Brad DeLong — Margaret Thatcher Against Friedrich von Hayek's Pleas for a Lykourgan Dictatorship in Britain: Hoisted from the Archives

Instructive. Margaret Thatcher may have been a neoliberal but she was not a fascist.

Grasping Reality
Margaret Thatcher Against Friedrich von Hayek's Pleas for a Lykourgan Dictatorship in Britain: Hoisted from the Archives
Brad DeLong | Professor of Economics, UCAL Berkeley

How Hayek’s Evolutionary Theory Disproves His Politics — David Sloan Wilson interviews Sam Bowles

As an evolutionist critiquing the field of economics, I felt like a disciplinary outsider until I encountered the work of Friedrich Hayek. The Austrian economist was himself critical of Walrasian general equilibrium theory and proposed a radical alternative: Economic systems are a form of distributed intelligence that evolved by cultural group selection. They work without having been designed by anyone.

That was my area of expertise. I had to admire Hayek as a pioneer, especially since group selection was a heresy and the study of human cultural evolution was in its infancy when he wrote. Nevertheless, both topics have advanced by leaps and bounds since then and do not support his view that economic systems work best in the absence of regulations. Instead, cultural group selection theory points to a middle road between laissez faire and centralized planning that is rich with possibilities.

More recently, three distinguished economists—Samuel Bowles, Alan Kirman, and Rajiv Sethi–have made their own assessment in a retrospective titled Friedrich Hayek and the Market Algorithm published in the Journal of Economic Perspectives. 

Evonomics

How Hayek’s Evolutionary Theory Disproves His Politics
David Sloan Wilson interviews Sam Bowles

Brad DeLong — Must-Read: Samuel Bowles, Alan Kirman, and Rajiv Sethi: Friedrich Hayek and the Market Algorithm

Does anyone else see a parallel between Hayek's view of markets as information systems that generate natural spontaneous order and intelligent design arguments in evolutionary theory, harkening back 18th century Deism?

The point of the paper is that while Hayek was on to some good things, he let his liberal ideology run away with him, making claims that are not substantiated by his economic work.

WCEG — The Equitablog
Must-Read: Samuel Bowles, Alan Kirman, and Rajiv Sethi*: Friedrich Hayek and the Market Algorithm
Brad DeLong

* We thank Jeffrey Friedman, David Glasner, Gordon Hanson, and Timothy Taylor for their contributions to this essay and the Santa Fe Institute for providing an ideal environment for the collaboration that resulted in this paper.

 

Brad DeLong — David Glasner: Fifteen Thousand Words On Temporary Equilibrium, Expectations, And Consistency Of Plans

I confess to not reading this series yet, but it is on the list. David Glasner's analysis is always worth reading.

Washington Center for Equitable Growth
Must-Read: David Glasner: FIFTEEN THOUSAND WORDS ON TEMPORARY EQUILIBRIUM, EXPECTATIONS, AND CONSISTENCY OF PLANS
Brad DeLong

Jason Smith — More on Hayek and information theory

Longish but not wonkish. Of interest to those interested in this stuff and probably not of general interest.

Information Transfer Economics
More on Hayek and information theory
Jason Smith

Torygraph — A free market industrial strategy

The Torygraph recommends that May be guided by Hayek (just like the Iron Lady).

The Telegraph
A free market industrial strategy

Editorial

Yves Smith — New IMF Paper Challenges Neoliberal Orthodoxy

While the IMF’s research team has for many years chipped away at mainstream economic thinking, a short, accessible paper makes an even more frontal challenge. It’s caused such a stir that the Financial Times featured it on its front page. We’ve embedded it at the end of this post and encourage you to read it and circulate it.

The article cheekily flags the infamous case of the Chicago Boys, Milton Friedman’s followers in Pinochet’s Chile, as having been falsely touted as a success. If anything, the authors are too polite in describing what a train wreck resulted. A plutocratic land grab and speculation-fueled bubble led quickly to a depression, forcing Pinochet to implement Keynesian policies, as well as rolling back labor “reforms,” to get the economy back on its feet.

The papers describes three ways in which neoliberal reforms do more harm than good.…

Now that the wheels are coming off, the knives are coming out.

Naked Capitalism
New IMF Paper Challenges Neoliberal Orthodoxy
Yves Smith

Jag Bhalla and David Sloan Wilson — Updating Hayek: Can 'The Market' Prioritize Well?

This is diablog 9 between David Sloan Wilson (DSW) and me (JB)

Think Big — errors we live by
Updating Hayek: Can 'The Market' Prioritize Well?

Jag Bhalla

ht Evonomics

Ulrich Witt — Friedrich Hayek. Intellectual Hero or Ideologue?

I came to know Hayek in the last years of his life when I joined the Faculty of Economics at the University of Freiburg in Germany in 1988. He was still around then as an emeritus professor and, although his health status was quickly deteriorating, he was always open to an exchange with a new faculty member. Social philosophy was not my field of research, but I got interested in Hayek’s version when I noticed how eager he was to give it an evolutionary foundation. Evolutionary theory is, of course, far away from any political messages which social philosophy usually imply. For me the evolutionary underpinnings therefore offered a framework against which Hayek’s project could be assessed, independently of the political motivation that had inspired its beginnings and kept it going thenceforth.

Witt brings out some aspects of Hayek that I haven't seen discussed, especially Hayek's evolutionary views and criticism of them. Worth the read.

Evonomics
Friedrich Hayek. Intellectual Hero or Ideologue?
Ulrich Witt | former director of the Max Planck Institute of Economics and a retired scientific member of the Max Planck Institute for the Science of Human History in Jena, also an adjunct professor at Griffith University's Business School in Australia

David Sloan Wilson — Love Hayek, Love Darwin

It is not an exaggeration to say that as far as his premises are concerned, Hayek is one of the fathers of Evonomics. So is Thorstein Veblen, who titled an 1898 article “Why is Economics Not an Evolutionary Science?”

The conclusions that Hayek draws from his premises are another matter. In my humble opinion, they require updating. But there’s no point discussing the conclusions that follow from a set of premises unless the premises are first accepted. Discussions centered on Hayek are therefore discussions centered on economics from an evolutionary perspective.…

A different view of Hayek. To be continued.

Evonomics
Love Hayek, Love Darwin

David Sloan Wilson | Distinguished Professor of Biology and Anthropology at Binghamton University and Arne Næss Chair in Global Justice and the Environment at the University of Oslo

See also

Why Darwinian Economics Is so Threatening to Libertarians

George Cooper

What’s the Secret to Joining the “Rich-Country” Club?

Steve Roth

Brad DeLong — That Friedrich von Hayek Was Inconsistent and That Milton Friedman Was Running a Con on His Ideological Allies Are Not to Their Benefit

More history of economics focusing on economic liberalism and its paradoxes. Finishes with a keeper Keynes quote.

WCEG — The Equitablog
That Friedrich von Hayek Was Inconsistent and That Milton Friedman Was Running a Con on His Ideological Allies Are Not to Their Benefit: Hoisted from the Archives from Two Years Ago
Brad DeLong

Open Democracy: Friedrich Hayek: in defence of dictatorship

Hayek intended his writings to serve as a wake-up call to defenders of liberalism. When such defenders took actions in support of private property, Hayek was unashamed in his support for them.

Of course, Hayek would argue that this was just the defense of (economic) liberalism against the tyranny of the majority of democracy, even though democracy based on popular sovereignty is the foundation of political liberalism.

Another paradox of liberalism.

In his influential article The Principles of a Liberal Social Order published in 1966, at the high point of Euro-American Keynesianism, Hayek outlined the relationship between liberalism and democracy. He makes a strong normative case for the primacy of the former, and the potential elimination of the latter. The article also outlines the needs for very strict limits on the parameters of electoral democracy in ‘normal’ (non-dictatorial) times.

Hayek begins by contrasting two traditions of liberalism. The first, his favoured one, emerged in the England of the Old Whigs from the mid to late seventeenth century and was fortified by the theories of Edmund Burke, John Locke and Adam Smith. The second was a continental European product elaborated theoretically by writers such as Voltaire and Rousseau.

The first tradition of liberalism is “inseparable from the institution of private property”. It has its roots in human nature. It is superior to any form of centralized state planning...

It:

“[D]erives from the discovery of a self-generating or spontaneous order in social affairs…an order which made it possible to utilize the knowledge and skill of all members of society to a much greater extent than would be possible in any order created by central direction…” (Hayek, 1966).

It “arose from the desire to extend and generalize the beneficial effects which unexpectedly had followed on the limitations placed on the power of government"....

For Hayek, the second, continental tradition of liberalism advanced by writers such as Voltaire and Rousseau points in a fundamentally different direction. There is a straight line from it, to what he labels, the totalitarian politics of the French revolution and modern socialism. Through democratic practice, this tradition attempts to subordinate society to a set of political/normative objectives. Under such conditions, individuals are no longer free to do as they please, and certainly not free to use (or even own) their property in ways they see fit. Hayek argued that this tradition of liberalism “has in effect become democratism rather than liberalism and, demanding unlimited powers of the majority, has become essentially anti-liberal”.

There is is in black and white in his own words. Economics liberalism (capitalism) and political liberalism (democracy) are antithetical. It doesn't get much clearer than that.

Oh wait, elsewhere Hayek wrote:

In another letter to The Times entitled “the dangers to personal liberty”, he endorsed Thatcher whilst restating his claim that the marketplace is “indispensable for individual freedom” while the ballot box “is not”.

Who needs free elections anyway?

Selwyn sees the result as: 

... an erosion of democracy is occurring under the guidance of elected politicians across many of the advanced capitalist countries.

I suggest that the work of Friedrich Hayek is part and parcel of conservative neoliberal 'common sense'. His ideas justify the erosion of democracy under capitalism in defence of private property.

I would say not only an erosion of democracy but also of national sovereignty, along with an onslaught against civil rights, constitutional liberties, and human rights. In short, neoliberalism is in reality a neo-feudalism of a transnational power elite. The liberal revolution of the Enlightenment set about to do away with the remnants of feudalism at the time, and now they're baaack!

The Old Whig antipathy to popular democracy on the one hand, and support for private property rights on the other, stands at the core of Hayek’s political philosophy. From this starting point he theoretically de-links liberalism and democracy. This move is designed to a) explain how liberalism can exist without democracy, and b) to limit, significantly, democratic influence over a liberal private property based market order.

Hayek’s advocacy for negative freedoms over positive freedoms logically limits democratic content. If governments want to guarantee a liberal market order then they must guarantee negative but not positive freedoms. By default then, they are precluded from implementing widespread social programmes designed, for example, to redistribute wealth, power and property towards the poor. These policies would necessitate imposing obligations upon society in order to pursue a designated outcome. Such actions, according to Hayek, represent the first steps towards totalitarianism. Liberal freedoms would be undermined as society is forced to submit to an 'artificial' (i.e. planned) overarching objective, as opposed to benefitting from the free play of the natural, spontaneous market order....

Hayek points to how governments, driven by democratic and other rationales (such as economic planning), were undermining the potential benefits of the spontaneous market order.

Spontaneous market order is, of course, the basis of neoclassical economics and also Austrian economics:  Spontaneous natural order arising from laws of nature like the law of supply and demand regulating the operation of market forces results in Pareto equilibrium as long institutions do not interfere, with the chief interfering institution being government and its legal apparatus based on positive law rather than the laws of nature. Evidence for the assumption about spontaneous order, please.

Good history lesson about liberalism and also a good summary of Hayek's argument. Hayek held that liberalism is about freedom from government interference in private matters, especially involving private property. This is the English version of liberalism elaborated by Burke, Locke and Adam Smith, for example. It holds that the liberalism is essentially freedom from constraint. Continental liberalism held that liberalism as not only about freedom from (unreasonable) constraint but also freedom to choose freely and responsibly with respect to the equal rights of others, and freedom for self-determination.

The problem of economic liberalism relative to social and political liberalism is that the former prioritizes property over people while the latter makes people more important than property. The very term "capitalism" means that capital is prioritized, while socialism signifies that the people as a whole are prioritized rather than any class and vested interests are not privileged.

Open Democracy
Friedrich Hayek: in defence of dictatorship

Benjamin Selwin

Chris Dillow — Hating libertarians

Chris Dillow makes some good points.

Opponents of libertarianism sometimes fail to see that freedom leads not to anarchy and chaos but to spontaneous order. Demands for immigration control, for example, are often demands for government control in itself, because people don't see how uncontrolled processes can be welfare-enhancing. They fail to see how, in John Kay's words, our goals can sometimes be better achieved obliquely.

This habit is rooted in some common cognitive biases: the illusion of knowledge and overconfidence causes us to exaggerate the benefits of state control whilst the salience heuristic leads us to see the benefits of restricting freedom more than the costs. As Hayek said:

When we decide each issue solely on what appear to be its individual merits, we always over-estimate the advantages of central direction. (Law Legislation and Liberty Vol I, p57.) 

But here's the problem. Sometimes, a benign spontaneous order doesn't occur. Emergent processes can sometimes produce inequality and exploitation: much depends upon initial conditions and institutional frameworks. If libertarians' critics overstate this, they themselves understate it.

All this might sound rather abstract, but it's not. It bears directly upon the question of how public services should be organized..

Here is how I see it. Most people that disagree with libertarian thought don't "hate" libertarians. They just think that they are wrong and their assumptions are even stupid. As a result, some see libertarianisms rising as political forces on either left or right as damaging if not dangerous.

It seems to me that the fundamental offending assumption is that of spontaneous order resulting from freedom. Libertarianisms of the left and right assume that freedom implies spontaneous order, that is, order is natural. However, there is no good evidence for this assumption and a lot of historical evidence that speaks against it. History is the record of the triumph of organization. Military, political, and economic success have all come as a result of superior organization.

As a libertarian of the left, I realize that for libertarianism to be taken seriously, the assumption of spontaneous order being natural must be confronted and the obvious objections to it considered. Rousseau's noble savage versus Hobbes's law of the jungle, for example.

The problem, I believe, lies in the concept of natural. There are two meanings of natural. The first is  that which is found operating in nature (reality). It is evidence-based. The second is theoretical. It is based on the view that individual entities fall into different categories based on their "nature" or "essence," which can be intuited. This latter notion is not based on evidence, but rather on introspection, abstraction, and generalization. It is assumed.

Evidence seems to contradict the assumption of spontaneous order arising from freedom. Whence then does the assumption arise? The answer is quite evident in the case of economics — the invisible hand of market forces. In a free market with no asymmetries, the outcomes are "natural." It is assumed that these outcomes cannot be improved upon.

Hayek gave an account for this in "The Use of Knowledge in Society," arguing that information is too complex to allow for organization being imposed. I do not wish to contest Hayek's argument about the price system being fundamental. Rather, it is the shift from economic liberalism to neoliberalism, that  is, that economic liberalism is the foundation for political and social liberalism. Or as Margaret Thatcher put it, "there is no alternative."

The "mistake" that Hayek makes is the excluded middle. He assume that there is no range between the poles of free market economy with near perfect competition and a command economy on the model of the USSR, for example. His response to the objection that there are many examples along the range is that the tendency is toward the poles and if economic freedom is compromised, then the tendency is toward extreme collectivism under state control.

The result of this "mistake" is the view that economic liberalism based on property rights is the foundation for political liberalism and therefore political rights, and also social liberalism and therefore civil rights. I put "mistake" in quotation marks above to indicate that Hayek himself did not always go this far and allowed for some government involvement in social welfare, for example, but he has often been read this way, especially The Road to Serfdom.

There is no empirical evidence to show that the middle is actually excluded, and European social democracy since WWII would argue against it. Historical evidence also shows that the extreme economic liberalism of 18th  early 19th century classical liberalism was subsequently modified to take political and social liberalism into account by balancing property rights with political rights and civil liberties, and to add social welfare. European economies did reasonably well and there was no tendency toward extreme collectivism or limitation of individual rights other than with regard to property rights, e.g., in the form of taxation and business regulation, which extreme libertarianisms summarily reject.

Homo economicus is a fiction and homo socialis operates on the basis of both independence and interdependence, competition and cooperation, and that coherence and cohesion of a social fabric are based on institutional arrangements, that is, organization. Even so-called free markets are based on legal institutions that provide organization, including the system of property rights. Far from being natural, property is based on legal rights embedded in social organization and social cohesion.

The question then becomes whether libertarianism is a viable social, political and economic theory at all. My conclusion to this is neither yes not no, but maybe. It depends on the level of collective consciousness. Spontaneous order arises from freedom to the degree that individuals are conscious of interdependence individually and in large enough numbers to be collectively conscious of interdependence.

The question then becomes one of raising the level of collective consciousness culturally to the degree that interdependence is strongly evidenced in a society's institutional arrangements. Quite evidently this begins with early childrearing and education.

Every parent soon realizes that children left "free to choose" will pursue their own perceived self-interest even when it is detrimental to themselves and others. Childrearing and education are about the process of socialization that humans go through to fit them for social life as individuals. This requires realizing that one's boundaries don't stop at one's body. Life is a web, or as we would now say, a "network" or "system."

Societies are functional to the degree this learning process is successful and dysfunctional to the degree that the socialization process fails. This is also true of parts of society since societies are organized systems in which the parts — elements and nested subsystem — affected the whole and vice versa. Societies are wholes and the dysfuctionality even one subsystem affects the holism of the entire system.

The whole is greater than the sum of the parts owing to the relationships that provide its organization, and each part affects the whole. Societies are collectively autocatalytic either functional or dysfunctional and based on the reactions. It is difficult to be a good person in a bad society, and also difficult to be a bad person in a good society, where quality is a function of social norms embedded in cultural and institutions.

Western civilization is based on the Greek idea that individuals freely choose the laws under which they live. This assumes the ability of citizens to choose wisely. In this view, therefore, a free society is a based on wisdom. This idea was later melded with the Christian view, which was derived from the Jewish Law, that love is a law unto itself (Deuteronomy 6:5, Leviticus 19:18, Matthew 22:37, Mark 12:30, Luke 10:27). As Augustine summarized the teaching:  "Love and do what you will." Love is the great unifier. Spiritually, unconditional love takes on beyond the point value of ego to realization of what lie beyond the horizon of limited ego.

The other foundation of Western civilization, along with the rise of science and technology, is Roman law, order and organization. The West was able to dominate the world based on these latter two influences. However, Western soft power arises from the former two influences, which can be summarized as freedom, truth, and love.

In this view, freedom as the pursuit of self-interest or rational utility maximization is "natural" in the sense of what the animal nature in human being is guided by whereas life in a civilized society requires transcending one's animal nature to become truly human. This is the work of a lifetime. The Greeks called it philosophia meaning "love of wisdom" as the progressive unfolding of full potential, both as an individual and as a human being. It Aristotle's view of virtue ethics it involved building character. Order is spontaneous, therefore, to the extent that it is cultured. This implies that it must be enculturated.

There is no single optimal culture that is natural. Different people will approach the challenge of becoming truly human individually and as a society differently. However, freedom is not the outcome of a 'free society," but individual freedom and a free society are the outcome of a good society as one in which citizens are striving to live a good life in harmony. There is no one best way to life a good life. Every individual and every society has to deal with its own characteristics and the opportunities and challenges that arise in the course of individual and social life.

Stumbling and Mumbling
Hating libertarians
Chris Dillow | Investors Chronicle

David Glasner — Hayek, Free Banking and Tax Payments

A continuation of the previous post based on a comment.

Philippe made the following comment:

In “The Denationalization of Money” Hayek argued that you should be able to pay taxes with privately-issued currencies. However, this would in effect turn those ‘private currencies into’ de facto state currencies, or forms of government ‘fiat money’. For some reason Hayek chose to ignore this massive contradiction in his argument. Essentially, what he was actually arguing was that private corporations should be granted special state powers, i.e. the power to issue money backed by the state’s legal powers of taxation.

Uneasy Money
Hayek, Free Banking and Tax Payments
David Glasner

Peter Radford — Economics And Civil Society

I have been subject to quite a bit of push back on my repeated critique of the anti-democratic nature of orthodox/classical/neoclassical economics. 

So I am going to double down on the basis that when you’ve hit a nerve and produce a knee-jerk reaction it is wise to hammer away. 

Allow me to restate my opinion in brief: economics in the general tradition of Smith’s invisible hand up to and including the notions of Hayek, Friedman, and their disciples is, at its core, an attempt to conceive of a society stripped of politics. By this I mean it is an attempt to argue that passivity in the face of overwhelming “forces” that are “objective”, “decentralized”, and “systemic” will allow for an optimal distribution of wealth, and the attainment of the maximum possible total wealth compatible with that optimum. All that is needed is a goodly dose of rational decision making, a hopelessly large level of cognitive ability, enormous foresight, and an unobstructed view of absolutely everything.   

Oh, and under no circumstances ought there be any active interference in the economy to adjust the perfect outcomes. It is a perfect-in-perfect-out wonderland in which no one need concern themselves as to the ethics of the outcome. It is, after all, perfect. It cannot be improved upon. Free markets rule! 

This wonderland system, so constructed, will, we are assured, give back to everyone a return justified by their so-called marginal productivity. Mucking around in the system, no matter how well intentioned that activity might be, can only move society away from the optimum. It is, therefore, not possible for government action to improve the distribution of wealth. We all simply have to bow before the system and accept whatever it gives us. Hence the utter passivity of the vision. 

And hence the elimination of politics, since it is through politics of various kinds that humans arbitrate life, with economic outcomes merely being one aspect of that life.
I attribute the desire to eliminate politics to an early age in modernity when the world was still cluttered with arbitrary forms of government. The rising bourgeois class needed theoretical justification for a change in the power structure of the economy, and, in particular, it needed a way of neutering the tendency of autocrats, monarchs, and their ilk to get in the way of the accumulation of private wealth. 

Thus the success of Smith and his heirs....

This was the intention of the classical political liberalism of Locke and the economic liberalism of Adam Smith and devoid Ricardo. Marx called them out on what their agenda was.

Neoclassical economics can be viewed as the subsequent classical response to Marx, and also Henry George, who objected to the substation of one oligarchy, that of the haute bourgeoisie or "capitalists," for the old oligarchy of feudal aristocracy.

This transition was taking place at the time that Marx was writing and it was far from complete. That did not happen until after WWI. Neoclassical economics was already ready to step in as the paradigm for a capitalistic socio-economic paradigm, and it became the dominant political paradigm as neoliberalism.

To this day economists working in that tradition begin with a bias that all government is arbitrary at worst, or misguided at best. No matter what form of government. It is my contention such economists never took on board the arrival on the scene of democracy. Hayek et al are still fending off the evils of autocracy. They are living deeply entrenched in a past era. They have not adjusted to the reality of representative government when there is almost a one for one overlap between “we the people” as represented actively on the political system, and the so-called agents inhabiting the economic system.

I don't think that this is the case. The natural form of government under popular democracy as government of the people, by the people and for the people is some form of socialism, in which distribution is as significant as production. Mises and Hayek were minor aristocrats who were disturbed by the prospect of democracy overshadowing the better aspect of humanity by imposing a tendency toward the average man if not actually captured by an alliance of the worse. They were not alone. Those who are heavily influenced by neoclassical economics and neoliberal political theory tend to be conservatives in the sense of favoring the traditional social hierarchy in which the men are ruled by their betters. In time gone by, the criterion of being better lay in the use of arms whereas under the new organizational mode the criteria would be the ability to accumulate capital.

As the first Chief Justice of the newly established United States of America, John Jay, put it, "Those who own the country ought to govern it."

"By this constitution [NY State 1777] the right of suffrage was, in several instances, restricted to freeholders; it being a favourite maxim with Mr. Jay, that those who own the country ought to govern it."
— Son William Jay in Life and Opinions of John Jay (1833).

This is clearly quite different from Abraham Lincoln's "government of the people, by the people, and for the people" in the Gettyburg Address, and it is much closer to the intent of neoliberalism and its foundation in neoclassical economics, which provides the rationale for meritocracy and distribution according to "just deserts" based on marginalism.

Under the rule of the capitalists, production and therefore capital formation was regarded as primary and distribution was assumed to follow "natural" market forces if individuals were left free to pursue self-interest and there was no limit on accumulation. There needed to be no limit on accumulation in order to facilitate capital formation as the primary driver of economic progress. Influenced heavily by pseudo-Darwinist Herbert Spencer, who was perhaps the leading intellectual of that time, the late 19th century was all about progress and that has carried over to present times. Neoclassical economics and neoliberal political theory are products of that ideology.

In essence this was an attack on popular democracy.

Radford realizes this.

In a democratic system the people who comprise the market are those who comprise the government. To criticize one ought to be to criticize the other. To idolize one ought to be to idolize the other. You cannot have it both ways. 

Unless, of course, you disagree with the outcomes of one of the systems. 

And since economists working in the Smith through to Hayek/Friedman tradition are unrelenting in their criticism of all things governmental, I can only deduce that they disrespect if not despise democracy. Which, perhaps it escaped their notice, is our current form of government.

Well, there are different forms of democracy. There is popular democracy as opposed to representative democracy, that is actual democracy rather than republicanism, which favors the elite. There is a difference between participatory democracy and being present with limited slates of preselected candidates for office. Actual democracy as the rule of the people (demos) is quite different from oligarchic "democracy" of plutonomy, in which the ownership class selects the candidates, dictates the laws and regulations, and places its minions and cronies in positions of power through the revolving door.

Radford is correct in saying that classical economics arose at a time when the issue was autocracy and feudalism, so that early liberalism was oriented against "government" in this sense. However, neoclassical economic and neoliberalism as a politics theory continued in this vein even after the triumph of liberalism and the transition to democratic government. Then the objective became to bridle popular democracy by introducing the "natural" oligarchy of plutonomy where the "makers" would rule the "takers."

By being so in the thrall of so-called invisible hands, so-called free markets, so-called equilibria, so-called marginal productivity and the other paraphernalia of the Smith-Hayek/Friedman tradition, they simply reveal themselves to be anti-democratic.

The Radford Free Press
Economics And Civil SocietyPeter Radford

Branco Milanovic — Why individualism does not necessarily imply preference for a minimalist state?

Rand, Mises, Hayek, and left libertarianism briefly compared and contrasted.

Global Inequality
Why individualism does not necessarily imply preference for a minimalist state?

Branco Milanovic

Lord Keynes — Liquidationism and early 1930s Germany: Not a Good Mix!

Eye-opener. It was not the Weimar hyperinflation that brought Hitler and the Nazis to power but deflationary depression.

By 1928, during the economic boom in Germany, the Nazi party vote looked like it was almost dead and was only 2.6%. Remarkably, even in the aftermath of the Weimar hyperinflation in 1924 it was only 3%. 

When the deflationary depression struck Germany from 1929–1932, it soared to 18.3% (September 1930), then 37.3% (July 1932), and finally to 43.9% in March 1933 in the aftermath of the Great Depression.

Social Democracy For The 21St Century: A Post Keynesian Perspective
Liquidationism and early 1930s Germany: Not a Good Mix!
Lord Keynes

Ominously, deflationary depression threatens Europe again owing to austerity and the persistent German anti-inflation fetish. Some lessons are never learned.

See also Yves Smith,  Is the West Risking Financial Blowback From Sanctions on Russia? at Naked Capitalism.

Matt O'Brien,  Europe’s Greater Depression is worse than the 1930s at the Washington Post.

Brad DeLong — Making Sense of Friedrich A. von Hayek

More about tensions within liberalism than just about Hayek. Good introduction to the basic issues and challenges in political economy as a combination of philosophy, law, political science, sociology, etc., with economics.

Economic (classical) liberalism and social liberalism (utilitarianism) are antithetical, that is, neoliberal and anarcho-capitalism are incompatible with social democracy, e.g., owing to conflicting rights such as the property rights with the right to life and liberty. In one view, property rights prevail and in another, property is subservient to people (the general welfare) and the environment (externalities).

The modern compromise is republics that are dominated by the haute bourgeoisie rather than the landed aristocracy as it feudalism. The result is inequality of income and wealth owing to the institutional arrangements rather than just deserts or merit, as claimed. Thus the need for accommodation to avoid social unrest and political turmoil. The outcome has been mixed economies in which there is a ongoing tension between money and machines, and people and the environment.

Marx and Engels, Lenin, Polyani, Keynes, and Hayek all recognized this as a challenge to the present liberal order and offered different solutions.

WCEG — The Equitablog
Making Sense of Friedrich A. von Hayek
Brad DeLong

Lars P. Syll — Solow on Good Hayek and Bad Hayek

Robert Solow:

The Good Hayek also knew that unrestricted laissez-faire is unworkable. It has serious defects: successful actors reach for monopoly power, and some of them succeed in grasping it; better-informed actors can exploit the relatively ignorant, creating an inefficiency in the process; the resulting distribution of income may be grossly unequal and widely perceived as intolerably unfair; industrial market economies have been vulnerable to excessively long episodes of unemployment and underutilized capacity, not accidentally but intrinsically; environmental damage is encouraged as a way of reducing private costs—the list is long.… 

The Bad Hayek emerged when he aimed to convert a wider public. Then, as often happens, he tended to overreach, and to suggest more than he had legitimately argued. The Road to Serfdom was a popular success but was not a good book.…

Lars P. Syll’s Blog
Solow on Good Hayek and Bad Hayek
Lars P. Syll | Professor, Malmo University

Brad DeLong picks it up.
Lunchtime Must-Read: Robert Solow (2012): Hayek, Friedman, and the Illusions of Conservative Economics

The source of their alarm was not the danger from Soviet communism or Nazi Germany, but rather the rash of interventionist economic policies everywhere, the New Deal here and the Labor Party there, designed to ameliorate and to reverse the ravages of falling incomes and rising unemployment…. Lionel Robbins… Friedrich von Hayek… Frank Knight… Jacob Viner… Henry Simons… [all] wanted both to propagate ideas and to change the world. (It is worth mentioning that both Knight and Viner were later privately critical of The Road to Serfdom.) What seems off-key (at least now, at least to me) is that they all felt themselves to be in a struggle between free markets and collectivism (or socialism) with no possible intermediate stopping point. That is the meaning of ‘the road to serfdom’….

This is the source of Margaret Thatcher's TINA — "there is no alternative" [to neoliberalism]. This involves the informal fallacy of the excluded middle, aka "false dilemma, black-and-white thinking, bifurcation, denying a conjunct, the either-or fallacy, false dichotomy, fallacy of exhaustive hypotheses, the fallacy of false choice, the fallacy of the false alternative" [Wikipedia]. A lot of otherwise smart people fell into this trap of illogic, known since ancient times. Ideological blinders, or class-serving motive?

Bill Black — Why the Worst Get on Top – in Economics and as CEOs

Libertarians are profoundly anti-democratic. The folks at Cato that I debate make no bones about their disdain for and fear of democracy. Friedrich von Hayek is so popular among libertarians because of his denial of the legitimacy of democratic government and his claims that it is inherently monstrous and murderous to its own citizens....

New Economic Perspectives
Why the Worst Get on Top – in Economics and as CEOs
William K. Black | Associate Professor of Economics and Law, UMKC