I have always enjoyed chapter 10 of Friedrich Hayek's Road to Serfdom -- "Why the worst get on top." Always referring to the last quarter century or so since I first read it. Hayek's argument struck me immediately as watertight but I was puzzled that he seemed to exempt his own preferred collective from his argument. Maybe he just wanted to slip it past the unwary?Individuals may be individuals but individualists are a collective. Harold Rosenberg coined a fine phrase for such collectives: "the herd of independent minds." Whether we call it capitalism or free enterprise, the individualist's Utopia meets Hayek's definition of collectivism: "The 'social goal,' or 'common purpose,' for which society is to be organized is usually vaguely described as the 'common good,' the 'general welfare,'
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I have always enjoyed chapter 10 of Friedrich Hayek's Road to Serfdom -- "Why the worst get on top." Always referring to the last quarter century or so since I first read it. Hayek's argument struck me immediately as watertight but I was puzzled that he seemed to exempt his own preferred collective from his argument. Maybe he just wanted to slip it past the unwary?
Individuals may be individuals but individualists are a collective. Harold Rosenberg coined a fine phrase for such collectives: "the herd of independent minds." Whether we call it capitalism or free enterprise, the individualist's Utopia meets Hayek's definition of collectivism: "The 'social goal,' or 'common purpose,' for which society is to be organized is usually vaguely described as the 'common good,' the 'general welfare,' or the 'general interest.'"
We can be less vague in describing the social goal of a capitalist society: the accumulation of capital. Does that goal not seem collectivist enough? O.K., then let's be more vague and call it economic growth. That way, the people on top can claim to be pursuing the general welfare by promoting the accumulation of capital. Capitalism is collectivist.
Why does organizing society for a common social goal favour the worst? In the first place, because success is not guaranteed. When a democratic leaders run into obstacles in achieving the plan, they face a choice of giving up or of assuming extraordinary powers. When a dictator faces that choice, the choice is between "disregard of ordinary morals or failure." That is why, "the unscrupulous and uninhibited are likely to be more successful in a society tending toward totalitarianism." Sound familiar?
How do these unscrupulous and uninhibited people manage to rise to the top? Hayek gave three reasons why a "numerous and strong group with fairly homogenous views," large enough to impose its views on society, "is not likely to be formed from the best but rather by the worst elements of any society":
- "the lowest common denominator [of moral and intellectual standards] unites the largest number of people."
- "those whose whose vague and imperfectly formed ideas are easily swayed and whose passions and emotions are readily aroused... will swell the ranks..."
- "it is easier for people to agree on a negative program -- on the hatred of an enemy or envy of those better off [or of those worse off!] -- than on any positive task."
"Marx's theory of class war is utter nonsense by its own definition..." Again, "Marx was a fool..." He had a "superficial mind..."
...the most grinding despotism ever known resulted at once from the "experiment" of Marxist communism, which could posit nothing but a mechanistic process for its validation.
...they assume that a productive society, which depends primarily on exact communication, can be organized after they have destroyed that means. In this they revert below savagery, and even below the animal level. They have got down to the premise of mere mechanism. Cogs in a machine need no language.
Personal liberty is the pre-condition of the release of energy. Private property is the inductor which initiates the flow. Real money is the transmission line; and the payment of debts comprises half the circuit. An empire is merely a long circuit energy-system. The possibility of a short circuit, ensuing leakage and breakdown or explosion, occurs in the hook-up of political organization to the productive processes. This is not a figure of speech or analogy, but a specific physical description of what happens.
There is absolutely no solution for this except individual land ownership by the great majority, and the use of real money. It is not necessary that everyone should own a farm; but enough people must own their homes and have a reserve for "hard times."
In two sentences, "the great majority" dwindles down to a vague "enough people." Paterson doesn't elaborate on how this condition of home ownship and a financial reserve is to be met. Presumably, it can only be achieved by hard work and thrift. Since those "most visibly affected" are most also likely to not have such a reserve, it is hard to see in what way this is meant as a "solution" to the labor problem any more than "stop eating avocado toast" is a solution to the high price of housing.
"It is not necessary that everyone should own a farm..." is a remarkably insensitive statement to make in the aftermath of the great depression when farmers were on the front lines of dispossession. In the wake of the World War I wartime boom, small farms limped through the 1920s faced with low prices, over-supplied markets and rising debt. When "hard times" suddenly went viral after the stock market crash of 1929, many farmers had no reserve because they had already suffered through a decade of "hard times."
Admittedly, Marx didn't offer a practical solution for the labor problem, either. What he did, though, is present an analysis of how the accumulation of capital necessarily generates hard times both through cyclical depressions and chronic unemployment.
Although Paterson had a great deal to say about how stupid and dishonest Marx was, she didn't offer a single sentence about why he was wrong about, for example, "the disposable industrial reserve army of the unemployed" or "the law of the tendency of the rate of profit to decline." She did, however, offer this chestnut: "The collectivist, with the theory of "technological unemployment," assumes a fixed number of jobs, another arbitrary quantity." The lump of labor fallacy!
Backing up to her previous paragraph, this is how Paterson presented the alleged fallacy:
Anyhow, the collectivists were forced to admit that production had refuted Malthus, increasing prodigiously, year by year. Then they had to say that the trouble was "overproduction"; the workingman would work himself out of a job pretty soon! This theory has evoked the phrase "technological unemployment," which is said to be caused by mechanical improvements in the means of production. That is, if a machine is invented by which one man can do the work previously done by ten men, it must put nine men permanently out of employment. It sounds plausible, but is it true?
Not only is it not true, it is not Marx's argument, which presumably is what is meant by "the collectivists' theory." Marx's argument is that capital must constantly employ more labor power because labor power is what produces surplus labor. If capital gets rid of nine workers in one factory, it has to hire ten or eleven somewhere else in the economy to up the accumulation process.
Marx's theory has nothing to do with a "fixed amount of work." It has to do with disequilibria between supply and demand for commodities -- including labor power -- that is not adjusted automatically by investment, interest rates or some market deity's "invisible hand." Far from assuming a fixed amount of work, Marx argues that the accumulation of capital requires a perpetual increase in the amount of labor employed alongside an increase in unemployment.
Maybe Marx was wrong. If so, a hoary straw man argument demonstrates no such thing. How hoary? The bogus fallacy claim was 163 years old in 1943.
