Craner Explains Hayek to Padraig

[Clinamenic]

Definitely not. The Reagan administration drastically reduced antitrust enforcement.

Well here again I'm only a novice, and might be overlooking things or underestimating thought patterns of actial economists, but to me, having just read Road to Serfdom, antitrust is essential for a liberal economic framework - capture of markets, by private enterprise or by government, is anathema, and I think ultimately for good reason.

 

[Clinamenic]

If the Reagan-Thatcher era did, in fact, have loose antitrust policy, and especially if a consequent of that era of policy was a greater degree of monopolized or cartelized markets, then I'd be inclined to argue that that era of policy was not truly liberal/neoliberal.

 

[padraig (u.s.)]

And there is also the question, I gather, of the extent to which neoliberalism can be blamed for negative international externalities, i.e. neocolonialism, which in my novice opinion is probably the most glaring downside of neoliberalism.

There's also the destruction of organized labor, austerity, etc and the social atomization all these things produce. Or destruction of social cohesion if you prefer.

There's a direct line from the deregulation and deindustrialization of the 80s to the financial crisis, Trump and Brexit, and the current destabilization of political and societal norms.

 

[padraig (u.s.)]

If the Reagan-Thatcher era did, in fact, have loose antitrust policy, and especially if a consequent of that era of policy was a greater degree of monopolized or cartelized markets, then I'd be inclined to argue that that era of policy was not truly liberal/neoliberal.

This is the same no true Scotsman defense that Communists frequently use dude

"True [x] has never been tried"

 

[padraig (u.s.)]

And to answer your earlier question about Hayek and dictators

Neoliberalism doesn't have anything to say either way about liberal cultural values. Yes, no, doesn't matter. The only thing that matters is freeing markets to the greatest possible extent, bc that is supposed to be the ultimate good. Everything else is secondary. The only freedom that matters is the freedom to participate in the market, which Friedman phrased as "free to choose".

Those are the grounds on which Hayek defended various dictators, most notably Pinochet but also others like Salazar's Portugal. The money quote is "I prefer a liberal dictator to democratic government lacking liberalism" but he consistently defended Pinochet for many years. He wasn't against democracy, but it was less important than economic liberalism, so it was justified to overthrow a democratically elected govt and impose liberal economic policies by authoritarian means. Friedman doesn't come off well in re Chile either btw.

This article describes Hayek's thoughts on liberty and liberalism in more detail

https://www.opendemocracy.net/en/friedrich-hayek-dictatorship/

 

[Clinamenic]

There's also the destruction of organized labor, austerity, etc and the social atomization all these things produce. Or destruction of social cohesion if you prefer.

There's a direct line from the deregulation and deindustrialization of the 80s to the financial crisis, Trump and Brexit, and the current destabilization of political and societal norms.

Yeah I don't know what Hayek's stances are on organized labor, no mention of it in Serfdom, as I recall. I also really want to read Keynes, so get something of a counterpoint on some of these matters, but I don't know where Keynes stood on organized labor either.

If I were to extrapolate, I'd imagine Hayek (who was in favor of universal basic income, essentially, in Serfdom) would be in favor of organized labor insofar as it could protect basic living standards for workers involved, just so long as it didn't involve price-fixing or anything like that, but again I may be glossing over details.

You have any thoughts of "negative income tax" as proposed by Friedman? Not sure how much this shines through my posts here, but I'm definitely against extractive indefinite-growth profit-maximization, and primarily like the idea of free markets insofar as they entail greater economic decentralization than centrally-planned or cartelized markets.

Now as to how liberal economic policy can be gone about without leaving people in the dust, is unclear to me, but I gather a key aspect of that is strong antitrust.

 

[Clinamenic]

This is the same no true Scotsman defense that Communists frequently use dude

"True [x] has never been tried"

Well has it been tried? That is, liberal economic policy with strong antitrust regulation. I'd be curious to understand what about it doesn't work.

 

[Clinamenic]

Not having studied Reagan-Thatcher era economic policies, my gut tells me there were likely strong lobbying efforts and "expert economist advice" that appropriated the discourse of Hayek and the like to justify convenient laissez-faire policies conducive to the enterprises driving said lobbying efforts.

I also tend to think Hayek's warnings about planning are a bit too fatalistic, and that the likes of New Deal era policy, which again I'm not very familiar with but which I know included the likes of the Securities Exchange Act and I believe social security too, were actually beneficial to the sort of balance between economic liberty and economic opportunity I'm interested in identifying.

 

[Clinamenic]

And to answer your earlier question about Hayek and dictators

Neoliberalism doesn't have anything to say either way about liberal cultural values. Yes, no, doesn't matter. The only thing that matters is freeing markets to the greatest possible extent, bc that is supposed to be the ultimate good. Everything else is secondary. The only freedom that matters is the freedom to participate in the market, which Friedman phrased as "free to choose".

Those are the grounds on which Hayek defended various dictators, most notably Pinochet but also others like Salazar's Portugal. The money quote is "I prefer a liberal dictator to democratic government lacking liberalism" but he consistently defended Pinochet for many years. He wasn't against democracy, but it was less important than economic liberalism, so it was justified to overthrow a democratically elected govt and impose liberal economic policies by authoritarian means. Friedman doesn't come off well in re Chile either btw.

This article describes Hayek's thoughts on liberty and liberalism in more detail

https://www.opendemocracy.net/en/friedrich-hayek-dictatorship/

Based on what you say here, I'd be inclined to disagree with Hayek, insofar as I'd prefer a democratically elected/checked government which is less than purely liberal in economic terms, than a dictatorship which is more purely liberal in economic terms. I hope its obvious that I'd prefer this haha, but figured I'd explicate it anyway.

 

[Clinamenic]

And there were sections in Road to Serfdom where Hayek demonstrated that he wasn't a free market maximalist, and that there were scenarios where the spontaneous logic of the market couldn't be relied on to establish the sort of freedom and opportunity which, in other situations, he argued the free market would support. I can try to dig those up, took some notes on stuff like that throughout the book, i.e. when and where Hayek demonstrated that he wasn't a free market maximalist.

 

[Clinamenic]

Yeah I don't know what Hayek's stances are on organized labor, no mention of it in Serfdom, as I recall.

He did talk about how collectivist governments would take over trade unions and sectors of the economy, but as I recall he didn't speak much to how unions should operate in the free market context he advocated for.

 

[Clinamenic]

Also, I'd imagine Reagan-Thatcher era policy wasn't that similar to this. I surely have my own areas of naivete and dilettantism , but I'm certainly not a laissez-faire guy.

Recuperate the Vanguard: Free Market Collectivism via Self-Regulation in Emerging Technology Sectors

If the spectre of history has anything left to teach the western world, are we willing to learn? Economic liberalism has become the incumbent world order over the twentieth century,

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[Clinamenic]

Another excerpt from Road to Serfdom, from the section "Economic Control and Totalitarianism", where Hayek admits there is a significant role for the state to play in expanding economic opportunity (so long as it minimally interferes with the dynamics of competition).

Does this support the notion that "neoliberalism" as we know it today isn't quite in keeping with what Hayek advocated?

 

[Clinamenic]

So far this lecture is doing a great job at conveying the political reality of the neoliberal order, as opposed to the theoretical stuff I've mostly been interested in. It does make me wonder what schools of thought out there best describe what I'm trying to describe, if there are any. I know "market socialism" is an (untested?) thing, and I have been using the term 'free-market collectivism' but perhaps there is something better.

I try to be a realist when it comes to expectations around how power flows ands concentrates, and generally I'm in favor of decentralization of economic power, which is what I consider to be perhaps the fundamental axiom of what I mean by economic liberalism. But insofar as neoliberalism, in reality, entails unchecked and ever-consolidating privatization of power, I tend to be against it.

 

[Clinamenic]

"The idea that the neoliberal era was really about competitive markets, died in the banking crisis"

I think this explains the dissonance I was confused by, i.e. why what I'm reading with Hayek et co doesn't seem to align with the neoliberal reality. The narrative which now seems to me to make sense, in explaining this dissonance, is that 1) early/mid 20th century liberal economists and economic philosophers likely didn't refer to themselves as neoliberals, and 2) that some of their key arguments (e.g. Hayek's warnings about how strengthening the economic planning capabilities of the state tend to lead to totalitarianism) were rhetorically appropriated by crony capitalists.

 

[Clinamenic]

He also points out that, after the crisis, it couldn't be argued in good faith that the neoliberal order was defined by the state abstaining from picking winners / bailing out losers.

 

[Clinamenic]

Silvers cites three milestones in the gradual falsification of core neoliberal theses, and I'm curious what you think about all this @vimothy :

1. The failure of Enron (and the likes thereof) disproved the efficient market hypothesis, or at least the interpretation of the thesis which argues that capital markets naturally take into account public and private information. In the case of Enron, which I gather was engaging in some degree of financial fraud or at least obscurantist disclosure of its financial status, I'm not sure whether you could still argue that capital markets efficiently take into account public information, and that Enron's insolvency and illiquidity constituted private information, but I think the point remains that capital markets, in either case, failed to accurately valuate the company in terms of market capitalization.

2. The subprime mortgage crisis, and specifically the ensuing bailouts, contradicted the prevailing notion that the neoliberal order didn't involve the state picking winners.

3. Covid showed that globalized free trade doesn't enable market-based solutions to solve the worlds problems, because of how countries which produced PPE were unwilling to part with said equipment even at market value.

 

[Clinamenic]

Just ordered a copy of Individualism and Economic Order. So far I've read Road to Serfdom, and his essay The Use of Knowledge in Society.

 

[craner]

@Clinamenic pssst!

 

[Clinamenic]

@Clinamenic pssst!

Oooh, this looks even better.