The Austrian Whig

Michael Ivens

Hayek Eamonn Butler (Temple Smith £4) Hayek on Liberty John Gray (Basil Blackwell £19.50) Money, Capital and Fluctuations Friedrich Hayek (Routledge & Kegan Paul £12.50)

Few philosophers have had so swift and direct an impact on a nation as Fried- rich Hayek has had on the British. The Thatcher revolution did not spring fully armed from nowhere, but was preceded by a number of influences, and the greatest of these was probably Hayek.

This Nobel prizewinner, Austrian by birth and British by choice, is famous as a political economist — but his fundamental position is that of a sceptical post-Kantian philosopher. His fame and his influence have been achieved very much against the flow of fashionable opinion. In 1944, when socialism was regarded by many as inevit- able, he produced The Road to Serfdom, which showed the left-wing roots of Fasc- ism and Nazism and indicated that demo- cratic socialism would lead inevitably to an unfree society. Even Keynes stated that he found himself 'in agreement with virtually the whole of it; and not only in agreement, but in deeply moved agreement.'

It also helped Winston Churchill to lose the first post-war election. Impressed by the book, Churchill drew comparison be- tween national socialism and British social- ism. Newspaper cartoonists ridiculed this by showing the innocuous figures of Attlee, Morrison and Cripps in swastika uniform. The public rejected the Churchill — and Hayek — thesis and put in Labour.

Not long after the war, a young man, Antony Fisher, went to Hayek for advice about his future. 'Don't be a politician, be a businessman,' advised Hayek. Fisher made money on eggs and with it set up the Institute of Economic Affairs and took on Ralph Harris (now Lord Harris of High Cross) to get it off the ground. The IEA long-range intellectual shells, backed up by some bloody infantry actions from Aims of Industry, helped to keep open the terrain for the eventual Thatcher advance.

The Hayek thesis of the inevitable move- ment of democratic planned socialism away from liberty still enrages many good men. I once had to present an award to Antony Fisher for creating the Institute of Economic Affairs. I produced the anec- dote of Hayek's influence on Fisher, and spoke approvingly of Hayek's thesis of the roots of unfreedom in democratic social- ism. Next in line for an award (for his notable work on Marxism) was Professor Sidney Hook. He cast aside his prepared words of thanks and bitterly attacked me for suggesting that nice friends of his, such as Tony Crosland, could ever lead to something unpleasant.

Hayek's most dramatic influence, of course, has been — via Sir Keith Joseph on Mrs Thatcher. I recently asked her to name the three books that had most influenced her views on freedom. Number one was Hayek's Constitution of Liberty. Hayek, who admires her, regards her as a Whig rather than a conservative. She insists that she is both. So, in many ways, is Hayek, although he sometimes regards himself as a Whig.

Born in Vienna in 1899, he knew the great economist Eugen von Bohm-Bawerk. His father was a botanist, and the sense of a natural evolution of society makes Hayek a descendent of a line from Mandeville and Goethe.

His influences have often been his friends: von Mises, Lionel Robbins, Keynes. Eamonn Butler's excellent intro- duction to Hayek's political and economic thought charts clearly the basic Hayek position: that impartial rules and laws are necessary for society — as opposed to socialist measures which 'do not pass the test of the rule of law. They are designed to bring about a particular state of affairs, to achieve an object or communal plan.'

Butler sums up with Hayek's very re- levant thesis on how, in the socialist state, the worst may get to the top — and how difficult it is to stop the strong man once he seizes power. Hayek is opposed to collec- tivism, behaviourism, fake social science, excessive government expenditure, the planned society and the concept of 'social justice'. As Butler points out, `To him, intellectuals are not original thinkers, but the purveyors of second-hand ideas, in- cluding journalists, authors, teachers, ministers, publicists, artists and so on.'

His neo-Kantian scepticism about 'the Thing in itself' helped him to reject the idea of 'perfect knowledge' in order to plan society — and to prefer the market system, which he sees as a game of exchange in which everyone has his own limited in- formation and objectives.

Hayek's attitude to religion is odd, limited and pragmatic. 'While new reli- gions come and go,' states Butler, reflect- ing Hayek, 'the only durable religions are those which enshrine the institutions of private property, society and the family.' But this is far too simple, and ignores Buddhism with its rejection of material phenomena, and the cults of monasticism, virginity and apocalypticism. And he is at odds with dissidents like Sinyaysky who have experienced great spiritual freedom in the total restrictions of the Gulag.

John Gray's Hayek on Liberty widens the picture by his portrait of Hayek as the philosopher who 'gives us a defence of

individual freedom without equal in mod- ern thought'. As Gray points out, the failure to grasp the synthetic nature of Hayek's thought arises because 'his writ- ings cross so many major disciplines theoretical economics, jurisprudence, philosophy, and intellectual history . . . and they span over half a century'. His magnificent Constitution of Liberty is right- ly applauded, but his study in epistemology and philosophical psychology is neglected — curiously, since it provides the basis to his thought. His interest in language may have been influenced by his cousin Ludwig Wittgenstein. But, as Gray admits in his important study, Hayek is not all of a piece. There is the fascination with John Stuart Mill, his similarity to Mill and Spencer lying in his 'indirect utilitarianism' (defined by Gray as 'that theory of moral- ity and practical reasoning which evaluates all states of affairs by reference to the utility they contain but which condemns any strategy of direct utility-maximization as self-defeating'.)

Hayek does not regard the free society as 'a necessary or inevitable terminus of cultural evolution'. He is insistent that there is no law of evolution; 'there is also° tension, not always resolved, between his commitment on the one hand to libertarian individualism, on the other to cultural traditionalism.'

But beyond the tensions between tradi- tion and liberalism Gray adds, 'Hayek's system faces a crisis — because of a conflict between its rationalist and sceptical aspects.' Nor is the concept of 'social justice' so easily disposed of as Hayek indicates. Nevertheless, it is this valuable tension and a passion for liberty supported by law that makes Hayek a model political and economic philosopher for the late 20th century. A Hayekian society will provide a basis for men to go beyond its own values, to those aesthetic, cultural and religious ideals indicated by a less fashionable philosopher, A.N. Whitehead.

Money, Capital and Fluctuations, some early essays edited by Roy McCloughrY, are of great interest to the economist. Hayek's essay on 'The fate of the gold standard' (`Britain's gold shortage could be attributed basically to the same cause which can lead to a shortage of money for any private person, in that she was con- tinually spending more than she earned ) will interest more readers than Sir William Rees Mogg. His shrewd scepticism is dis- played in 'Technical progress and excess capacity' where he points out that the industrial engineer is seduced sometimes by aesthetic innovation instead of pursuing utility. And underlying the economic analyses are the big and presently relevant questions: 'Firstly, can capital consump- tion be avoided in the long run in 9, democratic society in which the majority o' the population is anti-capitalistic? Second- ly, will capital consumption not inevitably make its appearance, at least in a situation in which it can be avoided only by lowering the standard of living?'