All at sea without a moral anchor

Hayek and After - Social Citizenship Rights - Hayek
May 22, 1998

Judging from these three books published in the past two years, there is now a growing Hayek industry in academia. Having been ignored for nearly 30 years, he would have been pleased by this flood of attention.

A common thread running though the first two books and substantial parts of the third is the attempt to find an intellectual coherence in Hayek's social and economic thinking - which he liked to call a refurbished classical liberalism - within the current frameworks of moral and political philosophy. The central concern of both Joao Carlos Espada and Jeremy Shearmur is to see if, as Hayek hoped, he has provided a case for the universalism of the classical liberal tradition, and if he has not, whether some amendments or additions to his framework could do so.

The book edited by Stephen Frowen contains 14 essays on various aspects of Hayek's economic and social thought, as well as his views on the methodology of the social sciences. As with most conference volumes such as this it is a curate's egg. The most interesting pieces are both by philosophers: a comment by John Watkins on Hayek's famous "limited knowledge" thesis, and the essay by Tony Lawson on Hayek's non-positivist perspective on social theorising. Both are concerned with the lineage and contributions of Hayek's epistemology. Watkins I think rightly points out that the limited knowledge thesis is empirical rather than philosophical, while a conjoined thesis on the uniformity of human minds "has a dubious origin in a questionable assumption of Hayek's concerning the intelligibility of other minds".

Lawson presents a cogent argument that shows that the early Hayek of the 1940s essay on "Scientism and the study of society" was still a prisoner of a form of positivism as he merely added mental phenomenon - his "subjective data" - to the physical phenomenon of the empiricist theory of positivism. It was only later in The Fatal Conceit, Hayek's last book, that Hayek came to accept what is called among philosophers of science "the ontology of transcendental realism". This epistemological position is summarised in the following passage from that quoted by Lawson: "most knowledge is obtained not from immediate experience or observation, but in the continuous process of sifting a learnt tradition, which requires individual recognition and following of moral traditions that are not justifiable in terms of the canons of traditional theories of rationality".

Surprisingly, only three of the contributors to the Frowen volume make any mention of one of Hayek's key epistemological insights, namely the importance of "pattern predictions" in the social sciences. Ray Richardson naughtily turns this against Hayek to show how his views on trade unions could not have been based on this type of prediction. While E. F. M. Wubben and Eamonn Butler are more concerned with tracing the lineage of this notion and showing how it goes against the views of the mainline Austrians as well as the Popperians. There is little new in the various other commentaries in the Frowen volume on the myriad aspects of Hayek's economics (by Meghnad Desai, Otmar Issing, H. Klausinger, Mark Perlman, and G. R. Steele).

The concerns of Steve Fleetwood on "the necessity of social rules of conduct" in the Frowen volume are similar to those of Espada and Shearmur in their respective books. Of these the book by Shearmur seems to me to be the more cogent. Has Hayek provided an adequate intellectual foundation for his "great society" and in particular for the eschewing of redistribution but accepting a non-market welfare safety net?

Espada, concerned as he is with finding a middle way between Hayek and Plant, argues that while accepting Hayek's case for a market economy, this latter concession of Hayek's to at least part of the socialist welfare state agenda means that he should logically endorse the basic social rights of the destitute to sustenance, involving transfers, without giving in to the redistributive social democrat agenda of Raymond Plant. But as Shearmur rightly notes, though helping the destitute might constitute an action that is morally right it does not imply that the destitute have a moral right to such transfers. This distinction becomes even stronger if one considers the destitute not only in one's own country but in the world. The fact of destitution does not confer any rights to transfers on the world's poor.

Nor, as Shearmur notes, can Hayek, once he has accepted the need of government transfers to meet the basic needs of the disadvantaged, take a principled moral stand against the redistributive transfers advocated by social democrats. The only argument against them becomes the empirical one of efficacy, and whether a market economy can survive the creation of a transfer state because of well-known problems of political economy.

The most important issue, however, for Shearmur is to provide a case for liberty as a universal value. As he notes in his conclusion, the problem facing all liberals is "trying to explain what secular rationale there might be for the universalism of the liberal tradition". The answer that Hayek gave in his later works based on a form of cultural evolution - with the market and western "habits of the heart" winning in an evolutionary contest with rival systems - is rightly found unpersuasive by both Espada and Shearmur. But I do not think Shearmur or Espada succeed either in finding persuasive universal grounds for their variants on Hayek's great society - Shearmur's being a minimal state in which different "communities" live and compete with each other only bound by a rule-bound national constitution, and Espada's a market economy with social citizenship rights to basic needs.

The reason is that they are both trying in an Enlightenment manner to find a rational, universal basis for social and personal morality. To understand the nature of this quest, why with the death of the Christian God following the scientific and the Darwinian revolutions the secular moralities have all sought to ground traditional moralities previously underwritten by Christian beliefs in Reason, and why this enterprise is doomed to failure, one has to take a historical, interdisciplinary and cross-cultural view. While Hayek did take account of the two former aspects in his later years, he never took other cultures seriously.

For classical liberals, the justification for their beliefs was provided by the great sages of the Scottish Enlightenment. Adam Smith provided the justification of the instrumental rationality of the market, which has now been tried and tested not least in the failed alternative collectivist experiments of this century. Hayek's main contribution was to refurbish this by adding to the Smithian notion of the efficiency gains from a market-mediated division of labour his own gains from the division of knowledge.

But as the Scottish sages and Hayek knew, efficient markets need a moral anchor to overcome the various temptations offered to us selfish humans entailed by an extended market order. As Hume saw clearly, the morality required to maintain this social cement of society depended on a society's traditions and forms of socialisation. Neither God nor Reason needs to be invoked (or can be) to justify these conditioned and necessary habits.

This is very much the ethical view taken by the older non-Semitic Eurasian civilisations. Unlike Christianity these civilisations did not have "religions" that claimed to be universal. Nor were they monotheistic and egalitarian like the Semitic religions. Thus the particular concerns with providing a moral anchor based on a universal rational ethic that takes account of egalitarian impulses is a task uniquely confined to the contemporary Christian West. As Nietzsche so powerfully proclaimed, it cannot be done, and all the subsequent attempts by western social and moral philosophers - including Hayek - have merely clothed their particular prejudices in rational form.

Hayek, I think, was coming to such a Humean belief about ethics towards the end of his life. Often one feels that little of value has been added to social and economic thought since the writings of the Scottish sages.

Deepak Lal is professor of international development studies, University of California, Los Angeles.

28Jbooks economicsTHE TIMES 7Jmay 22J1998 Hayek: after 30 years of neglect, his work is now under the academic spotlight

Hayek and After

Author - Jeremy Shearmur
ISBN - 0 415 140587
Publisher - Routledge
Price - £45.00
Pages - 257

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