Paul Samuelson and Hayek

With the recent ascent of Hayek’s book, “The Road to Serfdom,” to the top of the bestseller list, there has been renewed debate about Hayek’s influence in shaping modern economic and political thought. Don Boudreaux recently went to town on the Wall Street Journal for insinuating that while Hayek’s work has had a lasting effect on popular culture, it has, nonetheless, been more or less dismissed by mainstream academic economists. This conclusion by the Wall Street Journal was, in large part, based on a quote from Paul Samuelson’s essay, “A few remembrances of Friedrich von Hayek.” I found this interesting because last year, after the death of Samuelson, I wrote a post at Freedom Democrats, Samuelson and Hayek that reviewed that very essay. Unfortunately, that essay has since been firewalled at, but I did find a reprint archived at Brad Delong’s blog, of all places.

If you read the entire essay, it’s apparent the Wall Street Journal is giving a Hayek little bit of the shaft in terms of what Samuelson actually said. In it, it is clear that while Samuelson didn’t think much of Hayek’s “The Pure Theory of Capital” as a counterweight to Keynes’ General Theory, he outlines how Hayek’s eventual formulation of the Knowledge Problem would win the day in the Socialist Calculation debate and writes clearly that Hayek deserved the 1974 Nobel Prize for “his notions about decentralized information economics.”

Samuelson did criticize the “Road to Serfdom” on an empirical basis, noting that history had written a different outcome contrary to the warnings of Hayek; in particular that the West shifted to “mixed economies” instead of “Nazi-Burma-Mao-Castro totalitarianism.” But, in this criticism, he is indeed misreading Hayek, and like many, are conflating Orwell’s fictional pessimism(it should be noted that Orwell was indeed influenced by Hayek) with what Hayek actually wrote. Hayek certainly did not write that governments couldn’t change or that the road was inevitable, but in warning against central planning, he specifically noted he was not talking about the type that was “planning for competition” but rather the type that “planned against competition.” Samuelson, in my opinion, closed the book on history a bit too soon. I would argue that the United States is in many ways is violating the warnings Hayek outlined in his book, noting that Nazi Germany arose out of a duly elected constitutional government that in many ways was fashioned on the US model.

Hayek, in the chapter, the “Socialist Roots of Nazism” how a religious, conservative “socialism” paved the way. There are parallels to Bush’s compassionate conservatism, which was really a type of religious communitarianism. This was bad enough, but the diabolical elements came in the aftermath of 9-11, when the many on the conservative, religious right saw the War on Terror as a holy war, a long war against Islam. Anti-Muslim rhetoric became rife and the language and practice of a legal detention regime against accused members of that class became accepted. Germany always had that conservative Prussian military culture in it’s tradition, a tradition, that for the most part, had been foreign to the US; however, in the aftermath of 9-11, almost overnight, the glorification of the military, the glorification of the police and fireman as “first responders” in a National Security paradigm became universally embedded in the culture. Obama would drop the anti-muslim rhetoric but continue the same policies, really institutionalizing the legal detention regime(with the political right still calling him a “raghead marxist”). The Obama domestic policy, this “public-private” partnership seems entirely guided by how to “plan against competition.” Every piece of “public policy legislation’ is now cast as a “national security issue,” which mirrors Heyek’s warnings in his chapter “Security and Freedom.” Now, of course, the head of DHS tells us that the greatest security threat to the US in internal, “Homegrown terrorists,” and that we need to re-engineer the communications networks to guard against this threat. The prospect of military and Police drones surveying the american public is a coming reality.

To think that “The Road to Serfdom” is not applicable to the US is ignoring the clear reality. But the threat is not from some Orwellian dystopia, because, frankly, “information economics” makes this implausible. Rather the threat is an institutional government of arbitrary power. I call this National Corporatism. In the United States, National Corporatism will be underlain by the Pink Police State.


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