Uneasy Money

I’m not sure why – well, maybe I can guess – but I have been thinking about an article (“Hayek and the Conservatives”) I wrote in 1992 for Commentary. I just reread it — probably for the first time this century — and although I can’t say that I agree with everything I wrote over 20 years ago, it somehow still seems relevant, perhaps even more so now than then. So I thought I would share it.

At the time of his death on March 23, 1992, less than two months before his ninety-third birthday, F.A. Hayek was widely if not universally acknowledged as this century’s preeminent intellectual advocate of the free market and one of its leading opponents of socialism. His death, coming so soon after the collapse of Communism in Eastern Europe and the abandonment of Marxism and socialism as intellectual ideals, occasioned understandable comment by his admirers about the vindication that Hayek, after years of vilification at the hands of critics, had received at the hands of history.

Though long in coming, however, Hayek’s vindication did not occur all at once. For his work had exerted a crucial, though basically indirect, influence over the renascent conservative and libertarian movements that had grown up after World War II in the United States and Great Britain. Indeed, the revival of those movements culminated in the rise to power of two politicians, Ronald Reagan in America and Margaret Thatcher in England, who were proud to list Hayek among their intellectual mentors. And his vindication had also been presaged, though in an oddly ambiguous way, when Hayek was named co-winner, with the Swedish socialist economist Gunnar Myrdal, of the 1974 Nobel prize in economics.

Still, most of Hayek’s career was spent in the relative obscurity befitting an expatriate Central European intellectual of reserve, urbanity, erudition—and unfashionable views. Hayek’s economic theories had apparently been superseded, first by those of John Maynard Keynes and then by the increasingly mathematical economic analysis of the postwar period, and his political philosophy was considered either a relic of an obsolete Victorian liberalism or, less charitably, an apology for the worst excesses of capitalist exploitation. Before winning the Nobel prize, Hayek, who never served either officially or unofficially as an adviser to any political figure and never sought a mass audience, only twice transcended the obscurity in which he labored for so long: first in the early 1930’s when, as a young man newly arrived in Great Britain, he was briefly considered the chief intellectual rival of Keynes, and a decade later in the mid-1940’s when, much to Hayek’s own surprise, his book, The Road to Serfdom, became a trans-Atlantic best-seller. . . .

Ironically, Hayek’s death occurred not only after his critique of socialism had just received decisive historical confirmation, but when the conservative movement in the United States, whose free-market and free-trade principles he, perhaps more than anyone else, had shaped, was undergoing a fundamental crisis. To understand the nature of the crisis, one must first understand how Hayek came to play such a crucial role in the development of conservatism.

Before World War II what passed for conservatism in the United States was an amalgam of views and prejudices which lacked sufficient coherence to be summarized by any clear set of principles. The chief characteristics of the Old Right were a fanatical opposition to . . . Roosevelt’s New Deal or indeed to any national measures aimed at improving the lot of the least well-off groups or individuals in the country; opposition to international alliances, coupled with decidedly nativist tendencies and a bias in favor of protectionist trade policies; a primitive bias against banks, speculation, high finance, and Wall Street; and complacent toleration of, or occasionally even active support for, racial and religious discrimination against blacks, Jews, and other minorities. . . .

Even more disastrously, American conservatives, mistrusting the federal government and its tendency to become involved in European conflicts, and viscerally hating Roosevelt, bitterly opposed any U.S. efforts to resist or contain the spread of European fascism. These attitudes gave birth to the America First movement of the 1930’s, whose often implicit and occasionally explicit anti-Semitic overtones can only be understood in the light of the broader set of fears, hatreds, and neuroses that animated the movement.

The onset of World War II, the attack on Pearl Harbor, and the subsequent horrific revelations about the Holocaust perpetrated by the Nazis (with whom the America Firsters had uniformly urged coexistence and for whom some of them had expressed sympathy) left American conservatism discredited both morally and intellectually, just as the Depression and a reflexive opposition to the New Deal had discredited conservatism programmatically.

Thus, when The Road to Serfdom was published in 1945, it filled a gaping moral and intellectual vacuum. For here was a book, written by an Austrian expatriate of impeccable anti-Nazi credentials, fundamentally opposed to the socialist ideas now guiding progressive thought everywhere. Moreover, in a profound and eloquent argument, The Road to Serfdom contended that the path the fascists had followed to absolute power had been prepared for them by the very instruments of central planning and the ideology of an all-powerful state which socialists had created before them. The Nazis, after all, had been National Socialists, and Mussolini had been a leader of the Italian Socialist party before starting the Fascist party. The common characteristic of all such movements was to subordinate the individual to the supposed interests of some abstract collective entity—class, nation, race, or simply society.

In a relatively brief span of time, Hayek’s version of free-market, free-trade liberalism (in the traditional European sense of the word), and political internationalism, which had never before taken root among either American conservatives or liberals, became the bedrock on which the generation of American conservatives who came of age after 1945 built a political movement. Liberated from nativist, protectionist, and isolationist tendencies, this generation could turn its energies to the struggle against Communism and other forms of collectivism, and to the promotion of a free-market economy.

Naturally the transformation of American conservatism was never complete. . . The lingering Old Right influence is today most noticeable in the conspiratorial cast of mind, the obsession with betrayal and disloyalty, the search for alien influences, the siege mentality, the anti-intellectualism, the chauvinism, and the free-floating anger that unfortunately still pervade parts of the conservative movement. It is just these qualities that Patrick J. Buchanan would restore if he should ever succeed in “taking back” the movement from those who, in his words, have hijacked it. . . .

The key distinction for Hayek was not big government versus small government, but between a government of laws in which all coercive action is constrained by general and impartial rules, and a government of men in which coercion may be arbitrarily exercised to achieve whatever ends the government, or even the majority on whose behalf it acts, wishes to accomplish. Though Hayek contemplated with little enthusiasm the absorption by the state of a third or more of national income, the amount and character of government spending were to him very much a secondary issue that directly involved no fundamental principle. . . .

Hayek’s point is that there is no deductive proof from self-evident axioms that will establish the case for liberty. Rather, he argues, liberty is a condition and a value that has evolved with society. If we value liberty, it is because Western civilization has evolved in such a way that liberty has become part of its tradition. That tradition, the provisional outcome of a contingent historical and evolutionary process, cannot be explained in purely rational terms.

This approach to social theory, the product of a thoroughgoing philosophical skepticism, is decidedly incompatible with the religious beliefs to which a large segment of the conservative movement subscribes, and equally unattractive to those, conservative or libertarian, who ground their political beliefs in natural law or in any other set of self-evident truths. This no doubt explains the regrettably limited influence that Hayek’s later work has exerted on American conservatives—particularly unfortunate because his rich contributions to legal and constitutional theory have much to offer both conservatives and liberals struggling to formulate a coherent philosophy of adjudication.

That apart, however, it remains undeniable that the primary goals of American conservatism in the postwar era evolved steadily from an Old Right toward a Hayekian agenda: from isolationism to containing the military expansion of Communism and other aggressive totalitarian movements; from protectionism to reducing the extent of government interference with and disruption of the free-market economy both domestically and internationally; from wholesale opposition to the New Deal to reforming and rationalizing its social-insurance measures along more market-oriented lines, and focusing government efforts on helping the least well-off rather than redistributing income generally.

Given the conflicting pressures under which policies are made, this agenda has been far from perfectly implemented even under conservative administrations. Yet it was only by embracing such an agenda that conservatism attracted not just new intellectual supporters—the neoconservatives—but, at least in presidential elections, a majority of votes. A retreat to the Old Right stance advocated by Patrick J. Buchanan and his supporters would mean not just throwing overboard the neoconservative “parvenus,” it would mean eradicating root and branch the fundamental consensus that enabled American conservatism to grow and to thrive in the postwar era.