John Gray on Hayek
By Alberto Mingardi
John Gray is well known for being an ideological wanderer. Though a classical liberal in the late 70s and in the 80s, when he used to co-operate with a number of classical liberal organizations, he subsequently became a vocal critic of classical liberalism.
I read Gray’s “Hayek on Liberty” a few years ago. I consider it an insightful book on Hayek. In this work Gray remarked on the similarity between Hayek’s approach and Herbert Spencer’s. Though most scholars are aware that both Hayek and Spencer were evolutionary thinkers, and that both obviously cared about markets and human freedom, they are not very often juxtaposed. This is not because of the fear of anachronism, but rather because of the Social Darwinism stigma that tainted Spencer.
Gray has a new piece on Hayek, for the New Statesman, which makes for an interesting read.
Gray tries to present a “balanced” view of Hayek and refers to his personal conversations with him. He points again to the Spencer connection. I found this bit interesting:
There are many similarities between Hayek’s and Spencer’s theories, not least the idea that capitalism will prevail over other economic systems because it is more productive and can support a larger human population. Hayek assured me that he had never read Spencer, and I’m sure this was the case. Very similar ideas had been popular in fin-de-siècle Vienna. Hayek was doing no more than reviving a recurrent modern delusion – the belief that history obeys evolutionary laws, which somehow underpin a process of progressive social development.
One of Gray’s central points is that Hayek’s theory is basically autobiographical, in the sense that he desperately hoped for a revival of fin-de-siècle Vienna. This was the period “Stefan Zweig described as ‘the age of security’: the long period of stability provided by the 68-year reign of its last-but-one emperor, Franz Joseph. Hayek witnessed the collapse of an imperial regime that for generations had been more civilised and more liberal than most of the nation states that replaced it in interwar Europe”. That might well be, and quite frankly I can hardly disagree with nostalgia for Habsburg Austria – with a view of what came after it in the 20th century.
Perhaps it is also true that Hayek couldn’t answer the question “How could liberal values be renewed in a time of political tribalism?”–but frankly, who can? A quick glimpse at Bryan Caplan’s “The Myth of the Rational Voter” or Ilya Somin’s “Democracy and Political Ignorance” may remind us that we are a long way from answering that question in a satisfactory way.
The fascinating thing in the article is the way in which Gray tries to tell the good Hayek from the bad Hayek.
One of his charges is a bit of an exaggeration, but is somewhat valid. That is, he accuses Hayek of “constructivism” for his attempts at constitutional engineering. They might sound self-contradictory, as Hayek relied so much on evolution and on time as the great legislator. Dan Klein has already dealt with that challenge in an amusing article on “The Ways of John Gray” (here, see also this paper by Jeremy Shearmur). I think however there is room to argue that Hayek’s pars construens, in so far as constitutional design is concerned, is not his best contribution. Perhaps, any transition to a freer society involves some limited attempts of constructivism (as Vaclav Klaus explains very well in his essay included in The Great Rebirth comparing privatization processes in the West and in former communist countries).
On the other hand, Gray recognises what is most interesting and genuinely Hayekian in Hayek’s thought: that is, his understanding of the market as “a means of discovering and transmitting information that is dispersed throughout society.”
It was this insight into the knowledge-creating function of markets that enabled him to formulate a decisive argument against central economic planning.
Generations of socialists have maintained that the failings of the Soviet economy were because of historical causes extraneous to the planning system: a lack of democracy rooted in tsarist traditions of despotism, the underdevelopment of the Russian economy when the Soviet system came into being, and Stalin’s deformation of Lenin’s supposedly more benign inheritance.
As Hayek perceived, none of these factors can account for the universal failings of planned economies, which have followed a similar pattern in countries as different as Czechoslovakia and Mongolia, East Germany and Cuba. The fundamental reason for the failures of central economic planning is that economic knowledge cannot be centralised. More than the love of power or the inevitability of corruption, it is the limitations of human knowledge that make socialist planning an impossible dream. Here Hayek’s argument was unanswerable.
But then comes what I consider the truly puzzling argument in Gray’s piece: that is, he comments that “it was Keynes who understood fully the vanity of liberal rationalism”, not Hayek. Wow, really?
Gray quotes Keynes’s “My Early Beliefs” and his “Economic Consequences of the Peace” and seems to consider Keynes as a natural anti-constructivist, who developed conscious/deliberate solutions for a hazardous/uncertain/precarious world and was always open to revising his own proposals (on Keynes and complexity, see Don Boudreaux here). On the other hand Gray maintains that “‘Keynesianism’ is a confection of Keynes’s more mechanical disciples, not an indication of how this mercurially brilliant mind would have responded to our present dilemmas”.
Fair enough, we don’t know what Keynes would have thought of the financial crisis, Margaret Thatcher, or the Back to the Future trilogy for that matter, but a thinker should be judged by his legacy. Keynes’s legacy is in itself a potent constructivist experiment: modern macroeconomics, which certainly Hayek didn’t like and which cannot be dismissed merely as “a confection of Keynes’ mechanical disciples.”
Gray’s last paragraph is likewise interesting and bizarre:
Hayek watched the interwar collapse with horror, as Keynes did, and shared many of Keynes’s liberal values. What he failed to understand is that these values cannot be renewed by applying any formula or doctrine, or by trying to construct an ideal liberal regime in which freedom is insulated from the contingencies of politics.
Ok. I have difficulties in picturing Hayek like the rationalist sketched by Oakeshott, who thinks politics can be changed through the appropriate training of the minds and thus that education in ‘public administration’ is “the surest defence against the flattery of a demagogue and the lies of a dictator”. But one of Hayek’s less apparent legacies is the contemporary classical liberal movement, upon which he exercised a considerable influence both as a theorist and as an intellectual leader. Classical liberals tend to believe they can renew liberal values by sharing them with a wider number of people, thus attempting to persuade public opinion at large to “buy in” the doctrine of liberty.
This was Hayek’s strategy. It was sometimes implemented by producing blueprints (applying a formula to politics) and on other occasions by investing into the dissemination of the liberal doctrine. I think it did plenty of good but certainly didn’t produce many “regime changes” in direction of freer societies. But after all, is it no mean feat to devise a strategy which won’t keep freedom “insulated from the contingencies of politics” and yet will continue to hold a classical liberal idea of freedom?