The inspiration for this post comes from an article written for The New Republic, by the Nobel Prize winning economist, Robert M. Solow.
I have not read Professor Solow’s work and I claim no expertise in his area of specialty. I can only speak to what he wrote in next month’s New Republic where he reviewed The Great Persuasion: Reinventing Free Markets since the Depression By Angus Burgin.
It is a very interesting review, because in it one can sense that this eminent economic figure feels the winds of change stirring, and he doesn’t like them.
He refers to the TEA Party multiple times, saying that members hold themselves as advocates of Hayekian economic philosophy. He tries to associate Hayek with the TEA Party to essentially denigrate Hayek as a figure to his (mostly statist) audience at the New Republic. Yet, he also says that the TEA Party doesn’t get Hayek, who advocated a very limited social safety net.
How Mr. Solow knows what the TEA Party believes (since the TEA Party itself doesn’t really know what it believes), is interesting. It could be on the one hand an example his of genius, or on the other it could be just an assumption made from limited anecdotal evidence. I think it is the latter.
Regardless, in the review Solow tries to paint a picture of “Good Hayek” (With limited acceptance of some state action. “Good Hayek” is, of course, reasonable) and “Bad Hayek” who deeply feared the power of the state, embodied in his simple masterpiece The Road to Serfdom. The Road to Serfdom was clearly wrong Solow argues-
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. Leaving aside the irrelevant extremes, or even including them, it would be perverse to read the history, as of 1944 or as of now, as suggesting that the standard regulatory interventions in the economy have any inherent tendency to snowball into “serfdom.” The correlations often run the other way. Sixty-five years later, Hayek’s implicit prediction is a failure, rather like Marx’s forecast of the coming “immiserization of the working class.”
How Solow can make such an assertion, that The Road to Serfdom is not unwinding and has unwinded before our very eyes since the New Deal is mind boggling.
But he thinks his position is the mainstream and that increased statism is not necessarily a bad thing. “Standard” interventions into the economy are just reasonable, not indicative of any path toward tyranny.
Tell me, Mr. Solow, what part of our lives is not now regulated and controlled to at least some extent by the government? We’ve been on the road to serfdom for a long, long time. Since you began your career in fact.
Solow then goes on to unload on Milton Friedman as an advocate of “radical” free market thinking. There’s no “good” Friedman for Mr. Solow, just “bad” Friedman.
There is much to criticize Friedman over, but his biggest mistakes come not from his advocacy of free market principals for which he was a vociferous proponent, (every student of economics should watch his Free to Choose series) but in his dismissal of hard money.
But presumably, for Solow a 20th Century Keynesian, hard money is an idea which stretches from “bad” territory into “dare not speak it’s name” territory. This is likely why he doesn’t even mention Ludwig von Mises, or that ultimate economic black sheep Murray N. Rothbard in the piece. Though admittedly the book he is reviewing is about Hayek and Friedman.
In the review, Professor Solow uses an old trick. He paints his views as simply common sense. That intervention in markets is obviously needed and that anyone who would argue otherwise is “extreme.”
It is an effective rhetoric tactic. It has been used by the establishment since the New Deal. However, after many years the winds do seem to be shifting. Even with the reelection of a president who advocates the expansion of the state, even as we institute a huge new program in the Affordable Care Act, economic reality is becoming more and more apparent. With each passing day people such as Hayek and Friedman (not to mention Mises and Rothbard) are shown increasingly to be not reactionaries (as New Dealers/Keynesians have long held) but instead the ones with the way forward.
Progress is with freer markets. Progress is with throwing off the shackles of serfdom Mr. Solow apparently doesn’t even see.