Libertarian Utopias II: The Political Nature of the Economy, Research Time, 02/03/2015

Continued from last post . . . What I find intriguing about reading this popular landmark work of Friedrich Hayek, The Road to Serfdom, is that he continually speaks of the immanent danger of political projects that seem laughably implausible today. I’m talking about what he considered the immanent spectre of a social democratic, left-wing government nationalizing all industry and putting every aspect of a country’s economy under the direct control of state authorities. 

This is the concept of socialist planning about which Hayek was so concerned. It is a prospect that is not politically plausible, or even conceivable, in today’s political and social climate. I think this is what’s so shocking to me about The Road to Serfdom. Only a few generations ago, only a couple of years before my own mother was born, the total nationalization of industry was an everyday political debate topic.

Until six years ago, this was owned by the government.
The phrase itself, “nationalization of industry” sounds so absolutely mad that it simply never appears in public discourse. Living in Canada, I’m used to the existence of crown corporations, usually public utilities that are structured as corporate entities, with profit seeking or at least revenue generating mechanisms and priorities, like charging its customers for their services. They exist at arm’s length from direct political control, but are fundamentally funded by government tax revenue.

But to nationalize an entire industry? Every stage of its construction, from research and development to the design and manufacture of products to their dissemination to the people and managing the service. To allow no competitors except for the state-controlled utilities. Not even in ancillary sectors like entrepreneurial internet service providers renting cable and bandwidth from infrastructure owners. 

I feel just as separate from the world where this was a viable political option as I do from the Holy Roman Empire or the Tokugawa Shogunate. Even though this world was the Europe of my grandparents. This is how thoroughly the new liberalism, call it neoliberalism if you want, has won.

Yet I still see one fundamental mistake in Hayek’s conception of how the world works, and although it’s only a matter of intuition now, I think it might be key to how badly neoliberalism has failed at ensuring the liberty that was so important to its founders. Hayek identifies a central critical gesture of socialism as the notion that politics and economics are inextricably linked. Hayek correctly points to the Nazi party as holding to this notion.

It’s a twisted mirror image of his own contention that the soil of political freedom is a free economy. Insofar as they’re conditions of the other, the political and the economic are essentially bound in the new liberal perspective too. 

The kind of political-economic unity that Hayek opposes is the unity through state institutions, the subsumption of all economic activities under the authoritative direction of a bureaucracy. It seems to betray two senses of the term ‘political’ in his thinking. When he talks about political liberty, he refers to the freedom of an individual to choose his path in life, given the constraints of his particular situation. 

The other sense of the political appears when Hayek talks about ‘politics.’ Here, he’s talking about the processes of governing through the state. Political parties, elections, legislatures. This is the subject matter of politics. 

The national identity of the Welsh people is built around
an economic activity, coal mining. This is the political
power of economic forces: from the ground-up.
Yet the political is a very different matter than politics. This is the blind spot that I suspect lies in Hayek’s philosophy. The political is the actual organizing of individuals to form the relationships that constitute their communities. It’s the way everyone builds their individual identities in concert and conflict with everyone else around us, and the relations of varying intensities and distances that constitute our social networks. The political is the assemblage, link by link, of the network we call society.

This conception of the political reveals the political power of economic actors. Natural resource deposits are identified in a region, and the institutions able to move capital and the means of production (whether a state or a business) set up an industry to extract it. Whole cultures and national identities grow around economic activity. This is the political power of the economy. It’s something that the libertarian theorists I’ve read so far have all missed. 

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