A Prolegomenon to Hayek S the Abuse of Reason Project

A Prolegomenon to Hayek’s The Abuse of Reason Project

Jeremy Shearmur, Philosophy, School of Humanities, Australian National University

This paper has been written specifically, and rather too quickly, for a seminar of the HOPE group at Duke University, on 11/21/09 and consists very much of an attempt to convey the kind of thing upon which I am working, so that I may benefit from criticism by members of the seminar. I have included a wide range of material, some of which is obviously in a particularly half-baked form, just so that I can receive as wide-ranging criticism as possible. No-one should feel obliged to read anything that does not interest them: it is fine to skip and skim. The fact that I have had to write quickly also means that in some cases I have not provided all the documentation that I would wish, to back up my various claims. Should anyone wish to refer to the paper, please check with me at that it has not been superseded. I am all too aware that it could do with further improvement, but I am now stopping work on it, so that it can be made available to members of the seminar, first thing on Monday. 11/15/2009

Preliminary note:

I am currently at work on a book on Hayek’s political thought. The book is currently planned to have two parts – one historical, concerned with how, in fact, Hayek’s argument developed, and, where it is relevant, its wider intellectual context. My plan here is to have sections on:

(a) The Abuse of Reason Project and Hayek’s Road to Serfdom;

(b) The Hayek’s path to The Constitution of Liberty, which will take up the reaction to The Road to Serfdom, what Hayek said about political issues in the wake of this, the development of his legal and political ideas, the various preliminary materials which went into The Constitution of Liberty (including, say, his Cairo Lectures, various earlier drafts, his correspondence with Pierre Goodrich about a draft of a couple of chapters, etc);

The second part of the volume will take up some wider intellectual themes: what to make of the arguments about calculation and planning; his conception of freedom; and issues relating to his legal theory, and his argument about social justice.

The first part of the book is historical, but the book as a whole will defend what I will argue to be the way in which Hayek’s account places key emphasis on an interplay between structural issues and subjectivistic themes (on which, however, I will take issue with some interpretations of Hayek which try to assimilate his methodological approach to that of Roy Bhaskar). While I will raise various criticisms, I will defend his approach against what I would see as the currently most obvious alternatives of a strongly normative approach, e.g. derived from Rawls, on the one hand, and various ideas influenced by postmodernism, on the other.

I have written this paper for the seminar. It offers an overview of some of the work that I have been doing, as a preliminary to engagement with Hayek’s Abuse of Reason Project. Hayek had plans for this, which have been documented and discussed by Bruce Caldwell in his ‘Introduction’ to the forthcoming edition of this material in Hayek’s Collected Works. He had intended to produce a wide-ranging critical history of ideas which, in his view, led up to a hubristic conception of the role of reason, in France, Germany, England and America; this was to be followed by a second part, dealing with totalitarianism.

In the event, what Hayek produced was the French study – on Saint-Simon and his influence; a long methodological study, a slight piece on Hegel; a lecture, ‘Individualism: True and False’ which dealt with themes that Hayek had planned for an introduction, and The Road to Serfdom. The latter represented a popularization of what he was initially planning, but its place in this larger picture serves to explain why there is, in fact, much greater academic depth to it than one would expect of what was written for a more popular audience.[1] My present paper is concerned with some issues in the background to all this – with why Hayek embarked upon these issues – and also with a few comments on some intellectual problems that emerge out of this material.

I have also added an Appendix, which indicates the archive material in which I plan to pursue this research.

In addition to the work that appears here, I have also been doing some work – which can only be briefly indicated in this paper – on the ideas of Beveridge and Hogben on methodology (and also on issues of planning), which involve explicit discussion of Robbins and Hayek, and on which I am planning to write a separate paper – with acknowledgements to my time here – for the Australian History of Thought conference. The Hogben material is a little difficult to track down, as it is spread right through his writings – including, for example, his work on popular science.

1. Introduction

In August 1939, Friedrich Hayek wrote to his friend Fritz Machlup, that he was starting work on a new project.[2] This took him into intellectual history and methodology. It also led him to write his Road to Serfdom – a work which was a surprise best-seller, but which was regarded by many in academia as an ideological pot-boiler,[3] and which Hayek seems to have thought affected his academic progress.[4] In addition, it led him into ideas – set out in the latter part of his Scientism and the Study of Society, and in his ‘Individualism: True and False’ –which were found anti-rationalistic and disturbing by Lionel Robbins,[5] who had been a close intellectual and political ally of his at the L.S.E., and also by Karl Popper, someone who, despite their political differences, Hayek also saw as an intellectual ally.[6] Given that, prior to this, Hayek was best known as a somewhat abstruse economic theorist – who clearly had plenty of work on his hands to render his distinctive but technically challenging (his critics might say, challenged) ideas viable – and as a historian of economic thought, one might well ask: what was going on? It is this question to which the present paper attempts to offer a preliminary answer.[7]

It is perhaps worth noting immediately that Hayek, in an autobiographical reflection, commented on his writing The Road to Serfdom:[8]

it proved to be a revival of an interest which would increasingly take possession of me. The problems were really those which had originally led me to economics and though for a time I had been completely absorbed by the logical articulation of pure theory, I never quite got away from the wider problems. It must have been in the middle thirties that I first conceived writing a book on the ‘Abuse and Decline of Reason’, an account of how the hubris of overestimating the powers of conscious reason led to the nemesis of its decay. And it was in the course of the attempt to write such a book – of which only the essays contained in The Counterrevolution of Science got written – that that tract for the times arose in which I tried to give a rapid advance sketch of the most significant conclusions to which that more abstract argument seemed to lead.

This is fine; but it does not really explain how it was that Hayek moved from technical concerns, to the project on the ‘Abuse and Decline of Reason’.

I would suggest that the best way to see this project, is in terms of the long-term impact that Mises’ Socialism (and his argument about economic calculation) made upon Hayek, and of the view that he came to take of Mises’ argument about economic calculation under socialism and its significance.[9] As Hayek wrote in a Foreword to the Liberty Press edition of Mises’ Socialism:[10] ‘When Mises’ Socialism first appeared in 1922 its impact was profound. It gradually, but fundamentally, altered the Attitude of many of the young idealists returning to their studies after the First World War. I know, because I was one of them.’

In placing the emphasis that I do, here, upon the impact made upon him by Mises, I should not be understood to be suggesting that Hayek can usefully be looked at as a Misesian. Hayek himself has commented that he thought that he gained by the fact that he came to Mises after already having had an education in economics, with Wieser. Hayek indicated explicitly that he did not agree with the specifics of Mises’ argument concerning socialism, and also indicated, when he turned later to issues about economics and knowledge, a distancing of himself from Mises’ apriorism. All told, while, in Vienna, while Hayek, Haberler and Machlup were, with Mises, recognised as liberals, they were clearly people who took a rather different approach from Mises, intellectually.

The story of the impact made by Mises’ writings on Hayek is complicated and in some ways rather strange. His encounter with Mises’ writings about socialism seems to have slowly shifted him from his earlier attachment to vaguely Fabian socialist ideas.[11] As I have just mentioned, Hayek has told us that while he was not in agreement with the details of Mises’ arguments, he came in time to find the conclusions compelling. A role also seems to have been played, in what became a shift to liberalism, by his reading of liberal political philosophy when he was in the United States.

Now in one way Mises’ ideas made an obvious enough impact on him, in the sense that not only has Hayek told him that his personal views were changed, but Hayek was responsible for bringing out a collection in which Mises’ paper on economic calculation, and other related material, was made available in English.[12]

It is, however, striking to note the way in which Hayek introduced this collection – which seems to me to look forward to his broader ‘Abuse of Reason Project’:[13]

There is reason to believe that we are at last entering an era of reasoned discussion of what has long uncritically been assumed to be a reconstruction of society on rational lines. For more than half a century, the belief that deliberate regulation of all social affairs must necessarily be more successful than the apparent haphazard interplay of independent individuals has continuously gained ground until to-day there is hardly a political group anywhere in the world which does not want central direction of most human activities in the service of one aim or another. It seemed so easy to improve upon the institutions of a free society which had come more and more to be considered as the result of mere accident, the product of a peculiar historical growth which might as well have taken a different direction. To bring order to such a chaos, to apply reason to the organization of society, and to shape it deliberately in every detail according to human wishes and the common ideas of justice seemed the only course of action worthy of a reasonable being.

Further, as Hayek has indicated, he developed his own reading of these issues. This led not only to a stress on the social division of information in the context of the argument about economic calculation, but also to Hayek’s work about economics and knowledge, and his re-interpretation of equilibrium.[14] In addition, this work led to Hayek’s involvement with other economists in argument about economic calculation. This is both interesting and important, but I will not be discussing it here, as it was concerned with issues within the kinds of economics that Hayek practised, or to which he could certainly relate. I will also not be concerned with Hayek’s disagreements with Keynesian economics: the picture which is sometimes offered, which lines up Hayek and The Road to Serfdom against Keynesians and the proponents of the welfare state, seems to me to misunderstand what was going on.

My concern here, however, will be with a broader impact that, I think, was made on Hayek by Mises. It was presented in a generalized manner in his Inaugural Address at the L.S.E., ‘The Trend of Economic Thinking’ (delivered on March 1st 1933). Two features of this seem to me of particular importance.

2. The Younger Historical School, Institutionalism, the ‘Memorial’ and the L.S.E.

Hayek thought that the methodological ideas of the Younger Historical School had the consequence of undermining what, in his view, was a particularly important lesson that he thought that we should learn from theoretical economics. This was a kind of generalization of the lesson he thought that one should draw from the economic calculation argument: that we may come to discover that there are constraints upon what can be accomplished politically, imposed by the mechanisms which underlie economic life, the operation of which we may typically have simply taken for granted. Hayek’s view was that there was a distinctive approach to the study of these phenomena, which he equated with the developing tradition of economic theory (and which was, one must imagine him to have thought, currently represented by the kind of work that he and Robbins were doing). This, he believed, clearly served as an important corrective upon utopian thought, by bringing home to us the role played by various important functional mechanisms, and thus the constraints which we are under.[15]

One might read his own intellectual development – and the impact that Mises’ work made on him – as having brought this lesson home to him, personally. It is also interesting to note the way in which, when he wrote a short encyclopaedia entry on Philippovich,[16] Hayek gave an account of his work in terms of a shift from the perspective of the Verein fuer Sozialpolitik, under the impact of his growing interest in economic theory. On Hayek’s account in ‘The Trend of Economic Thinking’, it was the kind of knowledge that could play this role, which was under threat from the heritage of the Younger Historical School.