Regarding a recent Wall Street Journal article by Russ Roberts - "Why Friedrich Hayek Is Making a Comeback" - I have to react on several levels. I'll start with one that is superficially emotional and immature... but that seems the most apropos and on-target reaction... and then follow up with added, calmer insights.
Before offering that initial response, however, let me posit that I admire Hayek's insights, in many ways. As author of The Transparent Society, I am in tune with his critique that one of the worst flaws in any modern market is failure to maximize the number of diverse, maximally-informed players, in a truly competitive playing field. This draws upon the fundamentals of the liberal enlightenment, as elucidated as far back as Adam Smith. I will also avow that his role as a critic of statist-interventionist tendencies in economic management has been useful and often cogent.
Only, in regards the Wall Street Journal article what I have to say to the author, Russ Roberts, is "Get bent!"
Speaking as a hired mouthpiece for Rupert Murdoch, Roberts is part of the twisting of a once-vaunted journal into a principal tool for the destruction of the market economy it portends to defend. Along with the intellectual courtesans (a polite term) at Cato, Heritage and AEI, it has played a major role in the warping of conservatism.
Specifically, the perversion of "free enterprise" away from its Smithian meaning of maximized competition and toward a meaning that Adam Smith openly, repeatedly and vociferously despised... the protection of uneven influence and collusive power in the hands of private oligarchy.
Let us be plain. Across 4,000 years of recorded history, there has been no greater enemy of open competition than collusive, wealth-centered aristocracy. By comparison, the horrific reign of Soviet communism was a brief flash (and the "nomenklatura" caste in the USSR was arguably just another owner-conspiracy class). And today's libertarian obsession with civil servant "regulators" pathetically ignores the real enemy, across 40 centuries...
...an enemy that killed every market until Smith came upon the scene, and that has done everything in its power - through the promulgation of Culture War" - to distract from the word "competition." The word that ought to be the true focus of any genuine libertarian. Any libertarian who was not a monstrously hypocritical dunce about human nature and history, that is.
At his best, Hayek was all about competition. The larger the number of knowledge-empowered players the better! And yes, government bureaucrats are inherently dangerous to competition, if they are left to "guide" an economy. They are few in numbers and hence prone to group delusion. Their limited information makes their models inherently cumbersome and planning problematic. (Though each generation of mercantilist hegemons does seem to do a better job than the last: witness the progression from the USSR to Japan Inc, to modern China.)
But Hayek collapses when he is used SOLELY as a critic of government economic management. For his critiques apply equally well to ANY economy-running oligarchy! And I have yet to see anyone explain cogently why 5,000 conniving golf-buddies, appointing each other onto each others' boards and granting each other 100 $million bonuses while calling each other "geniuses" and raping their stockholders...
...are inherently better managers than 50,000 highly educated civil servants, answerable to solemn codes of accountability, regularly audited and subject to open scrutiny, to prevent their self-interest conflicting with the job they are charged to do. By Hayek's own calculations, the latter group is VASTLY preferable! Moreover, Adam Smith would have said so, as well.
Of course, the BEST solution is genuine competition, with only enough government regulation to ensure that the market functions well as our primary engine of problem solving creativity. If 50,000 accountable bureaucrats are better than 5,000 secretly colluding oligarchs, then 5,000,000 small and medium-scale businesses are even better. They are more likely - by Hayekian reasoning - to discover the alternate paths and most creative solutions.
{Side note: I would part with many libertarians - and Hayek - in that I believe that markets can and should be "tuned" to shift their incentives in directions that society has chosen, through well-vetted political consensus, to be desirable in the long run, or to take into account externality costs; e.g. tobacco taxes and mileage standards, along with safety and other desiderata. And state intervention that expands the number of savvy, empowered competitors (public health and education for poor kids) is absolutely justifiable in market terms. (And so said Adam Smith.)
{ Finally, in a world where mercantilist hegemonies are running roughshod over market enterprise, some assertive governance is needed, just to protect our own companies from the Marxian "contradictions" that make them easy victims of nationaist-mercantile manipulation, say, by China. The matter is especially severe when such nations are scofflaws toward intellectual property.)
Finally, I am going to be brutally frank again. For the neoconservative movement to haul forth Hayek at this point an howl at Keynes... after their entire movement has seen its credibility destroyed by reality, across the last twenty years, is an ultimate groaner.
Let's put it plain. The neocons can point to NOT A SINGLE CLEAR STATISTICAL METRIC OF NATIONAL HEATH THAT UNAMBIGUOUSLY IMPROVED DURING THEIR TENURE.
Their mythologies lie in ruins, along with our economy, our civil society, our small businesses, our markets, our military, our alliances, our stature and our science. Not one of the bold predictions made by Supply Side economics ever came true. Not one, ever.
Their program of stocking the civil service with industry whores - turning "regulatory capture" into relentless government policy - is now revealed in its full glory, in the Gulf of Mexico... and I am furious at Barrack Obama, for failing to appoint a special prosecutor.
No, I am not claiming tat the Keynsians have it all sussed! It is arguable that the stimulus prevented a FAR deeper depression... most economists think so. But here's the crux: the Keynsian modality is to "use debt when times are bad and buy down debt when times are good." The test isn't bad time (like now), but DID THE KEYNSIANS BUY DOWN DEBT WHEN TIMES WERE GOOD?
The fact is that they did. Under Clinton. He tried to buy down our debt and build a rainy day fund for hard times. If this had been allowed, we would have been in great shape. But instead, the neocons said "give largesse to the oligarchs! The debt will vanish!" Yeah right. Smith knew better, 250 years ago.
No. Excuse me, but I don't think that the neocons have any more right to cite F. Hayek than they do to mention the name of A. Smith. For them to try to take shelter behind such men is a travesty.
Me? I think I'll stick with the democrats and Keynsians a while longer, rather than listen any further to a howling pack of certifiable loons and shills for a new feudal caste. People who drove both capitalism and the nation that I love straight toward an early grave.