The Mouse on "Conservatism" (Part I)
[The next several blogs will be from chapter 11 of my book "The Several Roads to Serfdom," which purports to be a critique of F. A. Hayek's libertarian masterpiece, "The Road to Serfdom." I have left the footnotes in. They will appear as end notes to each installment.]
Hayek’s masterpiece: In chapter six of The Road to Serfdom, Friedrich Hayek explains the difference between economies that operate under the rule of law and those that operate by the whim of government. “Under the first the government confines itself to fixing rules determining the conditions under which the available resources may be used, leaving to the individuals the decision for what ends they are to be used. Under the second the government directs the use of the means of production to particular ends.” [Page 81.] One can see from the tone and scope of these keynote sentences that Hayek has focused upon the law as it relates to economic matters. The title of the chapter, “Planning and the Rule of Law,” leaves no doubt that Hayek has set out to contrast the way capitalist and socialist economies understand and use the law. Briefly put, capitalist governments make laws designed to maximize the free use of resources by individuals, whereas socialist governments reserve to themselves the power to restructure and redirect the use of resources as they see fit.
History has rendered that particular distinction practically obsolete. As Hayek acknowledged in the introduction to the 1976 edition of his book, and as Francis Fukuyama confirmed in The End of History and the Last Man, “hot” socialist economies are almost extinct. Even the so-called communist nations, the People’s Republic of China, for example, while continuing their dictatorial ways, run their economies by means more capitalist than socialist. Those nations cannot, of course, be said to operate under the rule of law as Hayek understood it. The Chinese government, for example, still reserves the right to change the law to suit the momentary perceptions of its dictatorial rulers rather than to enforce the ideals of their quasi-capitalist economies. The local family enterprises that were the first to go into business in modern China, were able to do so because the government found it beneficial to make a law permitting the businesses to open. The Chinese dictators could just as easily pass a law forbidding for-profit enterprises and, thereby, revert to pure socialist practices. That it does not – or has not done so – speaks either to their good economic sense or to a visceral fear of uprising.
It has not eluded notice, however, that western, free-world governments have gradually taken on some of the trappings of socialism. The Medicare and Social Security laws in the United States are clearly not capitalist in nature, since by law they dictate the flow of certain economic resources. The U. S. government has also enacted laws of a quasi-socialist type to control (or benefit) certain areas of free enterprise. They have, for example, interfered with the tobacco business by methods that fly in the face of rule of law Hayek envisioned as the staple of free capitalist societies. The excise tax on tobacco aims primarily to encourage people to stop killing themselves by smoking it. As noble as that objective may seem, the government has handled the “tobacco problem” in a self-contradicting manner. It has taxed smokers while leaving the tobacco farmer’s product relatively untaxed (in fact subsidized), leading at least this observer to believe that, in its treatment of tobacco farmers, the government has implemented one of the most fraudulent forms of economic fascism, that which favors a small body of producers with no possible benefit to anyone other than the recipients of the largesse.
Medicare, Social Security, and levies like the tobacco tax are a few of the tools of what has come to be called “social engineering.”[1] Such laws aim to produce effects the government believes will benefit the people. Social engineering laws, like all others, whether socialist or capitalist, are burdened with two separately identifiable – but closely related – bodies of cost:
(1) economic costs in dollars and cents, and
(2) ideological costs, like those perceived as the ill-effects of the tobacco tax.
One or the other of the two costs lie at the heart of the disagreements that inevitably crop up when social engineering programs become subjects of debate. Legislators typically frame their economic analysis by weighing costs against benefits. But since the benefits derived from social programs do not lend themselves easily to dollars and cents evaluation, ideological issues arise even in that process. Imagine the difficulties involved in trying to put a dollar value on human life, or on good health.
Assessment of the second cost item involves benefits of the unmeasurable sort to an even greater degree. Capitalism and socialism, and similar ideologies, have no value apart from the benefits they provide to the sustenance and enjoyment of life.
Social engineering laws – and in fact, all laws – could be said to be plans. They certainly result from a governmental attempt to implement a “planned” solution to a perceived problem. Sometimes the plans work and sometimes they don’t, but in all cases, plans that seek to marshal the government’s power to limit or control people’s activities arouse objections. When raised by libertarian ideologues, the objections usually take the form of questioning the right of the government to do anything that might be interpreted as an interference with the people’s rights and liberties. Those of the opposite persuasion tend to think the government is obliged to do whatever is necessary to achieve social equality. Consequently, nations that permit free expression generally find themselves engaged in a continuous debate over what is good planning and what is not.
Hayek anticipated – or saw with his own eyes – the turmoil that arises from disagreements of that sort. To help us resolve the difficulty, he identified objectionable planning as “a central direction of all economic activity according to a single plan, laying down how the resources of society should be ‘consciously directed’ to serve particular ends in a definite way.” [Page 40, italics mine.] While this definition seems to make crystal clear at least one side of the argument, it still leaves loopholes in pure laissez faire theory that Hayek’s purported disciples have had difficulty accepting. If planning is bad only when “all economic activity” is controlled, the modern conservatives, with few socialist governments to criticize, have been deprived of most of their ammunition, which of course, hasn’t stopped them from criticizing any action of government which they find repugnant to their own beliefs.
[1] Paul Johnson, in his book Modern Times, claims, by curvilinear reasoning, that over 100 million people were killed in the 20th century as “unintended consequences” of social engineering projects. He’s contending, for example, that Germany’s socialist economic policies led directly, though not by intention, to the Holocaust. I contend that Hitler’s political tactics, fueled by ancient prejudices derived from the Christian gospels, led intentionally to the Holocaust. I do not aim to account for all of Johnson’s 100 million dead. I’ll just say it straight: Johnson’s claim is phony, a blatant example of the post hoc ergo propter hoc logical error.
Hayek’s masterpiece: In chapter six of The Road to Serfdom, Friedrich Hayek explains the difference between economies that operate under the rule of law and those that operate by the whim of government. “Under the first the government confines itself to fixing rules determining the conditions under which the available resources may be used, leaving to the individuals the decision for what ends they are to be used. Under the second the government directs the use of the means of production to particular ends.” [Page 81.] One can see from the tone and scope of these keynote sentences that Hayek has focused upon the law as it relates to economic matters. The title of the chapter, “Planning and the Rule of Law,” leaves no doubt that Hayek has set out to contrast the way capitalist and socialist economies understand and use the law. Briefly put, capitalist governments make laws designed to maximize the free use of resources by individuals, whereas socialist governments reserve to themselves the power to restructure and redirect the use of resources as they see fit.
History has rendered that particular distinction practically obsolete. As Hayek acknowledged in the introduction to the 1976 edition of his book, and as Francis Fukuyama confirmed in The End of History and the Last Man, “hot” socialist economies are almost extinct. Even the so-called communist nations, the People’s Republic of China, for example, while continuing their dictatorial ways, run their economies by means more capitalist than socialist. Those nations cannot, of course, be said to operate under the rule of law as Hayek understood it. The Chinese government, for example, still reserves the right to change the law to suit the momentary perceptions of its dictatorial rulers rather than to enforce the ideals of their quasi-capitalist economies. The local family enterprises that were the first to go into business in modern China, were able to do so because the government found it beneficial to make a law permitting the businesses to open. The Chinese dictators could just as easily pass a law forbidding for-profit enterprises and, thereby, revert to pure socialist practices. That it does not – or has not done so – speaks either to their good economic sense or to a visceral fear of uprising.
It has not eluded notice, however, that western, free-world governments have gradually taken on some of the trappings of socialism. The Medicare and Social Security laws in the United States are clearly not capitalist in nature, since by law they dictate the flow of certain economic resources. The U. S. government has also enacted laws of a quasi-socialist type to control (or benefit) certain areas of free enterprise. They have, for example, interfered with the tobacco business by methods that fly in the face of rule of law Hayek envisioned as the staple of free capitalist societies. The excise tax on tobacco aims primarily to encourage people to stop killing themselves by smoking it. As noble as that objective may seem, the government has handled the “tobacco problem” in a self-contradicting manner. It has taxed smokers while leaving the tobacco farmer’s product relatively untaxed (in fact subsidized), leading at least this observer to believe that, in its treatment of tobacco farmers, the government has implemented one of the most fraudulent forms of economic fascism, that which favors a small body of producers with no possible benefit to anyone other than the recipients of the largesse.
Medicare, Social Security, and levies like the tobacco tax are a few of the tools of what has come to be called “social engineering.”[1] Such laws aim to produce effects the government believes will benefit the people. Social engineering laws, like all others, whether socialist or capitalist, are burdened with two separately identifiable – but closely related – bodies of cost:
(1) economic costs in dollars and cents, and
(2) ideological costs, like those perceived as the ill-effects of the tobacco tax.
One or the other of the two costs lie at the heart of the disagreements that inevitably crop up when social engineering programs become subjects of debate. Legislators typically frame their economic analysis by weighing costs against benefits. But since the benefits derived from social programs do not lend themselves easily to dollars and cents evaluation, ideological issues arise even in that process. Imagine the difficulties involved in trying to put a dollar value on human life, or on good health.
Assessment of the second cost item involves benefits of the unmeasurable sort to an even greater degree. Capitalism and socialism, and similar ideologies, have no value apart from the benefits they provide to the sustenance and enjoyment of life.
Social engineering laws – and in fact, all laws – could be said to be plans. They certainly result from a governmental attempt to implement a “planned” solution to a perceived problem. Sometimes the plans work and sometimes they don’t, but in all cases, plans that seek to marshal the government’s power to limit or control people’s activities arouse objections. When raised by libertarian ideologues, the objections usually take the form of questioning the right of the government to do anything that might be interpreted as an interference with the people’s rights and liberties. Those of the opposite persuasion tend to think the government is obliged to do whatever is necessary to achieve social equality. Consequently, nations that permit free expression generally find themselves engaged in a continuous debate over what is good planning and what is not.
Hayek anticipated – or saw with his own eyes – the turmoil that arises from disagreements of that sort. To help us resolve the difficulty, he identified objectionable planning as “a central direction of all economic activity according to a single plan, laying down how the resources of society should be ‘consciously directed’ to serve particular ends in a definite way.” [Page 40, italics mine.] While this definition seems to make crystal clear at least one side of the argument, it still leaves loopholes in pure laissez faire theory that Hayek’s purported disciples have had difficulty accepting. If planning is bad only when “all economic activity” is controlled, the modern conservatives, with few socialist governments to criticize, have been deprived of most of their ammunition, which of course, hasn’t stopped them from criticizing any action of government which they find repugnant to their own beliefs.
[1] Paul Johnson, in his book Modern Times, claims, by curvilinear reasoning, that over 100 million people were killed in the 20th century as “unintended consequences” of social engineering projects. He’s contending, for example, that Germany’s socialist economic policies led directly, though not by intention, to the Holocaust. I contend that Hitler’s political tactics, fueled by ancient prejudices derived from the Christian gospels, led intentionally to the Holocaust. I do not aim to account for all of Johnson’s 100 million dead. I’ll just say it straight: Johnson’s claim is phony, a blatant example of the post hoc ergo propter hoc logical error.
posted by Benedict S. at 9:40 AM
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