A couple of years ago I posted here a series of entries on the origins of capitalism, or more precisely on the evolution of Western thought regarding capitalism, from Adam Smith through Ayn Rand. Looking back, I see that that series excluded some important contributors to this intellectual current, in particular the authors of the “marginal revolution” in late nineteenth-century economics and the creators of the “Austrian school” of the twentieth century. I neglected the former group because I didn't know anything about them at the time, and the latter because I assumed their importance had declined relative to the Nietzschian novelist and cult leader Ayn Rand, about whom I wrote at length. In May 2013, however, political scientist Cory Robin published in The Nation a provocative essay joining all of these men and women – the marginalists, the Austrians, Nietzsche, Rand – into a single school of reactionary thought. “Nietzsche's Marginal Children” became the subject of a forum on Crooked Timber, and generated such hostile commentary there that the author published another long essay in Jacobin magazine defending his conclusions. All deserve some commentary here, if only as a coda to my earlier series and a reflection on the illiberal nature of capitalism.
The marginalists, more specifically
William Jevons, Carl Menger, and Leon Walras, introduced to economics
the concept of marginal utility, which tied the price of a good or
service to the usefulness of one additional unit of that commodity to
the consumer. Marginal analysis stipulated that the price of a good
depends both on its importance and its scarcity, which is why water
is cheaper than diamonds, even though the former is more universally
useful. Marginal analysis suggested that labor, being more abundant
than land and capital – or, rather, owned by more people than land
or capital – should command a lower-unit market price than those
latter commodities. It was thus a useful concept for elitists who
feared that the revolutions of 1789 and 1848 had destroyed the
values of the ancien regime and substituted only Marx's labor theory
of value, which gave entirely too much power to
the working class – to the mob. Marginalism promoted instead the
idea that scarcity and the making of difficult choices determined
value.
The same fear the mob lay
behind the elitism of Friedrich Nietzsche, whose philosophical works
argued that the masses, obsessed with their “finite” lives, could
not create anything of enduring value. Value, Nietzsche admitted,
was a human invention, but it came only from the works and the esteem
of “exalted men of culture,” a tiny minority of warriors,
statesmen and artists whose thoughts and struggles were the only
sources of beauty and dignity. The purpose of a society, he insisted,
was to serve as the support structure for this aristocracy. To
borrow a phrase from Theodosius Dobzhansky, Nietzsche believed that
common people were “a manured soil in which to grow a few graceful
flowers of refined culture” (quoted in Fernand Braudel, The
Structures of Everyday Life [U. of California Press, 1992], 186.)
A democrat he was not.
Nietzsche had a considerable influence
on early twentieth-century European fascists, and on several important American philosophers, notably Leo Strauss
and Ayn Rand. His impact on the Austrian economists, particularly the
ur-libertarians Ludwig von Mises and Friedrich Hayek, is harder to
prove, and Robin argues that Nietzsche did not directly influence
them. The three men instead came of age in the same problematized
intellectual environment, that of late nineteenth-century middle-European
gentry struggling to defend their position and their culture against
the working class. The Austrian economists
took their initial cues from the marginalists, who argued that
landowners and capitalists were more economically valuable (because
scarcer) than an equal number of laborers. The marginalists also
imparted a certain romance to the marketplace, insofar as “economic
man” had to make sacrifices in order to determine what was
economically valuable to him.
What Mises and Hayek added to these
assumptions was the belief, alien to Nietzsche and unnecessary to the
marginalists, that the capitalist market economy was a moral system.
Morality, Hayek argued, concerned the ordering of ends, or goals, and
because scarcity determines marginal utility, a free market forces
individuals to prioritize and rank their goals. “The economy,”
Robin observes, thus “becomes a theater of self-disclosure...It is
not in the casual chatter of a seminar or the cloistered pews of a
church that we determine our values; it is in the duress—the
ordeal—of our lived lives, those moments when we are not only free
to choose but forced to choose.” Economic man became through his
choices a moralist and (because the market was actually a moral
theater) an artist.
Thus far the Austrians' view could
theoretically support social democracy, insofar as it makes ordinary
workers' and consumers' economic lives morally significant. Mises
and Hayek, of course, were not social democrats. Instead, they
viewed the market as “the proving ground of aristocratic action.”
In his 1960 work The Constitution of Liberty, Hayek argued
that consumers were never free to make all of their own economic
choices; instead, the inventors and entrepreneurs who develop
complex technologies and the wealthy capitalists who are the leading
arbiters of taste shape the choices of the consuming multitudes.* Economic freedom was not an end in itself but a means to an end: the
creation of an economic sphere in which an entrepreneurial and
cultural elite could flourish. To give Hayek his due, one should
note that he was a trickle-down elitist: a flourishing
entrepreneurial class and aristocracy would, he believed, create
benefits for society as a whole, providing ordinary schmoes with
jobs, security, and
access to mass-produced consumer goods. Contrast him with Nietzsche, who argued that the
highest purpose for hoi polloi was to support the elite, and Ayn Rand, who described the 99% as “moochers and looters” for whom
the great-souled elite should feel nothing but contempt.
Since a society could not flourish
without nurturing a free-market elite, however, Hayek viewed any
government which threatened capital and markets as a menace, and
considered its overthrow, even by a dictatorship, as a positive good.
He reserved particular contempt for totalitarian systems like Nazi
Germany's, but he believed social democracy was also dangerous,
insofar as it replaced a rule-based economy favorable to capital with
a discretionary political economy controlled by the mob. A temporary
dictatorship, Hayek believed, might occasionally become necessary to
purge a nation-state of its constitutional “impurities” and
restore a free-market economy. In the early 1960s he sent a copy of
The Constitution of Liberty to Antonio Salazar of
Portugal, hoping to persuade him to become that nation's law-giver,
and later Hayek became an influential cheerleader for Augusto
Pinochet of Chile. That Pinochet violently deposed his
predecessor, Salvador Allende, and then tortured and murdered his
political opponents does not appear to have bothered Professor Hayek.
A “liberal” dictator, Hayek argued, was preferable in the long
run to an illiberal social democracy. Jeanne Kirkpatrick would
certainly have approved.
Robin's essay has its shortcomings.
His writing style is diffuse, digressive, and occasionally difficult
to follow, and I find his connection of the Austrians with Nietzsche
both strained and unnecessary. One may successfully argue that Mises
and Hayek were elitists without
invoking Thus Spake Zarathustra. I think “Nietzsche's
Marginal Children” and the sequel that Robin published in Jacobin, "Nietzsche, Hayek, and the Meaning of Conservatism,"
are noteworthy for other reasons. Fans of the Austrian school of
economics generally characterize Mises and Hayek as the intellectual
heirs of nineteenth-century liberalism, and Robin persuasively argues that
they were not. They were instead reactionaries, for whom a free
market was not an instrument for egalitarian social progress but the
crucible of aristocracy. Robin also usefully summarizes the
work of another, equally influential Austrian economist, Joseph Schumpeter, whom Mises and Hayek found inspiring but with whose
historical conclusions they disagreed. Schumpeter attributed
technological progress to a small elite of entrepreneurs and
inventors, whom he characterized as eccentric, romantic geniuses
willing to flout social norms and destroy older industries.
Schumpeter argued that a mature capitalist economy had little place
for the entrepreneur, but the other Austrians disagreed, asserting
that the entire purpose of a free-market society was to nurture such
capitalist heroes.
Perhaps Robin's most controversial
contribution is his linkage of Hayek with modern dictators, a liaison
which actual classical liberals, like John Stuart Mill, would have
found appalling. In noting Hayek's fondness for Salazar and
Pinochet, Prof. Robin observes that we do not often appreciate the
role of violence in creating capitalist societies, or in transforming
socialist countries into free-market ones. This is a point addressed
by David Graeber and Naomi Klein, and one upon which I would like to
expand in a forthcoming blog entry.
**
(The above image, of octogenarian Friedrich Hayek enjoying a sherry and a scowl, is from Wikimedia Commons.)
* Hayek made analogous observations about free-market price systems: prices are extremely useful for consumers and investors, but they the product of complex socio-economic interactions that most people don't fully understand; one can "use" prices just as one uses advanced technology, without fully understanding the intellectual and social labor that went into them.
**
(The above image, of octogenarian Friedrich Hayek enjoying a sherry and a scowl, is from Wikimedia Commons.)
* Hayek made analogous observations about free-market price systems: prices are extremely useful for consumers and investors, but they the product of complex socio-economic interactions that most people don't fully understand; one can "use" prices just as one uses advanced technology, without fully understanding the intellectual and social labor that went into them.
Excellent essay, as usual, Dave. You hate all the right people.
ReplyDeleteIn a sense, I would call Rand, von Mises and Hayek all bastard children of Nietzsche. Nietzsche defies ideological classification because he defies ideology. The ubermensch is not a political type, rather he is a spiritual type who exalts women, children and family and humanism, beyond the realm of religion or ideology.
ReplyDeleteSchumpeter is another issue. The most prophetic of modern economists, he accurately predicted the role of technology in concentrating wealth through the devaluation of labor and stifled entrepreneurship, eventually resulting in bureaucratic and regulatory stagnation.
Sound familiar?