Monday 4 October 2010

Cage Match: Caldwell versus Farrant [updated]

Update: text below updated in a couple of spots for accuracy and clarity.

Bruce Caldwell replies to Farrant and McPhail on Hayek's Road to Serfdom; I'm told the reply is coming out in a later issue of Challenge.

For Farrant and McPhail, the resurgent popularity of RTS hinged on a reading of Hayek that, while unpopular among RTS fans, was in fact the right reading of Hayek: any moves towards socialism would lead to serfdom. Consequently, Glenn Beck's using of Road to Serfdom as a rallying call against Obama's policies does no disservice to Hayek. Hayek, however, does disservice to those British socialists who rated liberalism above totalitarianism and who would have stepped back from planning rather than allow the rule of the demagogue.

Caldwell argues that Farrant and McPhail miss essential context. The argument in RTS was addressed only to "hot" socialism: full nationalisation of industries and central command planning. When restricted to that set, Hayek was right: full planning cannot be undertaken without totalitarianism. Caldwell notes that no socialist state achieved totalitarianism through Hayek's mechanism: democratic election leading to failings of planning leading to the rise of the demagogue; he argues that consequently no test of Hayek's mechanism has been undertaken. While the argument in RTS was restricted to "hot socialism", Hayek's later writings provided other warnings of the dangers of the welfare state. The mechanisms and arguments in those later writings were different and oughtn't be conflated with the dangers noted in RTS.

Farrant and McPhail respond to Caldwell [Note: they're there responding to earlier Caldwell arguments, not this particular piece], and others, in the latest issue of Challenge, unfortunately gated. I'll leave to one side F&M's noting that the current talking heads promoting Hayek's argument on Beck's show happily identify Obama's policies as the starting point on the road to serfdom; the more interesting question is whether Hayek meant the argument there to apply.
Intriguingly, Bruce Caldwell — commenting on the Beck-inspired surge in Hayek’s sales—notes that Hayek wrote his “full-fledged attack on socialism and totalitarianism” largely in “response to the British Labour Party platform of the time” (Caldwell, as quoted in Zaitchik 2010, 3). Caldwell’s reference to the policy program of the British Labour Party is particularly noteworthy. Hayek often invoked postwar British experience to illustrate the supposed veracity of The Road to Serfdom. As Hayek explained in 1948, British experience supposedly clearly demonstrates that “the unforeseen but inevitable consequences of socialist planning create a state of affairs in which sooner or later totalitarian forces get the upper hand” (Hayek 1948, as quoted in Farrant and McPhail 2010b). Unsurprisingly, the tenor of Hayek’s remarks is markedly congruent with the logic he laid out in chapter 5 of The Road to Serfdom: Planning and intervention (it is highly revealing that Hayek invokes the interventionist and welfare state policies adopted by Labour as full-blown “socialist planning”) generate pervasive economic inefficiencies and dislocations.8 This pervasive inefficiency supposedly leads to the wholesale replacement of democracy.
They then cite the foreword to the 1976 edition of RTS:
In the preface, Hayek notes that if any reader asked whether he would still “defend all the main conclusions of ... [the] book ... the answer ... is on the whole affirmative” (xxiii). Importantly, Hayek notes that “terminology has changed” between 1944 and 1976, and
for this reason what I say in the book may be misunderstood.... At the time I wrote, socialism meant ... nationalization ... [and] central economic planning.... [Hence] Sweden ... is today very much less socialistically organized than ... Britain or Austria, though Sweden is commonly regarded as much more socialistic. This is due to the fact that socialism has come to mean chiefly the extensive redistribution of incomes through taxation and the institutions of the welfare state. In [this] ... latter kind of socialism the [totalitarian] effects I discuss in this book [Road to Serfdom] are brought about more slowly, indirectly, and imperfectly ... the ultimate outcome tends to be very much the same, although the process by which it is brought about is not quite the same as that described in this book. (Hayek 1976/1994, xxiii–xxiv, emphasis added)
Hayek intended the argument to apply to the British Labour Party. British socialists would then had to have preferred totalitarianism to liberalism for the RTS mechanism to run its course; otherwise, they'd have retreated from planning before going too far down that path. It's of course possible that their retreat came only because Hayek showed them the inevitable outcome of pushing through with planning. But that we can't point to an example of a democratic country turning totalitarian using the RTS mechanism suggests that the RTS mechanism isn't a particularly important one in explaining any real world totalitarianism; totalitarianism tends to come in with planning rather than as later consequence of it.

So, I'll disagree with Caldwell that Hayek's mechanism hasn't been tested. Caldwell writes:
Next, there are no examples of democratically elected governments that tried to put such a system into place.10 So we cannot directly test to see if he was right or wrong. We do, however, have examples of such systems that were not democratically elected. And Hayek’s description of life under such regimes is spot on.
Planning cannot be done without totalitarianism. But the RTS argument isn't just that; it's that steps toward planning push us to totalitarianism. And that many western European democracies turned back from planning rather than continuing on the road to serfdom suggests Hayek's mechanism was wrong, even if he was right that planning cannot be done without totalitarianism.

But I will have to re-read Constitution of Liberty and Law, Legislation and Liberty to contrast the mechanisms there with those in Road to Serfdom.

Note also that John Quiggin reviews Farrant and McPhail's argument at Crooked Timber:
Until the right went completely crazy, the most common claim in support of Hayek was that his predictions had somehow been vindicated by Thatcher’s reaction against the welfare state. Leaving aside the fact that Thatcher’s remodelling of the British economy in the image of the City of London looks a lot less appealing today than it did only a few years ago, this totally misses the point of Hayek’s book. If he had wanted to argue that social democratic policies would reduce the rate of economic growth, and to throw in a bit of hyperbole, he could have called it “The Road to Destitution” or something similar. Hayek wanted to make the much stronger claim that the attempt to implement Labor’s policies would necessarily lead to a loss of personal and political freedom.


  1. How can the book be merely about command planning. Hayek writes in RTS:
    “[T]he close interdependence of all economic phenomena makes it difficult to stop planning just where we wish . . . once the free working of the market is impeded beyond a certain degree, the planner will be forced to extend his controls until they become all comprehensive” (Hayek [1944] 1994, 117, emphasis added).

    He is trying to explain why you ultimately get to command planning. He does not simply - as Caldwell would have it - assume you are already there.

  2. Is your primary complaint about totalitarianism denial of Tiebout competition?

    Some people undoubtedly want to participate in a planned economy, for the benefits of communalism or whatever. For those people, lovely. But for those who don't, the state normally prevents them from leaving (Syria being the only exception I can think of, but I'm not thinking too hard).

  3. Exit would limit the evilness of totalitarianism, but I suppose my primary complaint is just the evil.


    You are all wrong.

  5. Fair enough. I wondered if you'd be wearing different hats when making the two comments.

  6. Eric -- I can think of nothing by religious fanatics when I read the spin on Hayek from the Hayek-haters.

    You can't deal with the real Hayek -- you have to very dishonestly create a fake Hayek to stab knives into.

    Hayek very plainly says that welfare provisions and regulatory protections are NO threat to liberty -- he says that in The Road to Serfdom in words that no one could miss.

    It takes truly twisted people to construct a giant fraud to take down "Hayek" -- and I only assume this is because leftist religious fanatics can't deal with Hayek's actual insights and reminders and arguments.

  7. Hayek's biggest mistake -- his most obvious false prediction -- is his 1956 assumptiong that "hot socialism" is dead.

    But no one talks about that.

  8. Caldwell drills down and hits the mother load of what is going on in this "debate":

    "Those who might wish to dismiss all of Hayek’s arguments are, of course, happy to do so with the claim that the absence of jackboots and gulags mean he was wrong. In doing this they fail to deal with his actual arguments."

  9. Ransom writes: "Hayek very plainly says that welfare provisions and regulatory protections are NO threat to liberty -- he says that in The Road to Serfdom in words that no one could miss."

    Provide the quotes. Are these minimal provisions (which he later repudiates according to Caldwell) or is he talking about the modern welfare state?

    "“[T]he close interdependence of all economic phenomena makes it difficult to stop planning just where we wish . . . once the free working of the market is impeded beyond a certain degree, the planner will be forced to extend his controls until they become all comprehensive” (Hayek [1944] 1994, 117, emphasis added).

    What does Hayek mean by planning Greg? Soviet style totalitarian planning or?

    You have no answer.

  10. " In doing this they fail to deal with his actual arguments"

    What are his actual arguments? Does Greg know.

  11. How come Greg Ransom no longer calls himself a world respected scholarly authority on hayek (used to be on his website sidebar)? Was it too tough to keep pulling off the delusion since he never actually writes or publishes anything of a scholarly nature?

    I used to find his scholarly delusions amusing. Now I just find his coming to terms with his scholarly inadequacies rather sad (why not finish that dissertation Greg?)

  12. Yes. Prestopundit used to write: "Among other things I'm a world- respected authority on the work of Friedrich Hayek."

    Amazing for someone who has never published in a peer-reviewed journal.

    And I'm a world authority on nanotechnology (no idea what that is).

  13. As usual Greg Ransom just makes stuff up to suit his right-wing priors:

    "Hayek in fact indicates that he was prepared to go forward with in a legal action to stop Samuelson from spreading the "inevitibility" myth."

    In what letter to Samuelson does Hayek mention legal action? A direct quote would be even better. Thanks.

  14. Where is Ransom? Normally he is as omnipresent when Hayek is mentioned as a Bishop in a whorehouse!