Posts tagged F. A. Hayek

Essay on Ideological Thinking Revisited

Ideological Thinking Revisited

Tibor R. Machan

Following the December 15th Republican “debate,” New York Times columnist Paul Krugman wrote once again about the evils of ideological thinking.

Krugman began piece by criticizing Mitt Romney for his repeated vacillations about which public policies he supports, which he opposes, a problem Romney has been plagued by most of his political life. But Krugman didn’t do what follows form this, namely, praise Romney for being a pragmatist, for his agility and flexibility. No, he decried the former Massachusetts’s Governor’s various views. And then he moved on to a more familiar target, one he has been shooting at every chance he gets. This is Representative Ron Paul’s integrity and consistency. Calling it ideological thinking, Krugman considers this a far great failing than anything he could find with Romney.

As Krugman summarizes all this, “In a way, that makes sense. Romney isn’t trusted because he’s seen as someone who cynically takes whatever positions he thinks will advance his career – a charge that sticks because it’s true. Paul, by contrast, has been highly consistent. I bet you won’t find video clips from a few years back in which he says the opposite of what he’s saying now. Unfortunately, Paul has maintained his consistency by ignoring reality, clinging to his ideology even as the facts have demonstrated that ideology’s wrongness.”

Ignore, please, for the moment that Krugman is every bit as ideological as would be anyone who tries to make sense of political economy, just one field of study that tries to learn generalities from the past so as to prepare for the future. The way this is done is by the identification of certain principles and then implementing them with the expectation that bad results will be avoided and good ones fostered. There really is no practical field, such as farming, medicine, engineering, child raising, and so forth, that can carry forth without this approach. Call it theoretical or ideological thought, no one who even dabbles in them can avoid them.

Ron Paul’s theoretical guidance comes from a certain school of free market economics, laid out by the likes of Ludwig von Mises and F. A. Hayek. (Other free market schools are those of Milton Friedman–the Chicago School–and those of James Buchanan–the Virginia School.) Massive volumes lay out these positions, in more or less technical ways, as they do the positions of Paul Krugman and his idol, John Maynard Keynes. It is routine in the social sciences for up and coming scholars and researchers to hitch their wagon to some earlier leader in their field. Just check out sociology or anthropology–they all follow this pattern. Krugman is no exception–he has hitched his wagon to Keynes and follows Keynes’ pragmatic, erratic economic thought. It happens to accommodate his hostility to principles. It doesn’t demand any integrity in one’s thinking; only expediency counts.

Because we are talking here about how political economy should be approached, or if you will macroeconomic theory, the impact of unprincipled thinking is quite remote. It is difficult to tell which results of such a mishmash political-economic thinking come from which ideas–as I have argued before, it is like getting food poisoning or, alternatively, health benefits from a smorgasbord meal which contains many diverse ingredients. But if you consider some areas of concern that are more immediately relevant to one’s life, the unprincipled approach shows its damage right away.

For example, it is generally understood that people with certain medical maladies should stick to a certain diet–think of diabetics. In engineering, medicine, nutrition, farming and the rest the practitioners learn their general principles and implement them in the course of their practice. Or consider morality; it is pretty much the case that lying and cheating ought to be avoided. Eve more drastically, deploying coercion in sexual relations is not just immoral but outright criminal. Everyone must, therefore, practice consensual sex so that rape, for example, is never acceptable. That is the principle of the thing, no exception.

Yet by Krugman’s lights to prohibit rape in all cases, as a matter of one’s ideology, is a serious flaw in one’s character, just as sticking to free market economic analysis is supposed to be in Ron Paul’s thought. As Krugman says, “Paul has maintained his consistency by ignoring reality, clinging to his ideology even as the facts have demonstrated that ideology’s wrongness,” but the only case he offers to illustrate the alleged wrongness is that Paul and his allies have warned about inflation for years and yet we are not seeing inflation break out all over. (Of course, there are those, rather more subtle economists, who see it break out in numerous hidden way–like postponing the destruction of the value of money for a while, kicking the can down the road to confront the mess later, e.g., by our grand children.) In other words, inflation can be prevented in various clever ways but not without eventual dire consequences. So here, too, Krugman is off.

What Paul insists on is consistency in one’s economic theorizing, something that every bona fide science insists upon. Pseudo-sciences like astrology and tarot reading don’t, with the result that they accomplish nothing useful at all. Most of Krugman’s ad hoc economics is like that–fancy footwork without any useful wisdom in its wake.

The ideology that Krugman follows despite denying it–just as many pragmatists deny that they firmly stick to some ideas–is the economic philosophy of coercion, of the state’s regimenting economic agents at nearly every turn. At no time will coercion as such be frowned upon by Krugman–it would be ideological to do so, in his view.

But the issue isn’t whether ideology is admissible but which ideology is sound, which bogus.

Column on Hayek on Morality

Hayek on Morality

Tibor R. Machan

When he was about to receive the Nobel Prize in economic science, I interviewed F. A. Hayek for Reason magazine (at his home in Salzburg, Austria). Although he didn’t believe that political economists should dwell on ethical issues per se, he was by no means “necessarily a moral relativist” as Francis Fukuyama asserts in his Sunday New York Times Book Review piece (5-8-2011) of the new edition of The Constitution of Liberty (edited by Ronald Hamowy for the University of Chicago Press, 2011).

Hayek did, of course, object to the notion, mentioned by Fukuyama, that “there is a higher perspective from which one person can dictate another’s ends.” However, the stress here needs to be on “dictate.” No one can do what is morally right when this is being dictated to or coerced from a person. That isn’t at all because ethics or morality is subjective or relative. It is because to hold someone responsible for either morally right and wrong actions, it is that person who has to be the cause of it. The criminal law recognizes this, as have most moral philosophers. And when it is denied that one has free will or can exercise free choice about what one will or will not do, morality disappears. This is why so many thinkers who embrace determinism either reject morality as bogus or transform it into a social psychological device by which desired behavior might be encouraged or prompted from people. (A good example is much of the current work by nureoscientists!)

As Hayek put it elsewhere, “It is only where the individual has choice, and its inherent responsibility, that he has occasion to affirm existing values, to contribute to their further growth, and to earn moral merit.” (“The Moral Element in Free Enterprise,” Studies in Philosophy, Politics and Economics [New York: Simon & Schuster, 1967], pp. 230.) However, this view does not depend on moral relativism but on the ancient idea, held by most moral philosophers, that for conduct to be morally significant, it must be done freely, as a matter of the free choice of the moral agent.

One way to discredit defenders of political and economic liberty is to allege that they do not take ethics or morality seriously, that they are indeed subjectivists or relativists. Most people are pretty sure that some human conduct is ethically wrong or right. They teach this to their children and hold to this idea as they judge their fellows, including politicians and international movers and shakers. So to suggest that someone like Hayek, who defends freedom of choice in the market place, is a moral relativist pretty much serves to dismiss his or her views. But it is a mistake.

Alas, the effort does not succeed even when it is made by a famous public intellectual like Francis Fukuyama. It would have been far more accurate to say that for Hayek the tenets of a sound ethics or morality aren’t directly relevant to political economy. As he said in the same interview for Reason magazine, “I don’t see why it should be necessary for political philosophy to have any view at all about what is right for man—unless the political system does something about it, it needn’t concern itself with what is right for man.” This may be objected to for a variety of reasons but not because it supports moral relativism. Indeed, something akin to this position is held by Professors Douglas Den Uyl and Douglas Rasmussen in their book Norms of Liberty (Penn State Press, 2005) when they argue that the principles of classical liberalism aren’t directly derivable from ethics but are, instead, meta-norms, meaning, norms that are required for the social realization of ethically significant conduct.

The relationship between objective personal morality and the principles of politics which are basic to a constitution such as Hayek’s constitution of liberty is a challenging aspect of political philosophy. It does not help to casually dismiss Hayek’s approach by caricaturing it as moral relativism.

Column on Krugman’s Trashy Debating Style

Krugman’s Trashy Debating Style

Tibor R. Machan

Looks like critics of the free market are at their whit’s end. At least one of the most prominent of them clearly appears to be.

Princeton economics professor and columnist for The New York Times Paul Krugman has always been discourteous to those with whom he disagrees but his latest exhibition of his way of going about debating issues takes the cake. It used to be that he would call everyone who finds even the slightest merit in free market economic theory a “market fundamentalist,” suggesting thereby that such folks are, like all fundamentalists, mindless in their convictions and merely blindly follow some sacred text or book of instructions. Besides wishing to score points for his statist economic politics by smearing the ideas and methods of his intellectual adversaries, he also regularly distorts the scholarly lay of the land by claiming that America is in the grip of such fundamentalism. This basically meant that throughout the academic landscape departments of economics are filled by people who hold and teach views similar to those held by the late Milton Friedman, F. A. Hayek and Ludwig von Mises (among others).

While these thinkers did consider the free market superior to its statist alternatives–ones that give a decisive role to government intervention in the lives and activities of market agents–they did not, of course, hold identical views. Nonetheless, Krugman lumps them all as fundamentalists. Moreover, he rarely takes on living supporters of the free market, such as James Buchanan or Gary Becker, not to mention such current members of the Austrian School as NYU’s Israel Kirzner. Might we suppose that he doesn’t wish to engage anyone in a dialogue about economic policy but merely discredit them once they could not respond? (Just after Milton Friedman died, he and his frequent co-author Robin Wells penned an extensive and it turns out demonstrably inaccurate essay on Friedman for The New York Review of Books.) Also, despite Krugman’s allegation, there is plainly no dominance of free market thinking in American universities. Mainstream economists are mostly followers of such notables as Paul Samuelson and, of course, John Maynard Keynes, with quite a few who are influenced by the political economics of welfare statism. At the universities where I have taught throughout the last 40 plus years, economists may have been respectful toward free market theorists but were by no means fully in line with their views. So even in this elementary matter, Krugman has it wrong.

But the claim that the country is in the grips of market fundamentalism is also mistaken if it’s meant to apply to official public policies bearing on economic matters. Just for starters, the financial market place has been heavily regulated for over a hundred years–consistent free market theorists usually don’t favor a central bank such as the country’s Federal Reserve Bank (even though, somewhat paradoxically, Alan Greenspan had been such a consistent free market thinker before he was selected to head up the Fed). Furthermore, the plethora of government regulation of various elements of the economy, including virtually all professions (apart from the clergy, journalism, and writers of all stripes who are protected against such regulation by the First Amendment of the U. S. Constitution), is decisive evidence that free market thinking does not dominate public policy in America.

Yet, despite all this, here is a Nobel Laureate and professor from a most prestigious academic institution and columnist for a most distinguished newspaper who keeps trying to distort reality. Why? But I will not speculate, again. Who knows what Krugman’s agenda is.

One thing does clearly stand out in his approach to making a case for more and more government involvement in the economy. This is that he relies extensively on name calling, on besmirching those with whom he disagrees. In a recent column he went so far as to dismiss all those who hold views opposed to his as zombies! Yes, zombies. That means that people, some very distinguished scholars, who are convinced that a public policy of laissez-faire when it comes to a country’s economic affairs is best are all mindless. They do not merely think mistakenly but cannot think at all.

When a critic of a position needs to resort to this kind of technique with which to attract readers of his missives to his own outlook, it suggests that the intellectual merits of that position are truly hopeless. And that is precisely so. Statism in economics has for a long time been proven and shown to be utterly unsupportable, be this the Draconian sort one found in Soviet Russia and finds in North Korea or the less drastic kind that has just produced the worldwide financial meltdown, namely the more or less interventionist welfare state.

Column on Too Politicized to Fail

Too politicized to fail!

Tibor R. Machan

It may now be assumed that the only people allowed to fail in the world are athletes and some gamblers. Businesses are not.

In Ireland, for instance, banks made bad loans and thus lost a lot of dough but no, they were not allowed to go under by the government and by its European pals. Why? Because economic failure is, well, not nice. People do not expect it and politicians couldn’t hide from the responsibility for it.

Now on top of it all this is all being blamed on Ireland’s flirtation with free market economics. The country’s government lifted some regulations so as to give support to a more vigorous financial market but when the results came in–namely, that some folks who undertook business ventures ended up losing money–well they were not allowed.

Those who blamed free market economics for this are clearly economic imbeciles. The free market is a place in which both winning and losing are possible and in either case the government must stay out of the game, just as in most sports the referees don’t bail out those who lose unless they are corrupt. If Ireland did in fact have a free market economy, however extensively or minimally controlled or regulated by the government, banks would not be bailed out but left to lose if that is how they ran their business or if luck didn’t favor them.

But once again something that is completely antithetical to the nature of a free society and market is said by foes of the these to be a part of them. And very few people who must know better jump up and protest this. On Judge Andrew Napolitano’s FOX Business News program, Freedom Watch, one member of his panel recently kept repeating the mantra about how the free market is responsible of Ireland’s woes. More regulations are needed, she kept saying, more government controls. Yet even if the free market is not, as it certainly isn’t, a perfect system of economic relationships, compared to governments across the globe and throughout history it is a marvel of virtue and efficiency!

Every government, as H. L. Mencken made it his business to constantly remind his readers, is corrupt. Why? Well, because every known one of them extorts its funds from people many of whom have not given their consent to have their resources confiscated by anyone. The consent of the governed–now there is a revolutionary idea! And it doesn’t mean the consent of most of the governed but all of those who are being governed. People aren’t ants or termites, so they must not be lumped together and dealt with as a collective. Whatever collective people may be part of they must join voluntarily not be conscripted to.

I don’t know why it is so important for so many commentators to pretend that when bad laws make bad economics possible it must have been the free market that did it. Why are those people so hostile to human freedom? Why do they insist that governments know best and their control of economic affairs is wise and virtuous? It is what Hayek called their fatal conceit, a flawed self-aggrandized vision of themselves as superior to all those they embark upon controlling.

Trouble is that for so much of human history there was not even any serious thought of an alternative to top down rule in societies. The little protest against such rule that had been voiced by a few was quickly squashed.

Just think how even in this supposedly free country public education is in charge of informing young people of the nature of politics! Surely this is virtually handing to the most biased and corrupt faction of society the ultimate responsibility of guiding the population into adult citizenship. Consider, also, that in no public finance studies is there any mention of privatizing the funding of the legal order! Never mind actually treating the idea respectfully but it isn’t even considered. There is more attention paid among public finance academics to the methods used under dictatorships and tyrannies–e.g., the much adored John Maynard Keynes did this–than those that would be under a fully free system! This is a most insidious feature of the governmental habit.

That, as far as I can assess, is the core corruption of the system, not a few judges taking bribes and politicians purchasing the support of some voters with the resources they have extorted from other members of the electorate! That’s peanuts compared to the massive indoctrination campaign perpetrated via the public education system, from kindergarten to grad school!!

Banks and companies that cannot cope with the market ought never be bailed out, certainly not by governments. The idea undermines the principles of a free country, the notion of equality under the law. Those who back such an idea are foes of human liberty, certainly not friends of it.

It is time that the population of countries in which such ruses are carried out get wind of what is happening and do something serious and lasting about it.

Column on Self-Delusions of Statists

Self-Delusions of Statists

Tibor R. Machan

There is a provocative recent comment attributed to Harvard University and Nobel Laureate economist Amartya Sen in The Philosopher’s Magazine (3rd Quarter 2010, p. 12 and taken from what he reported wrote in the New Statesman magazine). It is that “The nature of the present economic crisis illustrates very clearly the need for departures from unmitigated and unrestrained self-seeking in order to have a decent society” and it is extremely disappointing.

Sen, who used to co-teach courses at Harvard University with the libertarian political philosopher Robert Nozick and therefore must have a pretty clear grasp of free market ideas and of libertarianis, must also know that no one who defends the free market advocates any sort of system he is caricaturing here, not Milton Friedman, not F. A. Hayek, and not even the late Ayn Rand.

Moreover, even those who do talk of market agents’ self-interest as the driving force in a free market economic system, such a good many economists, mostly mean nothing more by that than that free market agents would seek to do what they want to do, leaving it entirely open what that would be (if they really did operate in such a system rather than in the mixed economy where they do work and where the financial fiasco occurred recently).

In many cases, so called self-interested conduct in fact would promote various causes, objectives, goals that have absolutely nothing to do with self-enrichment. Moreover, even self-enrichment would often serve the function of enabling one to pursue goals that are generous, philanthropic, and focused on the arts, sciences, culture, and so forth. Even blatantly, overtly self-interested conduct often promotes one’s very useful skills and abilities which get translated into very valuable and, yes, socially beneficial actions. Self-interested conduct is what leads on to go to college, to major in some preferred discipline, to graduate with honors, etc., and all this has many desirable side-effects for those other than the agent of such self-interestedness.

If, indeed, people did pay heed to their bona fide self-interest, this world would be far more decent than it is with all the meddlers running around, pace Amartya Sen. The free market, if that is what is the target in Sen’s comment, merely leaves the decision as to what goals should be advanced to the ones who own the resources–including their own time and skills–instead of to politicians and bureaucrats who would regiment them. And that is nearly always a good policy.

One reason statists–and sadly Professor Sen has joined them wholeheartedly (it appears from the above quote form him)–use the language management so readily is that they pretend, in contrast to what a free market embodies, that it is the job of politicians and bureaucrats to regiment the country like one might manage a football team or a company or in the role of a life-trainer. Such managerial jobs usually voluntarily authorize the managers to move around personnel and resources as if they owned these or had power of attorney to do so. It doesn’t matter to them that they are actually pushing people and resources around without this authority. To evade this, they have persuaded themselves that the bloated democratic process is natural and to protest what they are doing could at best amount to professional criticism, mostly a matter of technicalities, never of the proper scope of their authority which, to them, is limitless. They do not believe in a government that’s firmly limited in its role in our lives. They are like runaway dentists who, once hired to fix teeth, mistake this as having been hired to take over the management of one’s life.

It’s malpractice, of course, but with their self-delusion they can block out that fact easily enough, especially given that their academic cheerleaders, like Professor Sen, keep encouraging them in these delusions.

In the end they need a fundamental reorientation–a revolution–in their thinking. This shows up, also, in how readily these academic cheerleaders make fun of the Tea Party, missing its central point and focusing on how the party members dress, what food they eat, and their manner of speech.

What is needed is a revitalization of individualism, the idea that one’s life is one’s own and one’s actions must be left to the person to govern and may only be governed–”mitigated and restrained”–by others with full consent, not via the democratic process.