A Modern Reappraisal of Hayek’s Thought

Friedrich A. Hayek strongly defended liberalism grounded in limited government and the rule of law, and he viewed anarchy critically. Hayek, who had mastered Austrian economics and understood the dangers of government better than perhaps anyone else, paradoxically reached the conclusion that a free society cannot be realized without the framework of government.

Hayek’s logic is, of course, realistic. Unlike competing left-wing thought or conservatism, Hayekian liberalism is fundamentally rooted in a thoroughly realistic understanding of human beings and nature. Human plans, made by imperfect beings, always carry the possibility of failure. Hayek criticized all attempts to artificially reconstruct society as a fatal conceit, arguing that only a liberal society centered on individual freedom rather than central planning can succeed. Yet a realistic view of human beings also suggests the danger of violence, because not all human beings can be morally perfect. To prevent the spread of violence, Hayek proposed not anarchy but the rule of law administered by government. The key issue is how to suppress the violence of government as much as possible and train it to be a protector of citizens rather than their enemy. In short, Hayek’s thought reflects the lesson of praxeology: because the resources realistically available are limited, it is critically important to act in consideration of the environmental conditions around us.

According to Hayek, limited government is both the best realistically possible option and the one that is theoretically most compatible with liberalism. However, the fact that limited government is the best possible under real-world conditions does not (immediately) mean that it is also the most ideal liberal social system at the theoretical level. For example, in the West, where liberal studies are at the forefront, a new view is being seriously received: that the fundamental insight of Hayek’s social philosophy may not coincide with limited government.

The traditional view remains highly dominant that “anarcho-capitalism” is the product of the Murray N. Rothbard and Hans-Hermann Hoppe tradition, and that Hayek’s thought stands opposed to anarchy. Rothbard and Hoppe strongly argued that Austrian economics as established by Ludwig von Mises has greater logical coherence when understood anarchistically, and they criticized Hayek’s social philosophy as standing in stark contrast to the anarchistic character of the Austrian School.

However, the anarchistic potential of Hayek’s thought also began to be discussed from the mid-1980s. Economists affiliated with the Mercatus Center at George Mason University, including Don Lavoie, Peter Boettke, David Prychitko, and Steven Horwitz, led this effort. Their view of Hayek advances an argument similar to Rothbard and Hoppe’s interpretation of Mises. In other words, even though Hayek himself criticized anarchy, his thought fundamentally implies anarchism, and therefore one must consider the context of anarchy in order to understand the true character of Hayek.

As I understand it, there are broadly two grounds for this claim. The first is epistemological reconstruction. It is widely known that Hayek’s evolutionary epistemology differs considerably from the a priori epistemology of Mises-Rothbard-Hoppe. From the 1940s onward, Hayek began to depart from the Austrian tradition and increasingly emphasized an evolutionary position that conflicted with Austrian apriorism. We usually understand the foundation of Hayek’s epistemology as deriving from the empiricist current of thought rooted in the Scottish Enlightenment tradition. By contrast, the Mises-centered Austrian School is rooted in the rationalist tradition represented by Aristotle, Aquinas, Leibniz, Kant, and Brentano.

In addition, the George Mason Hayekians led by Don Lavoie focused on “hermeneutics,” represented by Martin Heidegger and Hans-Georg Gadamer, and argued for a “hermeneutic turn” in Austrian epistemology. What does the hermeneutic claim—that the world must ultimately be understood as a given text—mean in economic science? If the world appears differently depending on how it is interpreted, then econometric and economic-statistical research, along with government intervention in the market economy, functions as a form of violence that buries various modes of “projection” (entwurf) and imposes only its own standpoint. In other words, because the uncertainty of the market economy, limited information, and evolutionary processes themselves reflect human “projective being” (entwerfenheit), hermeneutics leads not to active government intervention and regulation but to their complete unnecessaryness. In this way, anarcho-capitalism is elevated as the system that best reflects the ontological characteristics of human beings.

Second, the George Mason Hayekians focus on Elinor Ostrom, Douglass North, and the public choice school. Recent research on rules, norms, and institutions has revealed the important role of civil society beyond the state-market dichotomy, and they argue that Hayek’s rule of law does not necessarily require the state. In short, even without coercion by the state or government, the rule of law in civil society can function reasonably well.

This orientation of Hayekian anarchism differs markedly from Rothbard-Hoppe anarchism. The George Mason Hayekians argue that their position belongs not merely to the Austrian School but to “mainline economics.” “Mainstream economics” is a kind of sociological concept, a fashion among elite groups of scholars. By contrast, mainline economics encompasses practical economic thought more broadly. That is, it seeks sound methodology but does not assume that only one particular approach is correct, and it adopts an open attitude that positively considers not only the Austrian School but also the achievements of Kenneth Boulding, Ronald Coase, James Buchanan, Douglass North, and Elinor Ostrom. Thus, what is emphasized in Hayekian anarchism is “consequentialism.” Their aim is to demonstrate through empirical research and practical evidence that the power of the free market and civil society can replace the state.

By contrast, Rothbard-Hoppe anarchism takes “the consistency of a priori axiomatic theories” as its highest virtue. Praxeology is an a priori system of truth reflecting infallibility, irrefutability, and universal validity. Therefore, all research on human action and the social order resulting from it must presuppose praxeology. Considering the “action axiom,” the foundation of praxeology, and the “a priori of argumentation,” the core thesis of the Rothbard-Hoppe tradition is that only anarcho-capitalism is a logically consistent and a priori universally valid social system.

The key point is that anarcho-capitalism is not the exclusive property of the Rothbard-Hoppe tradition. A large body of research shows that anarcho-capitalism grounded in Hayek’s thought is also possible.

In Korea, Hayek has been understood only in terms of limited government and the minimal state, and I believe his anarchistic implications have not been seriously discussed. Considering that related research abroad already began in the 1980s, Korean research on Hayek can be seen as significantly out of step with global trends. Of course, overseas trends are not necessarily the truth. Nevertheless, the anarchistic potential of Hayek’s thought is a highly intriguing topic, and by studying it we can certainly advance our understanding of Hayek’s thought.

Is Hayek’s social philosophy more naturally connected not to Hayek’s own policy claims but to the anarchism developed by later scholars? Can the rule of law and the prevention of violence be maintained as a spontaneous order of civil society without being mediated by the state and government? Does Hayek’s evolutionary epistemology carry hermeneutic implications? Any liberal who respects Hayek and deeply sympathizes with him will surely find these questions compelling.

This article is also available in the Free Economy Essay Op-Ed section of the Korea Hayek Society:

http://hayek.or.kr/1417

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Original title: 하이에크 사상의 현대적 조명

Author: Kyeong-hun Kim

Date: 2020-05-11

Source: https://www.cfe.org/bbs/bbsDetail.php?cid=free_opinion&pn=14&idx=22619