Chris Roberts
2013-04-09 15:39:24 UTC
http://nakedkeynesianism.blogspot.se/2013/04/hayek-freedom-democracy-and-pinochet.html
I have been reading Masters of the Universe by Daniel Stedman Jones [got a free copy to write a review], and was a bit surprised about two glaring absences: Sraffa and Pinochet. Yes, talk about strange bedfellows!*
Hayek main theoretical argument, which is common to Austrian and other versions of marginalism alike, is that markets produce efficient allocation of resources, which includes full utilization of labor and capital (i.e. the 'factors of production'). Hayek emphasized heterogeneous, specific capital goods rather than a single malleable homogenous capital value measure. Hayek followed Böhm-Bawerk's emphasis on heterogeneous capital goods and the period of production. He emphasized an intertemporal price system that determines multiple own-rates of interest, but which tended toward a uniform rate, the natural rate.
Unfortunately for him, Sraffa had shown that the two notions were not tenable. As Hayek's business cycle theory was dependent on the differences between the natural rate and the money rate, in a monetary economy, it was his incapacity to deal with the problems raised by Sraffa that made his theoretical relevance in the 1930s to wane. So the complete absence of Sraffa from the book seems to be a significant lapse, but understandable since this is a book written by a historian, not an economist.
The second lapse is more problematic for a historian. Stedman Jones does cite Pinochet in a few places as a fellow traveller of the neoliberals. He even tells you that Friedman thought that "Britain could avoid the fate of Chile ... [and] he predicted that the 'destruction of democratic society,' were it to occur in Britain, would come 'from the left'." Even if you ignore the wild paranoia about 'the left' being a threat to democracy (Yes Labor was a threat! Doesn't that sound like the tea Party? Obama is a threat to democracy too, isn't he?), at least it seems to acknowledge that Pinochet was responsible for the end of democracy in Chile (and yes pictured above is uncle Milton with Pinochet). Not that this should be a controversial proposition. But Friedman was okay with economic policy in Chile.
Hayek had, if that is possible, an even more outrageous view of the Pinochet regime (he also visited and was received by Pinochet). Hayek was not only full of praise for the economic policies of the Pinochet Regime, but also supportive in political terms. He was concerned that Chile, and the Apartheid regime in South Africa too, did not receive a fair coverage from the 'liberal' press in Western countries, and suggested in his infamous interview with El Mercurio that a dictator like Pinochet might be a necessary step towards a liberal democracy. A more thorough treatment of the issue, in particular since Hayek suggested that economic and political freedom were intertwined, would have been relevant, to say the least.
PS: The other picture above is of Thatcher and Pinochet. It is always good to remember what neoliberals mean when they talk about freedom and democracy.
MONDAY, JULY 9, 2012
Hayek and Pinochet: Endless Love!
Someone left a link to this interesting article about Hayek's praise of Pinochet on my last post:
Corey Robin, "Hayek von Pinochet," Coreyrobin.com, 8 July 2012.
I was particularly struck by this remark of Hayek which, I understand, he gave in an interview to a Chilean newspaper:
"[A]s long-term institutions, I am totally against dictatorships. But a dictatorship may be a necessary system for a transitional period. At times it is necessary for a country to have, for a time, some form or other of dictatorial power. As you will understand, it is possible for a dictator to govern in a liberal way. And it is also possible for a democracy to govern with a total lack of liberalism. Personally, I prefer a liberal dictator to democratic government lacking in liberalism. My personal impression. . . is that in Chile . . . we will witness a transition from a dictatorial government to a liberal government . . . during this transition it may be necessary to maintain certain dictatorial powers, not as something permanent, but as a temporary arrangement."
So there we have it: when the chips are down, Hayek presumably preferred dictatorship to a state with the rule of law and a social democratic or democratic socialist economics.
By contrast, a fair point that Hayek makes is that a dictator can pursue "liberal" or laissez faire policies. This is perfectly true: Mussolini originally pursued standard free market, neoclassical policies: