Peter Boettke – F. A. Hayek: Economics, Political Economy and Social Philosophy

Peter Boettke – F. A. Hayek: Economics, Political Economy and Social Philosophy

Boettke has both revived and deepened my appreciation of Hayek. He emphasizes the importance of institutions and rules of the game that I (and many others) thought Hayek had overlooked, at least in comparison to Douglass North, James Buchanan, Mancur Olson, and other thinkers.

He also clears up the common misconception that The Road to Serfdom is a slippery slope argument. Instead, Boettke argues it is an outgrowth of the great socialist calculation debate that dominated the economics profession in the 1920s and 1930s. Hayek’s teacher Ludwig von Mises argued that socialism is impossible because it has no price system. Without prices, any semblance of efficient resource allocation is impossible. Abba Lerner and Oskar Lange countered that not only is a planned economy possible, but experts can have fewer errors, redundancies, and other inefficiencies that come with free markets.

1944’s Road to Serfdom, looking back at this debate, argues that in addition to Mises’ calculation problem, a planned economy is incompatible with liberal institutions. Mises was right about the calculation problem, and Hayek expanded on Mises with his emphasis on knowledge problems, and by thinking of markets as an ongoing discovery procedure, rather than a static equilibrium.

But Hayek’s main point in Road to Serfdom is that the powers an authority would need to exercise to plan economy are incompatible with democracy, and with most forms of personal and economic choice. Planned economies and illiberal governments are a package deal. If a country chooses that package, it can always go back on it—which is why Hayek isn’t making a slippery slope argument. But if you want a planned economy, you cannot also have a free society. And if you want a free society, you cannot have a planned economy.

Chapter 10 I found genuinely inspiring. Boettke reminds the reader that liberalism must be liberal. It is not conservative, it is dynamic, forward-looking, outgoing, and inclusive, even if people look different, come from different countries, or speak different languages. Liberalism is also not progressive. Liberalism emphasizes bottom-up emergent orders over expert plans.

Liberals—in the correct, classical sense—and conservatives formed an alliance in the mid-20th century based on shared anti-communist beliefs, but they have little in common beyond that. Hayek’s essay “Why I Am Not a Conservative” is a key document here. But Boettke, in prose much more passionate than his usual restrained manner, argues that this odd alliance was overdone in Haeyk’s time, and is irrelevant now that communism is gone.

As a result, some thoroughly illiberal people are using the libertarian label to promote illiberal ideas on race, discrimination, immigration, trade, and other issues. This thought problem is causing a major marketing problem for liberals—not to put too fine a point on it, but as one example, many people confuse the Ludwig von Mises Institute’s ideas for those of Mises himself. This is a problem liberals have created for themselves, and the damage that alliances with shadier parts of the right have inflicted to the liberal cause will not be easy to undo.

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