath in the shape of a 6 foot high dollar sign beside her grave. It was an oddly pertinent symbol of her cupidity, though her supporters thought otherwise. Here she declares her selfishness
I swear, by my life and my love of it, that I will never live for the sake of another man, nor ask another man to live for mine.
Other people are simply there for their usefulness. Not because there is any desire for companionship or anything like it. Rand had no use for companions. She had disciples. She was a cult leader.
It is easy to see where phrases like “socialized medicine” come from too,
Socialism may be established by force, as in the Union of Soviet Socialist Republics—or by vote, as in Nazi (National Socialist) Germany. The degree of socialization may be total, as in Russia—or partial, as in England. Theoretically, the differences are superficial; practically, they are only a matter of time. The basic principle, in all cases, is the same.
The alleged goals of socialism were: the abolition of poverty, the achievement of general prosperity, progress, peace and human brotherhood. The results have been a terrifying failure—terrifying, that is, if one’s motive is men’s welfare.
Of course this presupposes that capitalism has never been responsible for countless deaths, the loss of liberties or the imposition of an authoritarian regimes that were wholly supportive of the idea of unfettered capitalism as a ‘cure’ for all ills. I am thinking here of Pinochet’s Chile.
As this article from Mother Jones suggests, the world of Rand is an upside down one. In an deliberate inversion of logic, Rand’s thesis is that the rich and powerful are the oppressed, while the poor, the vulnerable and the low-waged – whom she labelled “looters” and “moochers” – are the oppressors. It is now easier to recognize the source of the coalition’s policies in relation to those on the lowest income scales. Those who receive state welfare benefits (including those on Disability benefits) have been consistently painted as “scroungers” regardless of their circumstances. The Tory press has been at the forefront of this war against the subaltern classes by printing a drip-feed of stories about “chavs”, “dole cheats” and so on. They have acted as the Conservative Party’s unofficial information service. It is arguable that the only reason the Conservatives have adopted Rand’s philosophy is to legitimate selfishness and greed. Rand’s ideas provide and instant justification to the false premise that the poor and the unemployed are stealing money directly from their pockets through taxation.
A better world is out there.
Duggan, L (2003). The Twilight of Equality? Neoliberalism, Cultural Politics and the Attack on Democracy. Boston: Beacon Press
Gilbert, J (2008). Anticapitalism and Culture. Oxford: Berg
Hayek, F. A. (1983). The Road to Serfdom, London: Routledge Kegan Paul
Nietzsche, F (2008). Beyond Good and Evil. Cambridge University Press
Rand, A (1975). The Romantic Manifesto. London: Signet
Rand, A (1964). The Virtue of Selfishness. London: Signet
Curtis, A (2003). The Trap – What Happened to our Dream of Freedom? (BBC2)
UPDATE: 30/1/11 @ 0102
Tidied up blog and made some clearer connections
UPDATE: 23/2/11 @ 1957
Made some additions to the text and did some further tidying up.