Untitled Document - Hayek's Neo-Liberalism PDF

Lecture 4. Hayek is writing against the liberalism of his time (e.g., Hobhouse). Neo-liberalism’s story is a response to ‘catastrophe’ (1914-1945: wars, fascism, USSR). What Hayek argued is that people lost sense of real liberal values, which created this disorder. Neo-liberalism is exploring how so...

Lecture 4. Hayek is writing against the liberalism of his time (e.g., Hobhouse). Neo-liberalism’s story is a response to ‘catastrophe’ (1914-1945: wars, fascism, USSR). What Hayek argued is that people lost sense of real liberal values, which created this disorder. Neo-liberalism is exploring how society should be organised, it rejects Mill’s progressive individualism. Hayek shares John Locke’s thinking on liberalism (e.g., markets being natural, spontaneous, hence, working by its own laws, should not be intervened). Hayek believes that the state should not interfere in markets and commercial society, but just put order onto them. Two dominant narratives arise mainly due to two huge groups being excluded - women and workers. Social Democracy - Close relative to social liberalism - Right limited by common good (Hobbhouse) + balance of power (e.g., workers and owners) → maximum liberty for all Neo-liberalism - Political and economic harms caused by political interference with markets (Hayek and Locke) - Entrepreneurial leadership of production of goods and values + free choices Neo-liberalism The nature of freedom (who, what and why) - Possessive individualism not progressive individualism. Hayek thought of people as possessive (owning house, land etc.), hence, he believed that freedom is the ability to use your possessions as you say fit. Market as key to freedom. Freedom → Order → Progress - Social order not grounded in the state (contra Hobbes) - Social order grounded in freedom of possessive individuals under the rule of impersonal law - Disorder caused by democracy: bad laws disrupt economic freedoms of possessive individuals Neo-liberal narrative Problem: authoritarian and ‘democratic’ politics = ‘socialist’ interference with market freedoms. Hayek believes that trying to interfere in catallaxy leads to chaos. Solutions - Responsible and limited political leadership - Flourishing markets ‘New right’, mainly Margaret Thatcher and Ronald Reagan, argued that workers, trade unions etc. became too powerful, hence, the new ‘story’ was needed to replace social democracy. Thatcher believed that there is no such thing as ‘society'. Common good cannot limit individual rights (against Hobhouse’s ideas). State cannot act on behalf of the whole ‘society’. Problem: progressive individualism - Progressive individualism neither possible nor desirable - Employed masses exchanged income and predictability over independence and skills - Division between ‘independents’ and ‘dependents’ (elite produces goods and values for a mass who take what is produced for them) Problem: failure of democracy - What if the majority makes the wrong decision? What if politicians won’t represent people properly? - Masses’ notions of their best interests opposed to the interests of the independents - In democracy, ordinary people (dependent) are resentful towards the elite (independent) and always try to bring them down - State official and bureaucrats understand politics from their own perspective and interests - also against entrepreneurial elites Solution: freedom under law - Understanding civil society as ‘catalaxy’ - Catalaxy as a free non-controlled social interaction - Rule-governed - The outcome of free interaction cannot and should not be predicted or controlled Solution: prices vs democratic government - Prices as superior to all political knowledge. Politics, as catalaxy, cannot and should not be controlled, hence, we have reasons to not trust the politicians → their control should be limited - Anti-socialist politics and de-democratisation. Politicians should be responsible for the protection of catalaxy from influence of masses. Monbiot reconsidered. Neo-liberalism and environment - Land owners are supposed to be taking care of the land. Hence, Monbiot argues in favour of stricter market controls to manage ecological disruption. Hayek argues in favour of free-flowing markets and puts massive importance on entrepreneurial elites.