Hayek a conservative after all?

Posted in response to a negative review of Robert H. Frank's "The Darwin Economy." A statement made blaming the creation of the Fed for the worlds economic ills was made, which I thought poorly supported (not that I'm particularly a fan of the Fed, but I'm not convinced it is the Evil Empire some seem to think it is).


You are quick to lay all economic problems at the feet of the Fed's influence. I don't think you've demonstrated that it's simply the existence Fed itself that is inherently faulty simply by pointing out some of its actions that turned out badly, or interpreting them as causal-- you seem to be cognizant of that point. However, I wouldn't necessarily be opposed to eliminating it, but I would need to know what you propose to replace it. An answer of "nothing" only tells me that you have no idea what will replace it. It's a ghost of Hayek, an etherial phantom that does not and cannot exist. Decentralized banking only means that the banks will choose on their own how they will centralize without regard to any democratic process, without any social involvement other than whatever meager influence their customers can exert on them. The fact is, banks exert significant control over our economy, I think we have a right to some say as to how they go about it. No, in fact, I think we have an OBLIGATION.

Society is necessarily a balance between collective interests and individual interests. That's simply a fact of life. The more you try to decentralize by eliminating "coercion", the more opportunity you provide for individuals of similar interests to choose to aggregate and collude against others of differing interests. The problem with an absolute anarchy is that there is nothing that keeps a bunch of people from getting together, forming a collective and exerting control. The tyranny of that control may not be substantially different than that of the despot dictator or maladapted representative government.

The question boils down to, what form(s) of collective(s) are you willing to tolerate? Many are quick to stand up for market collectives. This may very well be due to positive characteristics of such collectives that are quite desirable. But collectives cannot be prohibited simply by eliminating coercion, because coercion will form independently, as we've seen in corporate collectives. In fact, only coercion can eliminate coercion. The free market ideal that many are so fond of praising is not at all possible, because the level of freedom required for its existance is more than enough freedom to allow the elimination of it via collective interests, EVEN if government did not exist at all. There are in fact, TWO roads to serfdom, the path to socialism OR the path to free market capitalism, if you follow either of them far enough. The only difference in the latter is that a few more select individuals may escape via wealth or privilege.

We've certainly seen that a market so free that even government is for sale, is a "proven failure," for a significant number of people. And oh yes, we know that if government was powerless you probably think this wouldn't be a problem. But if government was powerless, that does not eliminate control and coercion, it only hands it over to collectives only beholden to society's interests in a peripheral way at best.

And there is another important fact that's relatively new (post-Hayek). Arguments for humans being incapable of understanding societal and economic dynamics sufficient to exert successful control over them may not be true for much longer. In fact, some may argue that it's not even true as of today. Computer information systems, simulations, evolutionary algorithms, etc., are being used today to model, predict, leverage, and even manipulate markets. How long before society can be modelled sufficiently enough that a lot of that experimentation I mentioned before can be performed at great speed and without impacting society at large, leaving proposed adjustments vetted to a much higher level of confidence than we've ever had or the classic economists ever imagined? What new strategies may be identified? We can only guess, but it is unlikely that there will be none. Will it solve all the worlds social problems, probably not, but I think it has the potential to make things better-- and even if it doesn't, we need to find out for sure anyway, as it is just too important to simply remain complacent that unrestrained free market dynamics is the best we can do, because frankly, it cannot withstand the very liberties it enjoys. And, do we want to leave these new information power tools only to potentially hostile (to society) forces? Or do we want to make sure that we can wield them as well? I suspect that given all of this, that Hayek might have decided that being a conservative was a good idea after all... :-)

The very definition of socialism in "A Road to Serfdom" is now an antiquated one that didn't foresee what individuals can accomplish via collectives on their own, with technology, and at what speed, and how collectives can form now and in the future, and how they can coexist with capitalism. Individuals can be a member of multiple collectives simultaneously, given modern communications. Suppose you had a free market but individuals chose instead to enter into collectives for the advantages they offer? Do they not already? Suppose an ad-hoc collective of individuals chose to form in order to target market or government forces that it sees as hostile to its interests? And of course, corporate collectives are long known to form anticompetitive or otherwise socially abusive pacts, as well as ones that no doubt have positive effects on society. As long as there is more than one person alive in the world, collectivism is here to stay in one form or another, the only question is, what forms will they be. If you just throw up your hands and let it be a total free-for-all, then you're just leaving it all to someone else who will take charge, I guarantee.