My friend Martin Stewart-Weeks points me to this piece by Simon Griffiths which argues that “an engagement with Hayek does not mean a capitulation to the market”. Quite. Indeed it’s always struck me that it’s a pity that Hayek pursued his ideas in such a tendentious way. He had a great critique of the necessary foibles of central planning and he won that debate, even if it took until the fall of the Berlin Wall to really drive the victory home.
I wonder how much this is actually typical of many political philosophers. They start with some ideological intuition they want to support and then produce a set of considerations that tend in that direction. Still I think Hayek’s ideas and sensibilities have plenty of implications that don’t point particularly clearly to the right, implications that Hayek, and sadly, so many of his followers show virtually no interest in.
One point I’ve made is that Hayek’s delineation of the foibles of central planning ought to send one in the direction of asking how we alleviate those problems where central planning is inevitable. You see central planning is all around us, and necessarily so. You don’t need to be Joe Stalin, this doesn’t have to be the Soviet Union for governments to be centrally planned. Governments are the largest organisations on the earth and guess what? They are, if not necessarily, then pretty much always centrally planned. And that’s true of all organisations. And there are a lot of organisations in our world. A lot of amelioration to be getting on with. A lot of amelioration for Hayek to be ignoring.
And there are interesting leads in asking how we might alleviate those problems. Dividing organisations into separate areas – in corporations profit centres, in governments, different departments and agencies – offers something. In governmental structures, levels of government, federation always coupled with notions of subsidiarity.
More particularly I’ve always thought the story of the Toyota production system a development of first order importance. If ‘Fordist’ production involves knowledge work being done at the apex of the organisation and then fed down to the workers and the suppliers via incentives that assume they are pretty simple stimulus/response organisms, then ‘post-Fordist’ systems in the spirit of the Toyota production system seek to recognise the need to have workers and suppliers free to optimise their productive efficiency both individually and collectively and to build a set of technical tools and social/cultural/economic incentives to facilitate that. Neoclassical economists ignore all this – as they ignore so much about the economic world – in this case re-describing it as one of many possible rightward shifts of the supply curve (which hardly deepens anyone’s insight).
And the epigones of Hayek have taken similarly negligible interest. You’d think Hayek and Hayekians might be interested in that – certainly it’s where Hayek’s thought leads. 1
Hayek was also a progenitor of the critique of liberal elites in his The Counter-Revolution of Science which was published in the early fifties though much if not all of its essays were written in the 1940s. This is a very timely attack on scientism, which the academy sadly ignored most particularly economics which went on its merry, ignorant way. Here’s an extract of an essay of mine entitled “An economists’ appreciation of design” which addresses the point:
Hayek critiqued the way in which the intelligentsia increasingly privileged some kinds of knowledge over others. They were privileging their own kind of knowledge – of systematic inquiry and knowhow such as engineering. By contrast, unsystematic knowledge of the everyday – knowledge pertaining to some local time, place or context, or to the idiosyncratic preferences of individuals – was given short shrift. When applied outside its proper sphere – for instance to government – this mindset spelled hubris. It failed to appreciate the extent to which the governed would make their own decisions. Indeed, one of the central motifs of Hayek’s denunciation of Soviet-style central planning is its under-appreciation of the local (unsystematic) knowledge of those on the ground. For the “marvel” of the price system was that it acted as “a system of telecommunications” to distribute the sum of information about local trading conditions and opportunities throughout the economy.
Today it is almost heresy to suggest that scientific knowledge is not the sum of all knowledge. But a little reflection will show that there is . . . a body of very important but unorganized knowledge: . . . the knowledge of the particular circumstances of time and place. [In this] respect . . . practically every individual has some advantage over all others because he possesses unique information of which beneficial use might be made, but of which use can be made only if the decisions depending on it are left to him or are made with his active coöperation. We need to remember only how much we have to learn in any occupation after we have completed our theoretical training, how big a part of our working life we spend learning particular jobs, and how valuable an asset in all walks of life is knowledge of people, of local conditions, and of special circumstances.
Hayek’s concern here was knowledge of market conditions, and so he juxtaposed the knowledge of scientists and engineers with the knowledge of traders. It is unfortunate that Hayek’s preoccupation with prosecuting his case – now thankfully won – against central planning so comprehensively diverted him from exploring the wider relevance of his ideas. In this context those ideas enable us to better understand the potential of design and ‘design thinking’. For the ‘scientific’ knowledge from systematic inquiries into psychology, sociology and even economics give us far less purchase on the human world than the disciplines of natural science and engineering give us over the natural world. Moreover, the point of any social action is to influence the experience of those ‘on the ground’.
Another direction that Hayek’s thought takes us in is the realisation – not emphasised in Hayek – that the price system is a story of externalities. All Hayek’s descriptions of what he liked to call ‘spontaneous order’ can be redescribed in my terminology as ’emergent public goods’. In effect a miraculous public good builds itself as a by-product of the non-rivalrousness of knowledge and the fact that it’s difficult for traders to conceal the price of trades they’ve done. But that would lead directly to ideas about how we might be able to improve this system. After all, if it’s hard to conceal the price of trades, it’s much easier to conceal qualitative factors about the trades – particularly the quality of the goods.
There’s an obvious role here for the basic regulation of truthfulness that’s been with us since the Goods Acts of the 19th century, but beyond this the state has been quite crude in its promotion of market transparency – with no Hayekians I know lending a hand. Hayekians you’d think might be concerned about dark trading, given the way it obstructs the great gift of price formation. Of course they might be out in the streets objecting to dark trading, or at least discussing it earnestly. Perhaps they are. Perhaps Hayekians worry about the non-transparency of markets. I don’t spend a lot of my time checking out the Hayek circuit, but somehow I expect they’ve got other concerns.
And there’s a further issue – which is that the price mechanism presupposes good knowledge of the quality of goods – which we often don’t have. Here (pdf) and here I’ve suggested a bunch of very light-handed ways we can further promote the miracle of the “telecommunications system” that the price system offers by piecemeal tweaks which might promote better information flows about non-price aspects of marketed goods and services and indeed labour markets.
Still my response to the Griffiths piece is one of mild disappointment. I think it’s a nice illustration of how an ideological frame so often impoverishes discourse, generally by focusing not on the fertility of some new perspective for giving us new insights and new agendas, but rather on the way in which the new material being introduced – in this case Hayek – can be used in all the familiar ideological ways. We can remain in our trenches, and point out that Hayek’s work gives us some ammo we can hurl back into the opposing trenches.
Thus Griffiths tells us of Hilary Wainwright, the founding editor of the ‘red-green’ magazine Red Pepper, who:
largely accepts Hayek’s claims that knowledge is dispersed and cannot be centralised, but she argues that Hayek mistakenly treats knowledge as ‘an individual attribute, rather than as a social product’. Understood socially, knowledge can be shared by people taking action to overcome the limits of their individual perspectives. Wainwright’s work is full of examples of organisations – trade unions, women’s groups and co-ops – that have come together to pool knowledge in order to solve collective problems that cannot be solved by the market or by remote bureaucrats.
Hayek famously linked freedom to the market – an argument which gained electoral appeal under Thatcher. Drawing on these debates the ‘market-socialist’ David Miller largely accepted that markets provide a structure within which free choices can be made. . . . For some on the left, however, while Hayek was right about the importance of these freedoms, . . . he never explained why freedom is valuable to us. This must be because of our desire to act autonomously. In order to do this, we need certain resources – food, shelter, and education, for example. The state is crucial in providing these. Market freedoms are important, but so is the autonomy needed to pursue them. Hayek’s argument for freedom can end, not simply with a case for the free market, but with an account of those resources needed to make freedom valuable to us.
Right wing trenches – this is the left trench here and we’re lobbing over some Hayek. And guess what. A particular interpretation of Hayek gives us a rationale for “trade unions, women’s groups and co-ops”. And government protections of “food, shelter, and education”. Take that!
So by all means try to open up the relevance of Hayek’s perspectives beyond Hayek’s own unfortunately blinkered and tendentious preoccupations, but I think it is more productive to try to keep the usual ideological argy bargy to one side in the process. And by the way, I expect I’m guilty of them occasionally, but sentences like the following are much too common – and much too stupid to be so common. “In contemporary political debate, an engagement with Hayek should not mean that the left must embrace the market unthinkingly”. No kidding.