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changed - new technologies have radically altered the way we communicate, and traditional and homogeneous cultures have been replaced by mixed and fragmented societies severed from their historical roots - but these scholars, largely because of the breadth and depth of their cultural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.]


  1. "A lightly regulated system will only flourish in a moral and cohesive society."

    You may have stumbled upon a new conspiracy theory. Perhaps the left has been undermining western culture (and morality) since the '60s in order to justify greater regulation and government control.

    Anyway, interesting post.

  2. Stopping in to let you know I'm reading this [and have visited your "Sketch" page recently even before this post]. I think this is a robust post, with potential for many threads. The "cohesive society" observation is especially trenchant, especially alongside the portrait of modern states as culturally "mixed and fragmented." Once upon a time, cohesiveness was simple: I was born [tribe here], my tribesmen are my brothers, and [tribe X] is at once my kinship, my identity, my affinity/loyalty and my moral environment. The modern world is, indeed, mixed, and neither identity nor affinity has much to do with kinship (superseded recently by "nationality"). In fact we consider "tribalism" atavistic, and with such a worldview we are losing any sense of "universal brotherhood," becoming instead atomistic individuals whose identities and affinities are made, more than born. Cohesiveness then depends upon a more voluntary, conscious process -- loosely speaking, identities/affinities people "join" rather than "belong to," which is a more rootless situation for the individual.

    What makes that picture (which you have painted) so relevant to the current "fiscal crisis" is that it suggests that, had US bankers and brokers more concern for the good of all (social cohesiveness), rather than short-sightedly producing (artificial) profits, they might have avoided undermining the entire capitalist system with their massive over-speculation.

    HR is actually not too far off, I think. Adorno (I think it was) once said that Marxists should do as much as possible to make capitalism stink, to hasten its demise.

    Ahem ... and more. LOL!

  3. Heathen, on the issue of the new conspiracy theory you suggest I have stumbled upon, I am more than happy to cede any credit for having unearthed it to you. (Devilishly clever those 20th century leftists.)

  4. GC, I like your join/belong to distinction.

    I don't know that we can expect bankers and brokers to concern themselves with 'the good of all', but one can expect adherence to certain standards or codes of behavior. This is an area where informal codes were once quite effective, I think.

  5. Arthur Koestler has described how in Berlin in 1930 the only choice, politically speaking, was whether to be a communist or a fascist (of the brownshirt variety). How lucky we are that we no longer live in that world. Things aren't entirely rotten in this post-totalitarian world of ours.

  6. Alan, I know the situation was polarized, but I suspect Koestler might have been guilty of exaggeration or oversimplification here. (I was going to say self-justificatory exaggeration, but I don't feel right making judgements about people trying to cope in a very different and dangerous world.)

    I heartily endorse your conclusion.