Saturday, September 17, 2011

Neither fascist nor socialist

I have been modifying and expanding the summary of my social views which currently appears as a stand-alone page under the title 'Sketch of a social philosophy'. I refer there to a particular European tradition of thought upon which I am consciously drawing and which may be characterized as both conservative and classically liberal.

"During the 1930s, a time of great political instability and polarization, a small group of European and American thinkers set out to revive and revise the classical liberal tradition. The group first came together in 1938 at a conference in Paris organized by the philosopher Louis Rougier, and was re-formed after the World War II as the Mont Pelerin Society. Its members were generally conservative, steeped in the cultural traditions of Europe, but forward-looking and seeking to apply new developments in economic theory and new political thinking to the economic and social problems of the time. Since then, of course, much has changed - new technologies have radically altered the way we communicate, and traditional and homogeneous cultures have been replaced by mixed and fragmented societies severed from their historical roots - but these scholars, largely because of the breadth and depth of their cultural understanding and their acute awareness of the contingencies of history, retain their fascination and relevance.

The European neo-liberals remained independent thinkers and did not really constitute a single school of thought. Some, like Ludwig von Mises and F.A. Hayek, favored relatively unregulated markets; others, like Wilhelm Röpke, Alexander Rüstow and Louis Rougier, argued for a more active role in the economy for governments. Ultimately, the test of social and economic principles is whether they work in a given context - though, admittedly, there will always be an ideological element in such judgements.

Instinctively I favor the less interventionist approaches of Mises and Hayek. It's clear that command economies, such as those of the old Soviet Union and communist Eastern Europe, do not work. But Hayek saw as fatally flawed not just socialism but also social democracy. Both systems may be utopian in inspiration but are oppressive and inefficient in practice. And, indeed, most European experiments in social democracy have failed miserably.

Hayek's attitude to social democracy was linked to his view that justice is not a matter of outcomes but of process, so the legal system should provide a framework for free human action that does not seek to direct it to predetermined outcomes. He was especially wary of the idea of 'social justice' which he saw as incoherent (because it is concerned with outcomes rather than process). I have some sympathy with this view, and, though I believe the unlucky and those not able to cope should be helped, I don't think it's a matter of rights or justice, but rather of benevolence or common decency. (See my short piece on rethinking rights.)

Socialist and social democratic programs may have failed, but there is a crisis also in economies more closely associated with free market approaches such as the United States, and so Hayek's optimism about spontaneous order may seem to have been unjustified. But, arguably, the financial crisis of recent years was caused (at least in large part) by inappropriate government interventions (for example, the politically motivated programs which encouraged people without means to buy homes).

Nevertheless, it can't be denied that there were failures in the financial markets also, and the expected self-regulatory mechanisms did not deliver. My explanation is that the spontaneous economic order which Hayek championed cannot be divorced from more general social values and norms, and these common values have been seriously eroded in the West in recent years. A lightly regulated system will only flourish in a moral and cohesive society. On the other hand, a proliferation of laws and regulations is no substitute for basic moral values, and may only succeed in stifling entrepreneurial and general business activity. In fact, whatever one's views on the nature of law and justice, it's undeniable that laws and regulations tend to proliferate beyond what is required to secure human freedoms or enhance other aspects of well-being."

[Since I wrote this I have been reflecting on my attachment to the writings of Thomas Hobbes which seems on the face of it difficult to reconcile with the views outlined above. More on this matter later.]