[PEN-L:1757] More Polanyi vs. Hayek

[knoWWare@xxxxxxxxxxxxxx (Tom Walker)]

Once again Polanyi features as the best citation for exposing the rotten
underbelly of unreflective Hayekianism (otherwise known as the current
conventional wisdom). Here are some excerpts from "The political economy of
utopia." by Geoffrey M. Hodgson, Review of Social Economy, Summer 1995 v53 n2:

..."Clearly, Hayek has a utopian agenda of his own... Indeed, Hayek's own
utopian vision pervades his writings and is much more considered and
detailed than that of Marx"

..."There is actually an interventionist temptation in Hayek's thought. But
it is masked by the fact that capitalist market systems are actually
dominant in the modem world. In such real-world circumstances the advocate
of free markets can then declare: when in doubt, do nothing. Accordingly, by
placing the "burden of proof on those wishing to reform" (Hayek 1988: 20), most
proposals for state intervention can easily be opposed. After all, no
advocate of reform can prove that the proposal will work precisely as
intended, or predict with certainty the alternative outcome.The Hayekian
argument is thus rigged. As long as the uncertainty of our predicament in a
capitalist world is mutually accepted, the free marketeer can easily seem to
win the argument"

..."Hayek and others have inspired policies to extend "free markets" and
"roll back the state." It is no accident that governments committed to these
ideas have often taken an authoritarian tone, such as in Britain in the
1980s under the premiership of Margaret Thatcher. As Polanyi (1944) argued
long ago, the extension of markets did not mean the diminution of the powers
of the state, but instead led to increasing intrusion and regulation by
central government. Accordingly, even in Victorian Britain, the introduction
of free markets, far from doing away with the need for control, regulation,
and intervention, enormously increased their range. This was true a fortiori
in France and Germany, where markets were often imposed from above and
generally more closely regulated."

..."Polanyi argued that the creation and maintenance of private property
rights and functioning market institutions require the sustained
intervention of the state to eject economic forms and institutions that are
antagonistic to the private market system. Paradoxically, therefore, "free
market" policies can lead to a substantial centralization of economic and
political power. Hayekian policies in practice actually threaten both
economic and political pluralism and grant extended powers to the central
state. His extreme individualism becomes what could be described as a kind
of totalitarian liberalism."


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"Only in mediocre art does life unfold as fate." -- Michael Ignatieff

Tom Walker
knoWWare Communications
http://mindlink.net/knowware/