The champion of popular opulence

This book attempts to assess Hayek's social and political thought as a systematic body of theory though the author recognises that this is problematic to some extent. His aim as he states is to assess what he sees as the essentials of Hayek's theory - the idea of a spontaneous order; "the tacit observance of certain rules guiding individual conduct; and his theory of cultural evolution". He finds all wanting. I found the book unpersuasive. But this is not because it does not fit in with the requirements for an Oxford D.Phil, in which this book originated, but because of the chosen area - political philosophy - in which it was presented. For ultimately Roland Kley's criticisms are based on the inadequacy of "the moral philosophic foundations of Hayek's liberalism". And therein lies the rub!

The author seeks to "approach Hayek as a social and political theorist". So he seeks to judge his work by what contemporary philosophers call "normative political theory". This has by now become an exercise in deriving deductive conclusions from some intuitionist "first principles", an exercise which I find completely unproductive and which more importantly is completely at odds with Hayek's purpose as far as I can judge. As Hayek explicitly states in the introduction to Law, Legislation and Liberty, (volume one), he like the great classical liberals Hume and Smith is concerned with the "science of legislation". The resulting policy debates are not helped by the no-man's land identified by Hayek as "social philosophy", which he claims are "'philosophical' only in the sense that certain widely but erroneously held beliefs are due to the influence of a philosophical tradition which postulates a false answer to questions capable of definite scientific treatment". He argues that "the most important political (or 'ideological') differences in our time rest ultimately on certain philosophical differences between two schools of thought, one of which can be shown to be mistaken". Kley finds this paradoxical as for him from within the current edifice of moral philosophy this smacks of "naturalism" - a deadly sin in this context.

But I think Hayek is right in distinguishing what he calls evolutionary as contrasted with constructivist rationalism, and in his claim (which is an empirical one) that the former leads to what he calls the "Great Society". To see this it is useful to use a more transparent contrast provided by Michael Oakeshott's distinction between the state seen as a civil vs enterprise association. Noting that Hayek is concerned with the classical concern, with the "science of legislation". There is a corresponding divide in its contemporary manifestation - the economics of public policy - between the technocratic school which seeks to maximise a social welfare function based on some judgements of the social good (an "enterprise"), as opposed to the Virginia public choice theorists and neo-Austrians who seek a framework of rules that allow individuals to pursue their own ends (a "civil association") without any attempt to maximise any "social good".

The trouble with the "enterprise association" view of public policy has always been the difficulty of getting agreement on what comprises the "social good". More seriously Hayek has also argued that given the division of knowledge in society the informational requirements for fulfilling tecnocratic public policy prescriptions are unrealistic for the agency charged with maximising the social good. As Kley accepts the validity of this important insight, it is strange that he takes such a jaundiced view of Hayek's criticisms of public policy based on what he called constructivism.

The reason seems to be that Kley finds the implication of the impossibility of defining an unambiguous "social good", namely that one cannot then also define a "just" or "desirable" distribution of income unacceptable. Like many others of a similar disposition, he seems to find a contradiction between Hayek's and other classical liberal's endorsement of measures to alleviate absolute poverty (the position of the "least advantaged") through for instance some form of social safety net and their eschewing any distributional criteria for public policy, by pointing out at great length the logical possibility that a worsening of the income distribution could further impoverish the poor. The classical liberal response is that with the popular opulence promoted by what Hayek calls a "spontaneous order", and Oakeshott a "civil association" associated with the market, there is no danger of this. This is an empirical claim, which despite Kley's assertions to the contrary has been substantially vindicated by the experience of a myriad of developing countries.

More important however is Hayek's systemic claim, that in the promotion of popular opulence, a market economy based on the "civil association" view of the state will outperform a command economy based on the "enterprise association" view. This is also an empirical claim. 1989 provides the necessary empirical validation. Kley senses this and writes: "still, as closely linked to Hayek's concerns as the upheavals of 1989 may have been, this book will not discuss them". But then curiously he goes on to say "obviously factors other than economic failure contributed to the downfall of these regimes . . . The success of the democratic movements, and of the revolutions to which they led, arose, at least in part, from their moral strength, that is from their successful appeal to citizenship, public discourse, individual rights, and procedural fairness, and their insistence that these notions are not empty bourgeois slogans but substantive principles to which a decent society must give institutional expression".

But these are the very characteristics of "civil association" that classical liberals including Hayek have upheld. They have maintained that apart from any moral justification for them (which could always be contested) that they promote opulence. In this sense they are instrumental. But that is not enough for Kley who says "about this political morality Hayek has not much to say". Together with other contemporary political philosophers he hankers after some sure-fire way of also justifying the morality of "civil association". But this continuing desire of Descartes' children to ground public policy in values that can be universally accepted with certainty is a dead end.

So Kley, who has written an acceptable dissertation in "political philosophy", has not however - because of his academic upbringing - been able to place Hayek's social and political thought in a coherent context.

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