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?