F. A. Hayek, Liberal

A couple of months ago I wrote a post for the Technology Liberation Front offering a qualified defense Tim Wu’s book, The Master Switch. My erstwhile colleagues at TLF had taken turns lambasting the book for what they regarded as its retrograde big-government liberalism. I suggested that they were focusing too much on the rather tentative policy recommendations at the end of the book, and ignoring the excellent history and economic analysis that accounted for the first 200 pages or so of the book. And I thought that my libertarian friends were too dismissive of Wu’s central thesis: that excessive concentrations of corporate power, often with the active assistance of government, posed a real danger to individual liberty.

This conversation came to mind yesterday as I was reading F. A. Hayek’s classic essay “‘Free’ Enterprise and Competitive Order.” The essay, written for the 1947 Mont Pélerin meeting, was Hayek’s attempt to sketch out a postwar intellectual program for a liberal movement that was at that time tiny and deeply unpopular among the intellectual elite. (I’ll follow Hayek in using the term “liberal” throughout this post, but he was of course addressing classical liberals)

Hayek’s argument was that by framing their political program primarily in negative terms—as a list of things the state ought not to do—the liberals of his time had ceded major swathes of intellectual territory to their ideological opponents. He writes:

Where the traditional discussion becomes so unsatisfactory is where it is suggested that with recognition of the principles of private property and freedom of contract, which indeed every liberal must recognize, all the issues were settled, as if the law of property and contract were gien once and for all in its final and most appropriate form.

He then offers the following examples, among others, of issues that liberals ought to care about:

• Urban planning: Hayek writes that “there can be no doubt that a good many, at least, of the problems with which the modern town planner is concerned are genuine problems with which governments or local authorities are bound to concern themselves. Unless we can provide some guidance in fields like this about what are legitimate or necessary government activities and what are its limits, we must not complain if our views are not taken seriously when we oppose other kinds of less justified ‘planning.'”
• Patents: Hayek argues that “a slavish application of the concept of property as it has been developed for material things has done a great deal to foster the growth of monopoly and that here drastic reforms may be required if competition is to be made to work.”
• Corporate law: Hayek doesn’t think there’s much doubt that “the particular form legislation has taken in [the field of limited liability for corporations] has greatly assisted the growth of monopoly.” He goes on to argue that “the freedom of the individual by no means need be extended to give all these freedoms to organized groups of individuals, and even that it may on occasion be the duty of government to protect the individual against organized groups.”
• Taxation: Hayek decries the confiscatory tax rates that were in effect at the time. But he also writes that “inheritance taxes could, of course, be made an instrument toward greater social mobility and greater dispersion of property and, consequently, may have to be regarded as important tools of a truly liberal policy which ought not to stand condemned by the abuse which has been made of it.”

I don’t think it’s much of a stretch to say that “‘Free’ Enterprise and Competitive Order” was a liberaltarian manifesto written almost 60 years before Brink Lindsey coined the term. Of coure, back in 1947 there was no need to coin a term because people understood what Hayek meant when he used the word “liberal.”

One of the more pernicious influences of Rand and Rothbard on the libertarian movement was their tendency to treat every policy problem as almost reducible to a logical syllogism. Too many libertarians act as though they don’t need to know very much about the details of any given policy issue because they can deduce the right answer directly from libertarian principles. The practical result is often to shut down internal debate and discourage libertarians from thinking carefully about cases where libertarian principles may have more than one plausible application. Hayek seems to have written “‘Free’ Enterprise and Competitive Order” with the explicit purpose to combat that kind of dogmatism. He thought it “highly desirable that liberals shall strongly disagree on these topics, the more the better.”

And one way to do this is to be more ready to treat modern liberals with bottom-up instincts as potential allies rather than ideological opponents. Regular readers of the blog may notice that all four of the issues listed above are topics I’ve focused on here on the blog. And there’s a substantial overlap between these issues and the program Matt Yglesias articulated a couple of weeks ago. And of course the second and third items on this list—the use of patents and the corporate form to entrench private monopolies—were at the heart of The Master Switch. Wu and Yglesias, in short, are engaged in precisely the kind of liberal intellectual project Hayek is calling for.