Wednesday, November 10, 2010

Hayekian progress

In chapter three of The Constitution of Liberty, Hayek lays out of the neoliberal conception of 'progress'. In this, he was consistent with previous rightist thought by conceiving of 'progress' not as a movement toward a desired end, but as the constant, rapid accumulation of capital in its various forms, with no agreed end - change for change's sake, as he put it. Hayek called this essay 'The Common Sense of Progress', and if we listen to politicians we can see just how influential this conception is among elites, how it has indeed become a kind 'common sense', as Hayek vaunted. What follows is a step-by-step outline of Hayek's argument with some context supplied, the better to appreciate what this notion of 'progress' is for, and what kind of assumptions are embedded in it.


Hayek sets out his stall by outlining a defence of the idea of historical progress (particularly during 'the last two hundred years') against some of the more sceptical inquiries, which doubted that the twentieth century of Nazism, colonial genocides, Stalinism, imperial famines, and nuclear annihilation was an uncomplicated advance. Hayek grants that much of what has been claimed for 'progress' has been hubristic, and deterministic, that not all change has been necessary or beneficial. Nevertheless, "civilization is progress and progress is civilization". Modern "civilization" (he means capitalism) depend on "the operation of forces which, under favourable conditions, produce progress". Without these forces, we would lose "all that distinguishes man from beast". What does separate man from beast? Well, Hayek routinely decried "primitive instincts" of group solidarity, the basic human impulse to put the collective ahead of the individual. For a methodological individualist, who holds that there is no collective, that all corporative entities are fictions which boil down to discrete, self-sufficient individual units, the idea of putting the group first is undoubtedly scandalous.

Thus in the chapter we're considering, he complains that "in some respects man's biological equipment has not kept pace with that rapid change, that the adaptation of his non-rational part has lagged somewhat, and that many of his instincts and emotions are still more adapted to the life of a hunter than to life in civilization. If many features of our civilization seem to us unnatural, artificial, or unhealthy, this must have been man's experience ever since he first took to town life, which is virtually since civilization began. All the familiar complaints against industrialism, capitalism, or overrefinement are largely protests against a new way of life that man took up a short while ago after more than half a million years' existence as a wandering hunter, and that created problems still unsolved by him." So, what distinguishes man from beast is the suppression of primitive instincts in favour of market "rationality", the willingness to accept the "artificial rules" of the marketplace which produce a "spontaneous order" and thus make progress possible. Interestingly, Hayek's quirky anthropological assertions do not support the classical fiction of homo oeconomicus. On the contrary, it is stated again and again that the principles of a "rational economy" are "artificial", at variance with our instinctive predilections. The neoliberal assumption, grounded in bitter struggle, is that human beings are not naturally disposed to living in a market based system, and will tend to rebel against it and seek to abbreviate it by various means. Indeed, Hayek later queries whether people even want most or even all of the results of "material progress". It seems a most "involuntary" affair. Thus, people must be somehow coerced or 'educated' into accepting it, and it must be upheld through effective political combat.

A little context here. In Law, Legislation and Liberty, Hayek very clearly draws out the political point he is making about social solidarity and the demands for 'social justice' which it produces. The market order depends upon the law being neutral, with everyone subject to the same rules. But legislation in the name of social justice meant that the law was 'socialised', giving special privileges and exception to certain classes for the purposes of ameliorating their situation. He cites 'New Deal' legislation in the US among his examples. This is, as William Scheuerman and Renato Christi have pointed out from different perspectives, remarkably similar to the legal critique of social democracy that Carl Schmitt developed in the 1920s, when - so Christi argues - he an authoritarian liberal, rather than the counter-revolutionary conservative he had been during the 1918 revolution and would become again when he bedded with the Nazis. (Christi's analysis suggests that the difference between the two is purely one of context). So, this is an important punctuation point: Hayek's ideas concerning progress and civilization are directly drawn from radical right political thought in the interwar years, which sought to rephrase classical liberalism in light of the challenge of mass democracy and socialism. If we hear Hayekian ideas of progress espoused by politicians, we know that they are not neutral, but were fashioned as weapons in a hegemonic struggle. Let's continue.


Progress is not, for Hayek, characterised by advances toward a fixed aim - say, equality, or liberty. He rejects such teleological conceptions. Rather, progress is "a process of formation and modification of the human intellect, a process of adaptation and learning in which not only the possibilities known to us but also our values and desires continually change. As progress consists in the discovery of the not yet known, its consequences must be unpredictable. It always leads into the unknown, and the most we can expect is to gain an understanding of the kind of forces that bring it about." Hayek's preferred metaphor here is the scientific process, the gradual accumulation of knowledge and power over nature, and the consequential transformation of our desires and intent.

A corollary of progress being unpredictable, is that it is unplannable. One cannot really master the forces which produce progress, bend them to any design or end goal, only come to understand them a little bit better in order to maximise their potential. It is not incidental that Hayek has used the example of scientific progress to make his case. Hayek's concern with the problems of knowledge is central to his outlook. In arguing against economic planning (see 'The Uses of Knowledge in Society', The American Economic Review, September 1945), he maintained that a "rational economic order" could not be brought about by any single intelligence, because knowledge of the circumstances of which those who would construct such an order must make use is not concentrated but distributed in "bits of incomplete and frequently contradictory knowledge" among "separate individuals". For this reason, the best system is one in which individuals act on their own self-interest, disregarding traditional morality, civic responsibility and so on, responding only to price signals. In doing so, by blindly obeying artificial rules and paying no attention to any greater end, they assure progress.

Hayek does pause to acknowledge that progress in this sense may not by itself leave human beings better off than they would have been had all progress halted a century, or a millenium, ago. He says that the question is "probably unanswerable", but that the answer "does not matter". He goes on: "What matters is the successful striving for what at each moment seems attainable. It is not the fruits of past success but the living in and for the future in which human intelligence proves itself. Progress is movement for movement's sake, for it is in the process of learning, and in the effects of having learned something new, that man enjoys the gift of his intelligence. The enjoyment of personal success will be given to large numbers only in a society that, as a whole, progresses fairly rapidly."

If this seems an unsatisfactorily peremptory way to dismiss imposing questions of political justice, it can be explained by recalling Hayek's twist on what is called "preference utilitarianism". For Hayek, the society which promotes the general welfare is that society which maximises an anonymous individual's chances of obtaining his or her unknown preferences. Thus, whether we're materially better off or happier is less important than whether as many people as possible have the maximum number of chances to strive for their own ends. Only a society in its "progressive" state offers that possibility. Hayek credits Adam Smith this insight, but as usual distorts him entirely. Smith's defence of agrarian capitalism depended on it continually improving the employment and wages of "the labouring poor, of the great body of people". This was a crucial ethical argument for the system and it was tied to a moral philosophy that was as far from posessive individualism as Hayek's is from socialism.


And here we come to another area where Hayek differs from Smith, and that is the former's belief in the virtues of hierarchy. In The Road to Serfdom, and The Constitution of Liberty, roughly the same case for inequality is made. The rapid economic advance that enables the greatest number to satisfy their preferences depends upon inequality and would "be impossible without it". Progress so rapid "must take place in echelon fashion, with some far ahead of the rest". The rich, therefore, are not exploiting anyone. They are simply the farthest ahead. But the reason why there must be some far ahead of the rest is that the growth of income that enables individual achievement depends on the growth of knowledge. This is more important than the accumulation of capital because, while material goods will always be subject to relative scarcity, knowledge, once created, is "gratuitously available for the benefit of all". (Hayek was not writing before the invention of intellectual property, so it is safe to call this a disingenuous observation). The production of that knowledge depends on the outlay of resources equal to many times the share of income that, were resources distributed equally, any one person would enjoy.

Thus, progress, civilization itself, requires a wealthy class, a leisure class. It requires that there are luxury goods for the exclusive enjoyment of a few, because it is only through first having been luxury goods that new inventions eventually are made available to the majority - be they airplane trips or refrigerators. The wealthy who enjoy luxury goods are thus like "scouts" who "have found the goal" and made the same road easier for "the less lucky or less energetic" (whose contribution may merely have been to produce the luxury goods in question). A progressive society is a highly unequal one. The more unequal the society, the faster progress is achieved, and the better the eventual lot of the poor.

Moreover, the rich stand as an example to the rest of us. In the tradition of conservative polemic from Burke onward, Hayek maintains that the things we strive for are things that we want because others already have them. These desires act as "a spur to further effort". The "progressive society" must recognise the spur, but disregard "the pain of unfulfilled desire". To sidestep the inevitable charge that he is engaging in "cynical apologetics", which he is, Hayek attempts to show that even a planned society, which he cannot help but think of as a stagnant society, a kind of "serfdom", must have a few who try out the latest goods before they are widely available. There must be production for some before there is production for all, and if there is to be growth, there must be the incentive of desiring what others have and what one does not have. The only difference would be that inequalities would result from authority rather than the market, "and the accidents of birth and opportunity". Rather than deepening the persuasive power of the argument, however, this merely restates the same set of axioms, which contain the same set of implied observations about human behaviour.


The commitment to inequality poses a problem for Hayek's commitment to liberty, inasmuch as he does not want anyone's progress to be inhibited by unfair and arbitrary advantage or disadvantage. But he maintains that as long as there no large gaps between the rich and the rest, so long as the income scale is well graduated, with each step along the scale well occupied, it can "scarcely be denied" that the advance of some benefits the rest. Of course, the income scale has never quite looked like a well graduated pyramid. These days, a more applicable metaphor is the L-curve.

Nonetheless, Hayek is convinced that we will see the justice of this if we only abstract a little from our immediate circumstances and look at the global situation. Yes, we are all interdependent, but the advancement of some has not deprived others of anything. "Although the fact that the people of the West are today so far ahead of the others in wealth is in part the consequence of a greater accumulation of capital, it is mainly the result of their more effective utilization of knowledge." And that more effective utilization of knowledge has been made possible by internal class distinctions: "a country that deliberately levels such differences also abdicates its leading position - as the example 0f Great Britain so tragically shows." And he goes on to lament the decline of the British empire. There is thus no injustice or exploitation, either globally or domestically, for the rich are not claiming exclusive title to something that would otherwise be widely available. They are pioneers, who have simply used their knowledge more effectively in the market place, and thus given us all an example to imitate and learn from. (Here, as elsewhere, Hayek deals with contentious observations not by acknowledging their contentiousness, but by asserting their certainty all the more forcefully - "there can be little doubt that", "it can be scarcely denied that", "it is worth remembering", etc.).

Hayek's conception of progress is naturally anti-traditionalist. Having acknowledged the resistance of populations to markets and the changes they bring, he explains that even the conservative peasant, happily enjoying a "way of life", owes her mode of existence to "a different type of person", the innovators and wealth creators of the past who forced the static, peasant farmer mode of living on the previously nomadic people. The "changes to which people must submit are part of the cost of progress", and every such change is involuntary. Indeed, picking up on a point earlier, Hayek states: "I have yet to learn of an instance when the deliberate vote of the majority (as distinguished from the decision of some governing elite) has decided on such sacrifices in the interest of a better future as is made by a free-market society." But in their own self-interest, people must be coerced into accepting such changes, because the things they actually want, not just material goods but even the social improvements they desire, depend on them being so coerced. They must be compelled to abandon their happy little ruts, their traditional morality, and their primitive instinctual desire for social solidarity.


When Mrs Thatcher declared of The Constitution of Liberty that "this is what we believe", she embraced a set of ideas consciously fashioned for rightist political struggle. And she engaged in that struggle with gusto, and was as ideologically combative as she was politically authoritarian and repressive. Her ideology mandated her anti-democratic, inegalitarian politics as being essential for progress and civilization. When the neoliberals, who presently enjoy a near monopoly over our parliamentary system, speak of progress, I think it is just this conception above that they have in mind. Blair's "forces of progress" were those of neoliberal globalization, while his "forces of conservatism" were those who indignantly upheld traditions of trade union solidarity, welfare, employment protections, regulation, economic interventionism, grassroots democracy, and so on.

However, the fact that the political advocates of the British ruling class do not today have the self-confidence to declare themselves open Hayekians, to embrace the principle of inequality - quite the reverse! - suggests that their ideological position is weak. That they have to adopt a 'fairness' criterion while attacking us, that they have to claim to be egalitarians interested in rebuilding social solidarity, that this is the only way they can cobble together a viable political base, is an index of just how much the initial popular base of Thatcherite neoliberalism, always a minority but at first a large one, has crumbled since the late 1980s. If neoliberalism is hegemonic in that its assumptions are reproduced in all the dominant institutions, from business to parliament, to the media, and the academe, this is not because these assumptions coincide with the views of the majority, who remain stubbornly primitive.