Edward McPhail

Does F.A. Hayek's Deserve to Make a Comeback?

As anger at President Barack Obamas social policies grows in some quarters, scholars and talk show hosts alike have said Friedrich von Hayeks 1944 best-seller The Road to Serfdom warrants another look. But does it? Hayek maintained that even the U. S. social welfare net would lead to totalitarian government. It has not. But that does not stop some from citing the book as a foundation for ominous warnings about the United States.

Hayek, Thatcher, and the Muddle of the Middle

This chapter provides a detailed examination of one of Hayek’s rather less well-known forays into macroeconomic controversy: in particular, the policy advice which Hayek gave to Margaret Thatcher in early 1982. Hayek urged her to pay much heed to the way in which the Pinochet junta had speedily restructured the Chilean economy in the 1970s and early 1980s. There is much speculation about what particular aspects of Chilean social and economic policy Hayek may have urged Thatcher to adopt in Britain—this chapter addresses this aspect of Hayek and Thatcher’s early-1980s correspondence.

Can a Dictator Turn a Constitution into a Can-opener? F.A. Hayek and the Alchemy of Transitional Dictatorship in Chile

Abstract Commenting on the Pinochet regime, Friedrich Hayek famously claimed in 1981 that he would prefer a ‘liberal’ dictator to ‘democratic government lacking liberalism.’ Hayeks defense of a transitional dictatorship in Chile was not an impromptu response. In late 1960, in a little known BBC radio broadcast, Hayek suggested that a dictatorial regime may be able to facilitate a transition to stable limited democracy. While Hayeks comments about Pinochet have generated much controversy, this paper neither provides a blanket condemnation of his views (he did not advocate dictatorship as a first-best ‘state of the world’) nor tries to excuse his failure to condemn the Pinochet juntas human rights abuses, but instead provides a critical assessment of Hayeks implicit model of transitional dictatorship.

A Response to Caldwell on F. A. Hayek and The Road to Serfdom

We are gratified that Bruce Caldwell, general editor of F. A. Hayek’s Collected Works, has taken the time and trouble to reply to our article in the July/August issue of Challenge (Farrant and McPhail 2010a). Caldwell has a variety of objections to our evaluation of Hayek’s message. In particular, he argues that we do not take sufficient heed of the historical and ideological backdrop against which Hayek initially wrote The Road to Serfdom. Caldwell also maintains that Hayek’s ire in The Road to Serfdom is exclusively directed against wholesale command planning. Accordingly, he thinks that we misread Hayek’s work when we argue that Hayek thought any dogged adherence to interventionist policy—the mixed economy and nascent welfare state—would ultimately mutate into wholesale central economic planning. In this article, we assess Professor Caldwell’s response to our original

Hayek, Keynesian Economics, and Planning Against Competition: A Caveat?

Hayek wrote The Road to Serfdom as a warning to intellectuals who were supposedly much taken with the idea of a ‘planned’ economy. Jeremy Shearmur (1997) makes use of unpublished material drawn from the Hayek archives to suggest that Hayek did not seemingly deem Keynesian full-employment policy to be incompatible with what Hayek would view as a free society. Our reading of the archival material invoked by Shearmur arrives at a rather different conclusion. Hayek’s view of the logic supposedly inherent in Keynesian policy is markedly congruent with the general tenor of The Road to Serfdom. We demonstrate that Hayek deemed activist monetary policy incompatible with Hayek’s favoured planning for competition.

Hayek's New Popularity

As FOXNews talk show host Glenn Beck and others champion Friedrich von Hayeks The Road to Serfdom, its sales have soared. Hayek warned that even a moderate social safety net would lead to a totalitarian government. It did not happen. But this does not deter his avid supporters. The authors follow up on their article on the subject in the previous issue of Challenge to identify how misplaced the fear invoked by Beck and others is—and how wrong Hayek was.

Supporters Are Wrong: Hayek Did Not Favor a Welfare State

Some supporters claim that Friedrich Hayek was more accepting of some aspects of the welfare state than is generally believed. Is that a way to sugarcoat his central laissez-faire message? The authors say there is no disguising his belief that the contemporary welfare state will lead to serfdom.

Hayek, Orwell, and the Road to Nineteen Eighty-Four?

Hayek and Orwell are justifiably famous for their mid-late 1940s analyses of the inherent logic of totalitarianism. Indeed, Hayek’s arguments in The Road to Serfdom (1944) and Orwell’s mid-late 1940s writings—e.g., Animal Farm (1945) and Nineteen Eighty-Four (1949a)—are usually viewed as having provided very similar assessments of the sundry ‘perversions to which a centralized economy is liable.’ And the similarities between aspects of Hayek’s 1944 analysis of planning and Orwell’s scathing 1949 analysis of Ingsoc (Newspeak for English Socialism) were the topic of much discussion when the Mont Pelerin Society met in England in early September 1984 for a fortieth anniversary celebration of the publication of The Road to Serfdom. But Orwell had explained that Nineteen Eighty-Four was not meant to be viewed as an ‘attack on socialism’ or the ‘British Labor party (of which I am a supporter)’ but as an account of the ‘perversions to which a centralized economy is liable.’ And any ‘return to “free” competition’ would, Orwell insisted, virtually assure that the ‘mass’ of the populace subsequently found themselves subject to a ‘tyranny probably worse … than that of the state.’ This chapter provides some basic graphical machinery to help to illustrate the analytical tenor of Orwell’s largely implicit model of the way in which a society might ultimately find itself saddled with full-blown oligarchical collectivism.

The evolution of governance structures in a polycentric system: Rational Decision-Making within the Bounds of Reason

The Tiebout competition model is often criticized for its unrealistic assumptions. We develop an imperfect Tiebout competition model in which households have no information about other jurisdictions (moving decisions are blind), and local jurisdictions operate as revenue-maximizing Leviathans. We show that, even under such harsh assumptions, jurisdictions will not increase taxes without also increasing the quality of their public services. The model also opens the door for understanding various possible vicious spirals, e.g. as a result of factor prices shocks, co-production problems, and income-based sorting. We also show that, in general, the model does not lead to the calculus of consent optimum, which opens the possibility for conceptualizing which constitutional rules would tend to constrain the system to evolve towards optimum levels of centralization or decentralization across all public issues. Last but not least, because the model involves positive moving costs, we explain the origins of voice, as an alternative to exit. When people do not engage in exit, either because they still hold up hope that public services will improve or because they do not have the resources to move, they increase their involvement in other activities such as voice and co-production.