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- The Centenary of Ludwig von Mises’s Critique of Socialism - June 9, 2022
- In the Beginning: The Mont Pelerin Society, 1947 - May 19, 2022
There is the ideologically captured mind that squeezes all the complexities, diversities, uncertainties, and serendipities of life into one limited dimension of cause and explanation. One such mind is that of Wellesley College historian, Quinn Slobodian, who sees everywhere the manipulating agents of a nefarious “capitalism.”
Even what seems as differing or even opposing ideas are placed through an analytical sieve that ends up making them “really” all just modified versions of the same purpose: making the world safe for capitalists everywhere to oppress and exploit the rest of the global society in the pursuit of their self-interested and ill-gotten, unjust profits.
Like most of the other members of the intellectual vanguard of identity politics, systemic race theory and general ideological political correctness, Slobodian seems to see “white racism” everywhere in the camp of those who espouse individual liberty, free markets and international free trade, impartial rule of law, and constitutionally limited government. To disagree with the “progressive” agenda demonstrates, it seems, that, ipso facto, the dissenter is an exploiter and a racist. Why else would such a person defend “capitalism” other than that he either believes in or is a paid propagandist for a system in which the few benefit while the many suffer? Implicitly impugning motives appears to be the default position of all those like Slobodian.
Slobodian Targets Ludwig von Mises and F. A. Hayek
Among Slobodian’s favorite targets for character assassination have been Austrian economists, Ludwig von Mises and Friedrich A. Hayek. He has tried to demonstrate that beneath his external classical liberal cosmopolitan veneer, Mises was really a racist who was a fascist sympathizer, and an elitist who opposed democracy as an expression of the true will of the people wanting to do away with their capitalist rulers. Slobodian recently devoted an entire book, Globalists: The End of Empire and the Birth of Neoliberalism (2018), in an attempt to show that classical liberals like Mises and Hayek, as well as a contingent of others, were all agents of an agenda to reconstruct a new international order in the era of post-colonialism that would enable the continuation of capitalist control of the world.
Careful reading and a diligent following of Slobodian’s references and footnotes in these writings, however, demonstrate how willing he is to take “poetic license” in taking quoted passages out of context, seemingly making up some sources that apparently do not exist and reading into the words and thoughts of Mises and Hayek’s meanings and purposes for which no text can reasonably corroborate, other that doing so enables him to fit anything into his preconceived narrative to argue that these two Austrian economists were among the intentional designers of the post-World War II ruling capitalist system. (See my articles, “Ludwig von Mises as the Victim of Quinn Slobodian’s Intellectual Dishonesty” and “Quinn Slobodian and the Academic Attack on Mises and Hayek” and “The Geneva Connection, a Liberal World Order, and the Austrian Economists”.)
Slobodian’s latest quest in this crusade is in an article on, “Hayek’s Bastards: the Populist Right’s Neoliberal Roots” in the Tribune (June 15, 2021), a publication that has been around since 1937, which has the stated goal of building “a real, socialist alternative to Britain’s media moguls,” by campaigning for “socialist ideals.”
Neo-Liberalism as the Catchphrase of All Things Disliked
Neo-liberalism has become a catchphrase for all those political, economic, and cultural things that are opposed by “progressives,” “democratic” socialists, and the ideologues of “political correctness.” Neo-liberal political and economic ideas, in particular, are considered servants of the capitalist system, the rationalizations of the concepts and institutions that justify and indoctrinate the mass of the population to accept or at least acquiescently not challenge the global order of capitalist exploitation of humanity.
Sometimes things change, and the intellectual “superstructure” of ideas that serves for the preservation of capitalism in one epoch might not be sufficient to sustain it in another. Thus, in Slobodian’s view of the world, in the 19th century, white European capitalists controlled and exploited the vast resources and potential profit-making markets of the globe through imperialist empires. But in the early years of the 20th century and certainly in the wake of the First World War, colonialism was being questioned and challenged by enlightened “progressives” in the imperial home countries and among the subject peoples around the world who clamored for the national independence and domestic democracy the imperial powers preached but did not practice in their farflung empires over non-whites.
Thus, arose “neo-liberalism,” a system of ideas that said that the “peoples of color” did not have to be ruled directly for control over them through the old imperial methods. No, the same ends of capitalist control of the planet could be attained by establishing a new economic order that nominally spoke of national self-determinations, and democratic forms of government, and degrees of social justice, but worked through international organizations such as the World Bank, the International Monetary Fund, and the United Nations to impose political and economic restrictions on the autonomy of governments within these “third world” nation-states.
These international agencies of intergovernmental cooperation imposed limits on individual governments from curtailing transnational corporations from investing wherever they wanted; pressured those local national governments into limiting their fiscal and monetary policies that might diminish the profit-making of domestic and global capitalist networks; and rejected extending the welfare state to any point at which it would threaten the aftertax revenues of international capitalist businesses and their ability to exploit local workforces for their investment and manufacturing plans.
Neo-Liberalism Captures Populism for Capitalist Purposes
But in the wake of the 2008-2009 financial crisis and the growing disruptions and inequalities, the postwar neo-liberal arguments and justifications for capitalism – personal liberty, economic opportunity, freedom of international trade and investment, restrained welfare spending and noninflationary monetary policies – no longer were enough.
“Populism” had reared its head among the victims of capitalist excesses and unjust outcomes, Slobodian says. “The people” became restive under the abuses of the capitalist elites who gain more and more at their expense. Liberal (capitalist) democracy seemed to be a sham behind which there is the oppression of the workers, women, and non-whites. What were “the capitalists” to do?
So, now, the neo-liberals – always the implicit intellectual lapdogs of their capitalist masters – have attempted to twist populism into the latest variation of maintaining power and control. Racism, fear of immigrants, political and economic nationalism, and opposition to “progressive” policy thinking is the new neo-liberal template to “save” capitalism from those who are its victims.
Thus, we see “right-wing populism” in America and parts of Europe as the new means for “capitalism’s” survival. The neo-liberal problem, says Slobodian, is, “How can markets be accepted by people in the face of their frequent cruelty?” To find an answer to this dilemma, he states, free-market liberalism should not be considered in opposition to or in competition to “right-wing populism.” Instead, they are merely two alternative strategies to the same end: keeping capitalism in power. “What we have witnessed in the last few years is not so much the clash of opposites as the public surfacing of a long-simmering dispute in the capitalist camp about what is necessary to keep the free market alive,” argues Slobodian.
Hayek as a Mastermind of Capitalist Oppression
Slobodian refers to a number of claimed neo-liberal economists or politicians on both sides of the Atlantic who have debated and taken sides on the best means to the shared end of capitalism victorious. But as is frequently the case in his writings, it always comes back to one sinister liberal intellectual who is behind the policy curtain, the evil Friedrich A. Hayek. He is the ideological puppetmaster, the mastermind behind that neo-liberal organization of intrigue and manipulation, the Mont Pelerin Society, and the ever-present ghost that still haunts the world in “capitalism’s” fight against “the people,” even nearly 30 years after Hayek’s death.
In his earlier neo-liberal incarnation, Hayek was for domestic and international freedom of trade; he was generally cosmopolitan in his outlook about peoples and global openness. Hayek also opposed political and economic nationalism, strongly criticized all forms of dictatorial and totalitarian rule, and spoke of the universality of the classical liberal defense of human rights.
But in the 1970s and 1980s, Slobodian tells us, Hayek began to change. Now, he became exclusionary, only believing in societal openness among people who shared the same traditions and culture. There is a dark and dangerous twist to Hayek’s thinking as he spoke favorably about “conservative” values, referring to sociobiology as complementary to his interests in cybernetics and systems theory.
While Hayek discounted viewing “society” in terms of genetic evolution, he focused on “cultural evolutionary processes” that separated peoples from each other. He placed emphasis on what he called “our moral heritage,” implying a world of “us” versus “them,” in terms of the goodness of the values believed in and shared by different peoples in different parts of the world. And, oh, no, Hayek spoke favorably about the ethical values, even the “Christian” values, of “the West,” with its implication that, “Some societies had developed the cultural traits of personal responsibility, ingenuity, rational action, and low time preference over long periods; others had not.”
Hayek, therefore, implied that some societies and cultures were “better” or more “advanced” than others, meaning European and American societies – “white people” – as more advanced (superior?) than those in non-white parts of the world. Racism was rearing its ugly head. Hence, Hayek could be viewed as a leading inspiration for xenophobia, white arrogance against “people of color,” and seeing closed-border nationalism as a way of holding off the tide of too many of “them” arriving through mass immigration.
This “new” neo-liberalism is capitalism’s way to pander to the worst emotions and hateful sentiments in people so they would not move in a more politically and economically “progressive” (socialist?) populism that would threaten the capitalist order. Thus, “right-wing populism” is not the opponent of neo-liberal capitalism, but its stepchild to serve the more fundamental purpose of protecting the capitalist exploiters of the world, in Slobodian’s view of things.
Hayek’s Predecessors on Spontaneous Social Evolution
Anyone who actually reads Hayek’s works in any degree of detail soon discovers that Slobodian’s depiction of his ideas and views has little resemblance to the truth. Hayek’s theory of society grows out of the earlier writings of 18th century Scottish moral philosophers like Adam Ferguson and Adam Smith, and Carl Menger, the 19th century founder of the Austrian School of Economics. The great insight of these thinkers, and others like them, was to explain that society is not the creation of designing rulers who wisely plan the creation of the social order and its institutions. Instead, they are often the unintended and unimaged products of multitudes of purposeful individual actions over long periods of time.
For example, Adam Ferguson, in his Essay on the History of Civil Society (1757), observed that “Mankind, in following the present sense of their minds, in striving to remove inconveniences, or to gain apparent and contiguous advantages, arrive at ends which even the imagination could not anticipate . . . He who first said, ‘I will appropriate this field: I will leave it to my heirs;’ did not perceive, that he was laying the foundation of civil laws and political establishments” (Part 3, Sec. 2).
It has, surely, become commonplace that language, custom, tradition, mores and morals, and many everyday modes of doing things and interacting with others are not the designed and planned outcomes of political edicts or commands. It is what Adam Smith meant when in The Wealth of Nations (1776), he said that, “By pursuing his own interest [an individual] frequently promotes that of society more effectually than when he really intends to promote it.” (Book 4, Chapter 2).
And Carl Menger’s theory of the origin of money highlights that money is one of those institutions that serve a highly useful purpose for bettering people’s ability to extend their interdependency through the division of labor. Money evolved out of many individuals’ attempts to consummate successful trading opportunities without thinking that the cumulative result of all of them doing the same would be the social institution of a medium of exchange.
Or as Ludwig von Mises expressed it in Theory and History (1957):
History is made by men. The conscious intentional actions of individuals, great and small, determine the course of events insofar as it is the result of the interaction of all men. But the historical process is not designed by individuals. It is the composite outcome of the intentional actions of all individuals. No man can plan history. All he can plan and try to put into effect is his own actions which, jointly with the actions of other men, constitute the historical process. The Pilgrim Fathers did not plan to found the United States. (p. 131)
From Primitive Tribes to the Modern Market Society
Hayek’s theory of the development of human society was that for tens of thousands of years our primitive ancestors lived in small tribal bands in which the social bonds were held together by shared loyalty and service for the group in the pursuit of simple and clear common ends – hunting, gathering, and warding off the threats of other bands also in search of food, water, and game. In other words, a form of primal socialism.
But man’s material condition did not really begin to improve until among some of these primitive groups in their different circumstances, and in unplanned ways, the rules of tribal conduct and behavior changed in directions that slowly allowed individuals degrees of greater latitude and liberty to act on ends and purposes of his own, outside of the common goals of the tribe; there was allowed forms of private property separate from the tribal “commons.” It came to be more acceptable for individuals to have degrees of autonomy to use that property as they, respectively, thought best and to keep more of the productive results for themselves without an expected communal redistributed sharing among the others in the group.
Thus, there began to emerge individual freedom from the collective’s purposes; an emerging custom and greater respect for private property, including means of production; the growing practice of forms of trade and exchange among competing tribes that created a dawning recognition of mutual gains from trade rather than betterment through war and plunder; and the establishment of rules and traditions of law and unwritten codes of conduct in human interactions that evolved into respect for the “rights” of others, in their persons and property.
The end result in all of this, Hayek argued, was the modern global market order. In this market order, most human actions are based on each individual’s right and customary practice of selecting his own ends and using those means that he thinks may be more useful in pursuing his desired goals. He benefits from the knowledge and abilities and resources in the possession of others through the competitive price system of a, now, worldwide economy; people need not know each other or the purposes for which they wish to buy or sell goods and services or the means of production that are at their disposal. The price system integrates, coordinates, and disperses all the minimum bits of information that is necessary for each participant in this worldwide division of labor to bring his own actions, as both producer and consumer, into cooperative balance with those of multitudes of others about whom he knows nothing.
Once the nature and social and institutional presumptions of this global market order are more fully appreciated, it becomes logically and factually impossible to make a successful case for any type of politically planned or heavily government-directed economy. The planners and regulators have inescapable limits to the ever-changing knowledge and experiences needed to socially engineer entire countries. (See my articles, “F. A. Hayek and Why Government Can’t Manage Society” and “Hayek’s Still Relevant Response to Today’s Paternalist Planners”.)
As Hayek expressed it in his last book, The Fatal Conceit: The Errors of Socialism (1988):
We are led – for example by the pricing system in market exchange – to do things by circumstances of which we are largely unaware and which produce results that we do not intend. In our economic activities we do not know the needs which we satisfy nor the sources of the things we get. Almost all of us serve people whom we do not know, and even of whose existence we are ignorant; and we in turn constantly live on the services of other people of whom we know nothing.
All of this is possible because we stand in a great framework of institutions and traditions – economic, legal, and moral – into which we fit ourselves by obeying certain rules of conduct that we have never made, which we have never understood in the sense in which we understand how the things that we manufacture function.
Modern economics explains how such an extended order can come into being, and how it itself constitutes an information-gathering process, able to call up, and to put to use, widely dispersed information that no central planning agency, let alone any individual, could know as a whole, possess or control. Man’s knowledge, as [Adam] Smith knew, is dispersed. (p. 14)
Societies have Evolved Different Cultural Qualities
The fact is that societies have not evolved and developed at the same time and in the same ways. Some have rules, customs, traditions, and unwritten and written laws of interpersonal conduct that have made what Hayek called, following Adam Smith, the Great Society of an increasingly interconnected global mankind. Slobodian scoffs at the idea that, “Some societies had developed the cultural traits of personal responsibility, ingenuity, rational action, and low time preference over long periods; others had not.” Regardless of Slobodian’s rejection of such an idea, it remains no less true; those societies that have successfully done so to a greater degree have made possible higher standards of living, and more economic and cultural opportunities for their members than others.
Some societies with their particular cultural values and religious beliefs cultivate real “diversity” and “inclusion” with accompanying peace and prosperity for most, if not all, and others do not far less successfully. However, cultures of envy and resentment of the successes of others often succeed in breeding violence as well as retarding or even halting economic development.
For instance, in Malaysia, the native Malays make up about 69 percent of the population, with Indians and Chinese comprising another 30 percent of those living in the country. Historically, the Chinese and the Indians, over the generations during which they have lived there, have tended to do economically far better than the Malay majority. The Malay majority has used its political power to impose restrictions and various other economic handicaps on the other two groups, and implemented subsidies of various sorts, including educational opportunity. When the Chinese or Indian minorities have called for changes in these arrangements, they are told to remember 1957; when shortly after Malaysia became independent of British rule, Malays went on a murderous rampage against the Chinese and Indian communities out of envy and resentment.
Malaysian Minorities Punished for Their Cultural Successes
The Chinese and Indians of Malaysia possess the cultural characteristics of hard work, forward-looking sacrifices in the present for economic and family betterment looking to the future, and market-oriented rationality and a spirit of entrepreneurial enterprise. The Malay majority often demonstrates less of these qualities. The reason I use this example is that a number of years ago, I was a visiting professor at one of the private universities in Kuala Lumpur that catered to Chinese and Indians students who were penalized for their ethnicities, and could not get places in state universities due to admission quota restrictions meant to benefit Malays, instead.
I will offer one more example from Malaysia. The majority of Malays are Muslim. They use their majority status to impose severe restrictions on freedom of religion, in spite of formal references to freedom of religion. It is against the law for non-Muslims to proselytize for their, say, Christian faith, with imprisonment being the possible fate for trying to convert a Muslim; equally, a Muslim who converts away from Islam faces the same potential imprisonment for rejecting the “one true faith.” It has been a very long time since a Catholic was imprisoned or burned at the stake in Europe for converting a Protestant, or vice versa. And no restrictions stand in the way of a Muslim proselytizing for Islam in either Europe or the United States.
Traditions and Moral Heritage Do Matter
Traditions and a moral heritage do matter. And, no doubt, however abhorrently shocking it may be for Quinn Slobodian, many of the moral elements historically to be found in the Western heritage make it better – dare I say, superior – to a variety of others around the world, even today. Should I assume that Slobodian rejects the idea of universal human rights, on the basis of which the brutal acts of governments may be challenged as inconsistent with any sense of common humanity? After all, this idea of universal human rights that are true, right, and belonging to all human beings everywhere and at all times has its origins in the history of the Western World. Do I need to remind him that the organized movement to abolish human slavery originated in the West in the second half of the 18th century? The West helped bring about the formal end to that age-old human institution in many parts of the world, and in not much more than one hundred years.
Culture, traditions, values, a people’s “moral heritage,” about which Slobodian gives an implicit sneer, do play essential roles in determining the successes, delays, or failures in improving a society in various social, political, and economic ways. The “moral heritage” of individual liberty; respect for the rights and dignity of each and every person; the tradition of civil liberties and the protection of them from both private and political abridgment; the practice and customs of freedom of association and trade; of open and unrestricted peaceful and honest competition both inside and outside of the marketplace; and respect for private property and the just possession of income and wealth earned through voluntary exchanges in a market.
These have raised humanity from poverty, private and political plunder, and the abuse and violence of minorities and majorities. They have facilitated cultural and social ecumenicalism that enables so many people in so many places in the world to experience and “appropriate” the knowledge, inventiveness, music and art, and material productiveness of all the other peoples around the globe.
The classical liberal ideas of individual liberty and market freedom under impartial rule of law have made a good deal of this possible. It is competitive free enterprise that has enabled and fostered the incentives for work, saving, and investment – the “lower” time preferences of individuals planning and acting for the future – that has made the world a far better place, and that continues to improve all the time; at least when governments do not keep getting in the way.
These classical liberal and free-market ideas have nothing to do with xenophobia, racial bigotry, disrespect for others less well off than oneself, or with policies to close off nations and people from each other. The idea of liberty – and if you go through virtually any of Quinn Slobodian’s writings you never seem to find that word ever used other than with implicit contempt – is the political-economic philosophy of one humanity, one common improvement, one world of justice, and individual rights for all.
Slobodian is blind to all this. His vision – clearly one parallel to or coterminous with a socialist remake of society – would turn us away from all of liberalism’s accomplishments, however imperfect and incomplete they have been, and take us back to the primitive tribalism that Friedrich Hayek explained has taken humanity so long to escape from.
First published at AIER.